I have always been clear about shorting oil, and the reasons are also very clear. This should be the fifth wave; during the previous four waves, I often faced drawdowns, which is very normal. After all, we are not Trump, not Iran, and we do not know what the next step will be. But why do I still insist on holding positions during significant drawdowns and not stop-loss?

First, my theory is that oil prices cannot rise indefinitely in the long term. For example, the historical high for WTI is 147 dollars, a situation that is almost impossible to replicate. The highest price for WTI in the past 18 years is 130 dollars, while the highest price during this Hormuz blockade is 120 dollars.

This means that as long as the liquidation price is raised to 150 dollars, it is almost impossible to get liquidated. In reality, 120 dollars is already quite high. Of course, if very extreme situations do occur, it cannot be helped, but the probability of such extreme situations is very low. At least, I don't think this time the U.S. and Iran will lead to such extremes.

If a nuclear war really happens, no price will matter anymore.

Second, the impact of Hormuz is not just on U.S. oil prices, but on oil prices worldwide. Although Iran is a theocratic state, incurring public anger is not good for Iran either. The trend of war is already very clear at this point.

Iran treats Hormuz as a cash cow, while the U.S. relies on its strong firepower to block Iranian ports. This is a mutually constraining, survival battle of who can hold out longer. Although Trump is affected by midterm elections, the U.S. is fundamentally a whole. In front of the vast machine of America, Iran's time is limited. The war is evidently about to turn, and once the U.S. blocks Iranian ports, negotiations will proceed much more smoothly.

There are also third and fourth points, but they are not very significant. In simple terms, shorting oil is like knowing where the ceiling is and understanding where the lower limit is likely to be. The rest is just waiting for time.

Initially, my biggest concern was the funding rate, but now the issue is not too big anymore. Therefore, I believe that shorting oil is a battle of endurance, needing sufficient margin, enough patience, and then just waiting. Of course, while I wait, I will continue to short at high points, such as preparing to short Brent at 92 dollars and WTI at 87 dollars; orders have already been placed.

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