Someone was sniffing the butane.
Energy experts have long warned that the war in Iran was causing the biggest oil-supply shock in history.
The closure of the Strait of Hormuz shut in 14m barrels a day of oil.
To destroy that much demand, they said, the price of Brent crude
should be more than double its pre-war level, at well over $150 a barrel.
But oil traders were in a stupor.
As recently as April 17th prices were below $90 a barrel.
Over the past week, on talk of renewed fighting, they have been waking up.
On April 30th prices spiked above $125.
Unfortunately, as bad as things are, the disconnect with reality endures.
Not only may spot prices have further to climb,
but the oil-futures market, in which speculators bet on where the oil price is going,
says prices will fall every month for the rest of the year, ending 2026 at about $88.
That implies most of this shock will soon be reversed.
If so, traders must believe three things are true:
that America and Iran will soon strike a peace deal;
that their agreement will reopen Hormuz;
and that, soon after the strait is clear, petrol and jet fuel will once again be plentiful.
All those are in doubt.
One thing everybody should be able to agree on