Economist Peter Schiff has a theory about why oil isn't already at $150 a barrel, and it has nothing to do with supply and demand behaving nicely. It's the Strategic Petroleum Reserve, and he thinks the spigot is about to close.
In a post on X on Saturday, the Echelon Wealth Partners co-founder said the "main reason it's [oil prices] not closer to $150 is all the oil being released from the Strategic Petroleum Reserve." Those releases, he added, will stop following the midterm elections in November.
Then comes the second act. "When it becomes obvious that inflation will outpace Fed rate hikes, the dollar will fall, sending oil prices soaring," Schiff said. He also warned of an imminent rise in global oil prices as tensions escalate between the U.S. and Iran, as well as the Russia-Ukraine war.
For context, the Energy Information Administration (EIA) reported that the U.S. SPR stood at nearly 283 million barrels of oil at the end of the second week of October. Notably, the U.S. was offering up to 40 million barrels of oil from the SPR as loans to oil companies.
Iran's Araghchi Slams Netanyahu
Meanwhile, the geopolitical backdrop isn't exactly calming. Iran's Foreign Minister Seyed Abbas Araghchi warned that Israeli Prime Minister Benjamin Netanyahu was going to drag the U.S. into another war to escape judicial action. Araghchi's comments came after President Donald Trump endorsed Netanyahu ahead of the elections in Israel.
On the domestic front, Energy Secretary Chris Wright defended Trump against criticism of high energy costs in the U.S. from Democratic lawmakers, saying that Democrat-led states had higher gas, diesel and electricity costs than GOP-led states.
Oil, Gas Movement
The American Automobile Association (AAA) data on Monday showed that the national average price of gas fell to $4.2953/gallon. Diesel also saw a marginal decline to $6.3187/gallon on Monday, but remained above the $6 mark.
The West Texas Intermediate (WTI) crude futures contracts maturing in December 2026 fell 0.99% to $98.04 at press time. Brent futures contracts ending in December dropped 1.37% to $108.35 at press time.
Oil ETFs like the United States Oil Fund (NYSE: USO) also recorded declines, with USO falling 1.05% to $160.05 during pre-market trading on Monday. The ProShares Ultra Bloomberg Crude Oil (NYSE: UCO) also fell 0.49% to $63.28 during pre-market trading.
