Name: Iran War: The Biggest Oil Shock In History
Uploaded: 2026-03-10T18:00:53.000Z
Duration: 11 min 50 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

The superlative

This is the biggest oil shock the world has seen.

Past simple

Oil prices shot from about $50 to as high as $120.

That's because the United States launched a complete war over Iran.

And if this war continues, then the world will be ripped off of 20% of the global supply of oil.

So if you do math, mathematically, you know that there will be a huge, huge shortage of oil, which is why oil prices skyrocketed this much.

But if you look at oil prices, there is a massive crash in oil prices.

So what exactly has happened over the last 24 hours?

That oil prices went down from almost as high as $120 to as low as $88.

And will oil prices continue falling down?

Or this is a temporary situation and oil prices will go back to $120, maybe $200 per barrel.

Now, to understand that, we simply have to understand how oil prices work.

Most people have no idea who exactly determines oil prices.

People just assume that oil prices rise suddenly because over the last week, everybody suddenly started buying oil.

Now what you need to understand about the markets is that there is how the market is operating today.

And, and then there is another thing that is called market expectations.

And these two things are completely different.

It doesn't actually matter what is happening to the market today.

Just because there is a war in Middle east, it doesn't mean that there is an instant shortage of oil in the market.

There is still plenty of oil and it doesn't actually change the dynamic of the market.

What it changes is about what is going to happen a few months from now.

So if this war goes on, let's say for three to six months, suddenly there is going to be a huge shortage of oil in the market.

And that's why investors are buying oil today.

Not because they don't have oil today, but

rather they expect there is going to be a shortage of oil.

So if you want to understand what is happening to the prices today, you have to understand what investors believe is going to happen in the future.

And that is why market expectation is far more important than than what is happening in the market today.

And there are a lot of industries that very heavily depend on oil.

So if you look at the automotive, aviation, manufacturing, can you possibly drive your car if you don't have oil?

So all these gas stations are massively buying oil.

You can't be shipping stuff around the world without oil.

The agriculture industry really depends on oil construction.

And I haven't even talked about the defense industry industry.

So fundamentally, even though that oil as a result of the total GDP does not represents a huge amount, but

Because if we suddenly get rid out of oil, we can't be even building Tesla cars that does not run on oil, but

And here is where Wall street comes into the picture.

Wall street understands that in fact Wall street makes money because they understand that people are afraid, they manipulate the market.

Most people are doing real businesses and Wall street is sitting down there.

All they're doing is that they're speculating on the price of a commodity.

So imagine you are a Wall street banker or a hedge fund manager and you're sitting down in Wall street and you're thinking, oh, there is a war in Iran.

It means unpredictability about the future.

So as a Wall street, how am I going to make money out of it?

Now that war instantly creates a fear for the aviation industry.

So aviation industry wants to secure a smaller or a lower price of oil today so that if this war continues, they won't be paying $200 per barrel.

So what they will do is that they will be buying futures.

A future is basically a contract that says that I'm going to buy a certain amount of oil at a specific price at a certain time in the future.

So that could be 30 days from now or 60 days from now.

And a future contract is very important in the global economy is because from the time that oil is extracted, let's say from Saudi Arabia, and

then it is refined and then shipped to the other parts of the world, let's say the United States, it is going to take some time.

So a future contract allows this transaction to happen because it secures the price for the aviation company and it also secures the price and the demand for the oil extracting company, because they're extracting oil and they know that they have a client.

But here's the problem is that in the financial markets, everybody can buy these future contracts.

A hedge fund manager can buy the future contracts.

So if there is a lot of fear in the market that there is going to be a shortage of oil in the market, what do you think all these aviation companies are doing?

They are buying a lot of futures, securing the price of oil before the price jumps to $200.

And if I'm a hedge fund manager in Wall Street, I don't need that oil.

All I want is to make as much money as possible.

So just like the aviation industry, I know that they will need a lot of oil.

I will be buying a lot of futures, securing the price of oil, let's say at, I don't know, like $60 or $70.

So because I'm buying, so much of oil is rising.

Everybody is buying futures and Wall street is buying even more futures, reinforcing the demand for the price.

And the price of oil is rising dramatically way faster than it's supposed to.

But now suddenly we have news that G7 countries are going to release a portion of their strategic reserves into the market.

A lot of countries understand that oil is literally the bloodline of their economies.

Without oil, there is no manufact oil, there are no cars.

So countries held a lot or hold a lot of oil in strategic reserves just in case if something happens.

And G7 countries, which are the United States, Japan, the UK or the seven leading global economies, hold about 1.4 billion barrels.

And that is enough for more than 100 days of the oil consumption that these countries have today.

And also there is another extra 600 million barrels that is being held by private companies.

So G7 countries told us that we might be releasing some of its oil to the market in order to release the shock and give the market some time to adjust.

What message does that send to the aviation industry?

Said, wait a second, why would I overpay for oil today if these countries are going to release billions of barrels of oil into the market, which is going to oversupply the market, which is why now the aviation industry or the aviation companies are no longer buying the futures.

When you're buying a future, you're not actually putting the entire money.

When you're buying a future, all you do is you put a small margin that is usually 5 to 8%.

So if I'm buying oil for $100, I don't have to pay a hundred dollars.

All I have to do is just pay $5 and I will secure the price for a hundred dollars.

Now suddenly, because of this news, all these companies are no longer afraid because this is enough for the next couple of months.

And in two to three months from now, maybe the war is going to be over.

Maybe they will find another way to supply the market with oil.

So why would we be overpaying $200 per barrel.

The second reason is that China also has a lot of strategic reserves, which is about 1.2 billion barrels.

And that is enough to sustain the Chinese economy for 115 days.

So if all of this oil suddenly will be thrown into the market, you know that there won't be any shortage.

And also the Trump administration, and Trump himself personally said that we might be removing sanctions from Russia.

Russia is one of the largest producers of oil in the world.

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Iran War: The Biggest Oil Shock In History

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