This round continues to short WTI (CLUSDT) in detail

😂 Early in the morning, my friend woke me up, saying that the U.S. and Iran were fighting again, asking me if WTI could continue to be shorted. The first time I checked the price, it was 92 dollars, and by the time I looked again, it had already fallen below 91 dollars.

I can't say my judgment is definitely correct, but my view is that the world has started to expect the U.S. to resolve the Strait of Hormuz issue, perhaps not through peace, but it must address this problem. After all, the issue of Hormuz is no longer just an American problem; Europe, Asia, including China, do not want the Strait of Hormuz to be blocked.

So, it seems that Iran is confronting the U.S. now, but in reality, Iran (the Hormuz issue) is confronting the world except for Russia.

The most critical point now is not whether Iran dares to attack the U.S., but whether the Strait of Hormuz can be long-term blocked. The U.S.’s latest strikes on Iranian military targets and drones appear to be an escalation of conflict, but the reason provided by the U.S. is to protect its troops and shipping lane safety, essentially reopening Hormuz.

At the same time, oil prices fell nearly 7% a few days ago, also because the market expects the U.S. and Iran may be close to some kind of agreement, indicating that oil prices have started to factor in expectations of the reopening of the shipping lanes, rather than just including war premiums.

I don’t even need to check Jinshi Finance, and I'm not concerned about localized conflicts. My current judgment on WTI is not that the more war continues, the higher oil prices go, but rather as long as Hormuz does not enter a long-term, substantial, uncontrollable blockade, every rise in oil prices will be pressed down by the expectation that the problem will ultimately be resolved.

Because Hormuz is no longer just a U.S. and Iran issue, but a global energy transportation, Asian import security, European inflation pressure, Chinese energy cost, and U.S. inflation control issue. Iran can confront the U.S., but it is hard to use global energy issues as leverage in the long term.

So, whether WTI can still be shorted depends not on whether there is a headline saying "fighting resumes," but on whether Hormuz has truly spiraled out of control. As long as the market still believes the U.S. will solve the channel issue through negotiations, military pressure, or joint escort, then as long as WTI rises, I will go short.

From another perspective, WTI's rise is capped; the historical high is just under 150 dollars, and before the war, the general price of WTI was only below 65 dollars. Even after the war, the long-term price of WTI maintained around 105 dollars, and now it is at 91 dollars, giving only 14 dollars of upward space, while there is more than 25 dollars of downward space (generally around 55 dollars for WTI).

Even during the entire war cycle, exceeding 110 dollars occurred for only 4 days, while the other two and a half months were almost between 105 and 90 dollars, indicating that the upward ceiling is limited and the downward space is larger.

This can also be seen from price transmission; today it was reported that fighting has resumed, and WTI only reached a maximum of 92.5 dollars, clearly indicating that the market does not believe prices can continue to surge, and within three hours it fell back down.

To take a step back, assuming WTI can continue to rise, how much can it go up? 120 dollars might just be the ceiling, so I would just short it at a high, as an asset that has nearly set an upward ceiling has a higher safety factor when shorted, because any reconciliation will cause the oil price to drop immediately.

In fact, the simplest judgment is whether you think the U.S. will stand by and watch Iran lead itself into recession. If yes, then there is no issue in shorting WTI; if no, then go short it.

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