The conflict with Iran is starting to feel like a forever war. When President Trump started the war on February 28, he said it would last a few weeks. We’re now in the eighth month, and there’s no evident movement toward a settlement.
Oil, gasoline, and diesel prices have been elevated since the first day of the war. The pre-war price of West Texas Intermediate, the US oil benchmark, was $67 per barrel. It went as high as $113 in April and is now around $89. Everybody knows about the corresponding spike in gasoline prices, from $3 per gallon before the war to around $4.50 now.
But this [probably] can’t last, and I put my money where my guess is. I placed a $50 bet on Kalshi on September 29 wagering that oil prices will be lower than $75 per barrel at the end of the year. That was the lowest price I could find a market for. I’d be willing to bet that prices fall below $70, but I think that’s probably the floor.
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Here’s my reasoning. Though Iran seems intransigent, the US blockade of its ports is stopping most of the country’s oil exports and squeezing its economy. The ruling mullahs need that oil revenue. That’s how they stay in power and finance all the regional proxy groups that wreak havoc on their behalf. Iran’s leaders talk a big game about menacing the Strait of Hormuz until Trump leaves office in 2029. But that’s bluster.