Carly Garner, the Las Vegas commodities trader, has been watching the wild swings in commodity prices lately, and, over the weekend, offered this thought about oil prices:
“I’ve only seen oil move this far, this fast on three other occasions: 2008, 2011, and 2022. “What came next wasn’t pretty for most assets,” Garner wrote on X, formerly Twitter.
Garner is a regular contributor to theStreet Pro.
Related: Qatar energy minister sends strong message on $150 crude
What the history tells us
Garner’s history is right. Big runups in oil prices can be good for oil investors and oil companies in the short term.
But the endgame can result serious trouble such as:
- Inflation, especially at the consumer level.
- Rrecessions that destabilize financial systems, markets and economies.
The numbers she is looking at are these:
- West Texas Intermediate (often called light sweet crude) has jumped nearly 59% since bottoming in December. It was up 14.4% last week alone.
- The price of regular gasoline is up 21.5% this year alone, according to AAA data. It has jumped 15.6% since Feb. 27.
Light sweet crude jumped to as high as $111 per 42-gallon barrel right after trading opened late Sunday. It fell back to $106 a barrel, that would translate into a gain of more than 17% in a day. Actually, in just 90 minutes.
Numbers like these rise until they don’t, and then they fall heavily and quickly when the rising stops.
Not only did that happen in 2008, 2011 and 2022. It happened in 1974, 1979-1982 and 1990 during the first Iraq War.
A war behaving according its own whims
Oil prices are obviously reacting the shooting war that erupted on Feb. 28 when Israeli and United States forces attacked Iran. One attacked killed Ali Khamenei, Iran’s supreme leader.
Iran has reacted by shooting missiles at U.S. forces in the Persian Gulf, Israel and at just about all of Iran’s neighbors.
Getty Images
Iran has also closed down the Strait of Hormuz, through which more than 20% of the world’s oil and a similar amount of natural gas must pass to get to global customers.
Qatar has stopped processing liquified natural gas. Kuwait officials said Saturday the country has stopped producing oil because it has run out of storage.
President Trump and Israel have called for regime change in Iran and, in Trump’s case, Iran’s unconditional surrender.
Iran’s religious leaders, who have controlled the country often brutally since 1980, signaled Monday they aren’t interested in surrendering by naming Mojtaba Khamenei, son of the late leader, as his successor.
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The winners and losers
There are some obvious winners to what’s happening with oil: oil producers, oil service companies that supply the knowhow to extract oil from thousands of feet below the earth’s surface.
And oil producing countries, assuming they’re not getting shot at by Iranian forces.
That would include Russia, Canada, Guyana, Brazil and, yes, the United States, one of the world’s producers.
The losers are everybody else. Especially consumers.
The threat Garner sees
What makes Carly Garner more concerned is what happens next,
She does see the war ending. Maybe it will stop but not be settled. Then, the global oil industry goes back to business as mostly usual. Futures markets on March 6 were seeing crude back to $69 a barrel some time in December. (As of that number had risen to $74.)
Those chasing prices now will get hurt.
Just as there were many investors who chased silver to $121.785 an ounce on Jan. 29 only to see it drop to $83.82, there are probably many investors chasing oil prices higher without any idea of the risks they’re taking on, Garner said in an interview with theStreet.
The banks and financial institutions who are providing the capital for the chasing will have to turn off the capital. Their balance sheets will get hurt. Economies will struggle.
Some ugly aftermaths of oil fever
One of the worst bear stock markets since World War II occurred after the Arab Oil Embargo ended in 1974. The Standard & Poor’s 500 Index fell 31% in 1975. The Dow Jones Industrial Average dropped 38%.
Bear markets, however, don’t follow the rules of calendars. Crude oil hit $145 in early 2008, then crashed, destabilizing real estate markets, banks and the global economy before bottoms set in March 2009.
The S&P 500‘s total decline in that period was 56.8%.
The big runup after the Covid-19 pandemic saw crude oil hit $120-plus while interest rates were low. AAA saw its highest price ever, $5.016 a gallon June 14.
(I saw people grimly talking about it during a visit to the island of Martha’s Vineyard all that week.)
Then, the Federal Reserve pushed interest rates higher, and home sales and real estate and related business cratered.
So, Garner is worried, though she thinks crude oil will stop rising. It will run somewhere around $105 for a while.
“When an integral commodity like oil spikes like this, things start to break,” she wrote. ” “That isn’t bullish for anything. Be careful out there.”
Related: 147-year-old oil giant just raised dividend 4% in 2026
