The crude reality: Why oil isn’t at $120
If you’ve been watching the news lately, you’ve seen the script: The Middle East is a tinderbox, the Strait of Hormuz is a “no-go” zone, and $120 oil is an inevitability according to JP Morgan.
But if you look at the facts and the data, the story falls apart.
Despite the headlines, oil is struggling to hold its gains. Why? Because the “New World Order” of energy isn’t being built in Tehran or Riyadh. It’s being built in North and South Americas and the “war” we’re watching looks more like a managed liquidation of the old guard than a global catastrophe.
- The propaganda gap: Drones vs. Data
We live in an era where investment thematics are ‘manufactured’ by influencers and scripted by investment banks. We saw it with gold in 2024 and silver in late 2025. Everyone jumps on AFTER the price has moved – a lot. Today, it’s Oil.
The narrative says Iran is winning and the world is burning. The data says something different. By way of example, Iranian, drone volumes are already down 86 per cent since last week.
And while every loss is a tragedy – especially when it’s innocent civilians and children, the “mortality” of this conflict is currently lower than domestic U.S. drug overdoses over the same period, according to the Red Crescent.
The fact is that if prices don’t validate the narrative, be very careful. Order flow is being driven by propaganda.
- The new energy triangle: US, Canada, and Venezuela
While the world stares at the Persian Gulf, the real mega powers in oil are consolidating in the West. Between the United States, Canada, and Venezuela, there are 500 billion barrels of proven reserves. To put that in perspective, that’s enough to cover global consumption (at 100mm bpd) for the next 14 years without a single drop from the Middle East.
America is now the swing factor of the oil world. The U.S. has the refineries, the reserves, and the reach. Meanwhile, China – the world’s biggest customer – is already swimming in supply.
And for those who think the high VLCC (Very Large Crude Carrier) rates are a sign of scarcity, the counterargument is that they’re a sign the world is stuffed with floating oil.
Thoughts…
Before you know it, the “war” will be over, the narratives will evaporate, and we’ll be left with the Epstein Files and a world where oil is abundant, cheap, and – most importantly – no longer a tool for global blackmail.
Betting on Middle Eastern chaos to drive your portfolio allocations will soon become a relic. The smart investor should now be looking for the reliable producers with high margins.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
