We are now passed day 100, of the US war with Iran. Iran still has its blockade in place and so does the US. So we have a double blockade. Yet over the past couple of weeks oil prices have remained kind of stable. Maybe this is the new reality. Then again maybe not.

Are people buying into Donald Trump’s almost daily statements that an agreement will be reached very soon. Nobody is falling for that anymore. So why are prices so stable the last couple weeks?

There are a few reasons. Prior to the war, about 15.6 million barrels of oil went through the Strait of Hormuz, daily. Now an estimated 2.9 million barrels are getting through, which is about 15%. It is estimated that 2.1 million barrels, of that amount, is getting through because tolls are being paid to Iran. It is estimated that remaining 800 thousand barrels are getting through because they are sneaking through. The ships carrying these barrels have turned off their transponders and are sneaking through.

What is also easing the pressure, is that approximately 4.5 million barrels, per day, are going through apipeline in Saudi Arabia to the Red Sea. Finally, China has cut down imports of oil big-time. They are using up their large supply of oil reserves, that they have on hand.

This might be a major reason why oil prices have been stable the last couple weeks. Sooner or later, though, if this war continues, China’s oil reserves are going to run out, which will put immense pressure on oil prices. If this continues through July or August, oil could still top $200 a barrel. Right now it’s at about $95 a barrel.

Hopefully, this war will end soon sooner than later. But who knows.

That’s all I have for today.