Commentary
In May of 2018, President Trump pulled out of the Iranian nuclear deal. The result was Iranian crude oil fell from more than 3.8 million barrels per day to roughly 2.1 million barrels a day while enforcing sanctions on Iran. That production climbed back to 3.2 Mbpd during the Biden Administration, with actual exports of 1.7 Mbpd. It is my belief that the market expects Trump to enforce the sanctions once again, removing that Iranian oil from the market, while opening the door for expansion of U.S. production and probably an increase from Opec Plus nations as well to make up for the short falls. Per the Justice Department, Iran has tried to assassinate Trump and several of his former national security officials. Could it be payback time? Trump in my view will most likely support Israel in their attacks on Iran nuclear and possible strikes on Iran’s oil sites and Trump possibly could impose very tight sanctions on oil and anything else economic. There is potential that Iran could be strangled by the US and attacked by Israel. In time there will be regime change not sure when, but I think it is coming. How do you think Trump feels about people who tried to assassinate him? Do you think he will encourage Israel to kill the mullahs before they try again to kill him? Crude Idea below.
Enel X, who is a major EV charging provider in the U.S. and Canada, abruptly ceased operations, rendering over 10,000 charging stations non-functional. This unexpected shutdown fuels concerns about EV reliability, as Tesla’s extensive network isn’t accessible to all EV owners and these supplemental chargers provided essential coverage. Looking for a charging station? Good luck. Used EV prices are plummeting in my opinion. There is a lot of noise that Trump will quickly end the $7500 subsidy so the incentive to buy an EV just went out the window in my opinion. It is my belief major automakers like GM will have to redo its strategy completely, with an aggressive move into hybrids a possibility. I think there will be more of a pushback on green energy and renewables the next few years. All those battery factories to make batteries for auto companies. No more. Windmills -no more. Natural gas- likely lots more. In Washington state they just voted to prevent any government program that stops gas powered energy. Standby for a lot more of this type of thing. People do not want to be told they can’t buy a gas stove, and developers want to have gas energy supplied to their buildings. Natural gas in my opinion could see a surge of increased demand in my opinion.
Crude Oil
Trade Idea Aggressive
Options-Sell the January 25 crude 64 v 62 put spread. At the same time by the August Crude 90 vs 100 call spread for even money
Risk-Max risk is 2K per spread. Plus, all trade costs and fees, that’s if crude oil basis January futures settle below 62 per barrel at option expiration on December 19th.However should we stay above 64, the put spread will settle worthless in our favor, and we are simply long a call spread deep into 2025 that we have paid for.
Conservative: Buy the September 90 vs 100 call spread for $500 OB.
isk is what we paid, plus commissions and fees.
Natural Gas
Trade Idea-Conservative
Buy the October 2025, 475/575, call spread. Pay 4 points or $400 per spread plus trade cost and fees.
Risk-The risk is the price paid here which is $400 plus trade costs and fees. The maximum one would collect is 10K minus trade costs and fees. That would only occur if Nat Gas settled over 5.75 in late September 2025.
Trade Idea Aggressive
Buy the October 475/575 call spread while selling the Jan 25 275/265 put spread. Suggested cost to entry at even money plus all trade costs and fees.
Risk-the maximum risk is 1K plus all trade costs and fees. The strategy here you are selling a put spread with a max 1K plus loss per spread plus trade costs, to finance and Oct 25 475/575 call spreads. Should the underlying January options that expire in late December 24, worthless, one is free and clear of the maximum risk and is long a call spread deep into 2025.
Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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