There is so much oil in the west
The price of oil and gas is higher in many countries despite abundant global supply and despite global production capacity being materially larger than the Strait’s direct output contribution.
That disconnect matters.
If supply alone determined price, then abundant inventories, diversified production, and alternative shipping capacity should suppress prices. Yet prices continue to rise because oil trades less like a pure commodity and more like an index of fear, sentiment, positioning, and future uncertainty.
Historically, “fair value” alignment between price and underlying fundamentals exists only part of the time.
Studies across financial markets routinely show that short-term price movement is driven overwhelmingly by sentiment, liquidity, positioning, reflexivity, and macro expectations rather than static intrinsic value.
In commodities specifically, speculative flows and geopolitical premium can dominate pricing behavior for extended periods. Depending on timeframe, estimates suggest that only roughly 20–40% of short-term oil price movement can be directly explained by immediate physical supply-demand fundamentals, while the remainder is influenced by expectations, hedging flows, risk premia, and sentiment-driven repricing.
This is proof of the bifurcation between price and value.
Price is not simply a reflection of present reality.
It is a probabilistic index of future fear, future scarcity, future conflict, and future instability.
And if price is running on sentiment a substantial percentage of the time, then other variables begin to matter far more than .traditional textbook fundamentals.
In other words, markets are not merely pricing oil.
That is why even in an environment of abundant supply, prices can still rise aggressively.
The market is not responding to what exists. It is responding to what participants fear could exist next.