This isn't over 'not by a long way', says Paul Sankey on disruption in oil market

12/22/2025 10:03:30 PM	short term cautious down	6 days later	-0.51%	+0.26%

Asks for analysis of president's comments on crude oil price drop and how it changes trading strategy.

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Paul Sankey

Interprets president's comments as signaling potential stop to bombing, but notes Strait of Hormuz remains blocked. Market reaction (Tokyo open high, sell-off) reflects uncertainty. This is a structural change - first-ever blockage shows vulnerability.

Gulf Cooperation Council wants bombing to stop. Need 60 tankers/day through strait to keep Asia running. Maintaining security in 60 sq mile area is difficult.

Notes president claims ships are traveling through strait, but suggests ceasefire needed is unlikely given new leader's personal grievances.

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Paul Sankey

Adversaries know Trump's weak spot (gas prices before midterms). US less affected as oil exporter, but Taiwan faces energy crisis affecting chip production. Strait must reopen.

Taiwan not getting LNG/helium, nuclear plants shut. Chip production at risk within months. Market reaction shows urgency.

Paul Sankey

Oil should have higher floor (~$60) due to global risk premium. Must pay more for tankers and insurance. Middle East growth now higher cost of capital.

Major companies (Exxon, Chevron) were returning to Middle East but will now reconsider capital deployment due to supply vulnerability.

Asks how long war can continue before protracted negative consequences beyond market equilibrium assumptions.

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Paul Sankey

Structurally already broken - insurance costs up, Middle East attractiveness down. Cannot replace barrels to Taiwan/South Korea quickly (6 weeks). 10M barrels/day lost has major negative effect.

Ships slipping through with transponders off not normal business for Saudis/Qataris. Houthis still threatening ships, 50% less Suez traffic. Major structural change witnessed.

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