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Carly Garner, the Las Vegas commodities trader, has been watching the wild swings in commodity prices lately, and, over the weekend, offered this thought about oil prices:<\/p>\n
“I’ve only seen oil move this far, this fast on three other occasions: 2008, 2011, and 2022. “What came next wasn’t pretty for most assets,” Garner wrote on X, formerly Twitter. <\/p>\n
Garner is a regular contributor to theStreet Pro. <\/p>\n
Related: Qatar energy minister sends strong message on $150 crude<\/p>\n
What the history tells us<\/p>\n
Garner’s history is right. Big runups in oil prices can be good for oil investors and oil companies in the short term. <\/p>\n
But the endgame can result serious trouble such as:<\/p>\n
Inflation, especially at the consumer level. Rrecessions that destabilize financial systems, markets and economies. <\/p>\n
The numbers she is looking at are these:<\/p>\n
West Texas Intermediate (often called light sweet crude) has jumped nearly 59% since bottoming in December. It was up 14.4% last week alone.The price of regular gasoline is up 21.5% this year alone, according to AAA data. It has jumped 15.6% since Feb. 27. <\/p>\n
Light sweet crude jumped to as high as $111 per 42-gallon barrel right after trading opened late Sunday. It fell back to $106 a barrel, that would translate into a gain of more than 17% in a day. Actually, in just 90 minutes.<\/p>\n
Numbers like these rise until they don’t, and then they fall heavily and quickly when the rising stops.<\/p>\n
Not only did that happen in 2008, 2011 and 2022. It happened in 1974, 1979-1982 and 1990 during the first Iraq War.<\/p>\n
A war behaving according its own whims<\/p>\n
Oil prices are obviously reacting the shooting war that erupted on Feb. 28 when Israeli and United States forces attacked Iran. One attacked killed Ali Khamenei, Iran’s supreme leader. <\/p>\n
Iran has reacted by shooting missiles at U.S. forces in the Persian Gulf, Israel and at just about all of Iran’s neighbors.<\/p>\n
Getty Images<\/p>\n
Iran has also closed down the Strait of Hormuz, through which more than 20% of the world’s oil and a similar amount of natural gas must pass to get to global customers.<\/p>\n
Qatar has stopped processing liquified natural gas. Kuwait officials said Saturday the country has stopped producing oil because it has run out of storage.<\/p>\n
President Trump and Israel have called for regime change in Iran and, in Trump’s case, Iran’s unconditional surrender. <\/p>\n
Iran’s religious leaders, who have controlled the country often brutally since 1980, signaled Monday they aren’t interested in surrendering by naming Mojtaba Khamenei, son of the late leader, as his successor.<\/p>\n
More Oil and Gas:<\/p>\n
Energy giant sends blunt $20 billion message on dividend growth147-year-old oil giant just raised dividend 4% in 2026Weekly Roundup: S&P Drops 2%, Portfolio Barely Blinks. Here’s Why.The winners and losers<\/p>\n
There are some obvious winners to what’s happening with oil: oil producers, oil service companies that supply the knowhow to extract oil from thousands of feet below the earth’s surface. <\/p>\n
And oil producing countries, assuming they’re not getting shot at by Iranian forces. <\/p>\n
That would include Russia, Canada, Guyana, Brazil and, yes, the United States, one of the world’s producers. <\/p>\n
The losers are everybody else. Especially consumers. <\/p>\n
The threat Garner sees<\/p>\n
What makes Carly Garner more concerned is what happens next, <\/p>\n
She does see the war ending. Maybe it will stop but not be settled. Then, the global oil industry goes back to business as mostly usual. Futures markets on March 6 were seeing crude back to $69 a barrel some time in December. (As of that number had risen to $74.)<\/p>\n
Those chasing prices now will get hurt. <\/p>\n
Just as there were many investors who chased silver to $121.785 an ounce on Jan. 29 only to see it drop to $83.82, there are probably many investors chasing oil prices higher without any idea of the risks they’re taking on, Garner said in an interview with theStreet. <\/p>\n
The banks and financial institutions who are providing the capital for the chasing will have to turn off the capital. Their balance sheets will get hurt. Economies will struggle.<\/p>\n
Some ugly aftermaths of oil fever<\/p>\n
One of the worst bear stock markets since World War II occurred after the Arab Oil Embargo ended in 1974. The Standard & Poor’s 500 Index fell 31% in 1975. The Dow Jones Industrial Average dropped 38%. <\/p>\n
Bear markets, however, don’t follow the rules of calendars. Crude oil hit $145 in early 2008, then crashed, destabilizing real estate markets, banks and the global economy before bottoms set in March 2009. <\/p>\n
The S&P 500’s total decline in that period was 56.8%. <\/p>\n
The big runup after the Covid-19 pandemic saw crude oil hit $120-plus while interest rates were low. AAA saw its highest price ever, $5.016 a gallon June 14. <\/p>\n
(I saw people grimly talking about it during a visit to the island of Martha’s Vineyard all that week.) <\/p>\n
Then, the Federal Reserve pushed interest rates higher, and home sales and real estate and related business cratered. <\/p>\n
So, Garner is worried, though she thinks crude oil will stop rising. It will run somewhere around $105 for a while. <\/p>\n
“When an integral commodity like oil spikes like this, things start to break,” she wrote. ” “That isn’t bullish for anything. Be careful out there.”<\/p>\n
Related: 147-year-old oil giant just raised dividend 4% in 2026<\/p>\n
#Oil #spike #sends #powerful #message<\/p>\n","protected":false},"excerpt":{"rendered":"
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