COIL
Citadel Exploration, Inc. Common
stock OTC

I have never traded options (or anything, really) in my life. Always been an index fund guy.
Sometime around March 14th it became abundantly clear that there was no carrot the US could credibly offer the Iranian government to end the war on terms that would allow US access to the Strait of Hormuz. It has subsequently become clear that there is no potential for opening the Strait with our air and naval assets in the region, and that the time horizon for a successful land invasion/counter-insurgency operation to force it back open (not to mention mine sweeping, naval escorts, etc.) is far longer than the horizon for oil prices to hit (conservatively!) $150/barrel, causing at minimum a recession, at maximum a depression.
Between functional closure of the Strait since February 28th, the shut-in of production capacity once storage on land and water was full, and the destruction of 30-40% of the civilian energy infrastructure in the Gulf, estimates for lost oil production range anywhere from 11 to 16 million barrels per day lost.
For context, the oil market has been operating without one and a half Saudi Arabia's for a month. Even with SPR drawdowns and rerouting through Fujairah Depot in the UAE and the Saudi pipeline to Yanbu refinery on the Red Sea, you're looking at 6 million barrels per day lost, and that doesn't account for the loss of 40% of Russian supply due to Ukrainian drone strikes this week (estimated another 3 million barrels per day).
Fujairah was hit by airstrikes last week, and the Houthis have threatened to bomb Yanbu (again— they hit it two years ago and it's still not 100%) if that option is exercised.
Which brings me to OXY and SM: Two domestic US shale oil producers with heavy exposure to the Permian Basin, who have begun to make money hand over fist from the this debacle, and who will inevitably make even more when the paper markets finally recognize the reality of the physical supply shortage, with supply chains scrambling for every available barrel.
In previous shocks (think Arab Spring, Invasion of Ukraine) these two stocks have moved with the price of Brent Crude at a clip of 1.0-1.3x (almost 1.5x for SM), and that's approximately what we're seeing today; when Brent Crude was $99/Barrel, OXY hovered around $58. Brent Crude sits at $110/barrel +/- as of this writing, and OXY is about $66.
Brent Crude is not going to stay at $110. It won't even stay at $120. The demand destruction necessary to stabilize oil prices— come mid-April, should this continue— is going to rival COVID; no cars on the road, no planes in the sky. United Airlines has canceled 5% of their flights, and surmises it could get as high as $175/barrel. The Trump administration is studying (to the extent they're capable of "studying" anything) what it would look like if oil hit $200/barrel. The price of Murban crude hit $180/barrel last week, we're already beginning to see the start of rolling energy shortages in SE Asia, Europe is next, and the US will be last in line (apologies if you live in California, you're on Europe's clock).
All of which is to say....
tl;dr go long on COIL (Brent Crude ICE) if you can get the permissions to trade it; I couldn't, unfortunately. Otherwise, go long on OXY (Occidental Petroleum) and SM (SM Energy Co), because you, too, can profit from the start of WWIII.

I have never traded options (or anything, really) in my life. Always been an index fund guy.
Sometime around March 14th it became abundantly clear that there was no carrot the US could credibly offer the Iranian government to end the war on terms that would allow US access to the Strait of Hormuz. It has subsequently become clear that there is no potential for opening the Strait with our air and naval assets in the region, and that the time horizon for a successful land invasion/counter-insurgency operation to force it back open (not to mention mine sweeping, naval escorts, etc.) is far longer than the horizon for oil prices to hit (conservatively!) $150/barrel, causing at minimum a recession, at maximum a depression.
Between functional closure of the Strait since February 28th, the shut-in of production capacity once storage on land and water was full, and the destruction of 30-40% of the civilian energy infrastructure in the Gulf, estimates for lost oil production range anywhere from 11 to 16 million barrels per day lost.
For context, the oil market has been operating without one and a half Saudi Arabia's for a month. Even with SPR drawdowns and rerouting through Fujairah Depot in the UAE and the Saudi pipeline to Yanbu refinery on the Red Sea, you're looking at 6 million barrels per day lost, and that doesn't account for the loss of 40% of Russian supply due to Ukrainian drone strikes this week (estimated another 3 million barrels per day).
Fujairah was hit by airstrikes last week, and the Houthis have threatened to bomb Yanbu (again— they hit it two years ago and it's still not 100%) if that option is exercised.
Which brings me to OXY and SM: Two domestic US shale oil producers with heavy exposure to the Permian Basin, who have begun to make money hand over fist from the this debacle, and who will inevitably make even more when the paper markets finally recognize the reality of the physical supply shortage, with supply chains scrambling for every available barrel.
In previous shocks (think Arab Spring, Invasion of Ukraine) these two stocks have moved with the price of Brent Crude at a clip of 1.0-1.3x (almost 1.5x for SM), and that's approximately what we're seeing today; when Brent Crude was $99/Barrel, OXY hovered around $58. Brent Crude sits at $110/barrel +/- as of this writing, and OXY is about $66.
Brent Crude is not going to stay at $110. It won't even stay at $120. The demand destruction necessary to stabilize oil prices— come mid-April, should this continue— is going to rival COVID; no cars on the road, no planes in the sky. United Airlines has canceled 5% of their flights, and surmises it could get as high as $175/barrel. The Trump administration is studying (to the extent they're capable of "studying" anything) what it would look like if oil hit $200/barrel. The price of Murban crude hit $180/barrel last week, we're already beginning to see the start of rolling energy shortages in SE Asia, Europe is next, and the US will be last in line (apologies if you live in California, you're on Europe's clock).
All of which is to say....
tl;dr go long on COIL (Brent Crude ICE) if you can get the permissions to trade it; I couldn't, unfortunately. Otherwise, go long on OXY (Occidental Petroleum) and SM (SM Energy Co), because you, too, can profit from the start of WWIII.