Electric vehicles may be the future, but oil is the present, and so long as the world runs on its production and sale, it’s a commodity that we’ll monitor. We’ve laid out our thesis on oil before: In a nutshell, shale oil, with its ever-decreasing break-even costs, has established a long-term ceiling on prices. That’s bad news for countries that depend on oil reserve for government revenue, especially Saudi Arabia and Russia.
But oil prices are now at highs not seen since 2014. Iran and Israel have exchanged blows in Syria, spooking the market in the process. And two of the world’s major oil producers, Venezuela and Iran, are facing domestic unrest (Venezuela) or domestic unrest and foreign threats (Iran) that put their ability to produce and export in doubt.
We’re still not in the business of forecasting commodity prices, but given these developments, it’s time for us to revisit our thesis. In this Deep Dive, we’ll expand upon two ways to analyze o