vstars Chapter 26 Soaring Oil Prices: The Appetizer for the Second Oil Crisis!
Chapter 26 Soaring Oil Prices: The Appetizer for the Second Oil Crisis!
In any case, personal safety is always the top priority and must be effectively guaranteed.
Alden said with a gentle smile, "Mr. Gu, we have just decided to upgrade your client level, and your transaction fees will be reduced from 5% to 0.5%!"
"Wow!"
Gu Yuhan was slightly taken aback at first, then smiled and said, "So, the Morgan Group really is quite generous!"
"Regarding the trends in the oil market, we would very much like to hear your insights and opinions!" Alden said with a smile, "Mr. Gu, could you perhaps offer us some guidance?"
"Do you have coffee?" Gu Yuhan asked with a smile.
"Of course!" Alden chuckled lightly, and as soon as he finished speaking, his subordinate quickly brought a steaming cup of coffee to Gu Yuhan.
Gu Yuhan picked up his coffee cup, took a small sip, and then smiled as he said, "In the summer of 1978, the Pahlavi dynasty saw massive demonstrations that lasted for four months, with tens of thousands of demonstrators gathering in major cities. I had a premonition then that something big was about to happen in this country!"
Alden frowned slightly. "So, you believe oil prices will rise sharply?"
Gu Yuhan simply smiled and said, "As it turns out, my judgment was correct. By September, demonstrations and protests had become commonplace, and I became even more certain that the situation would deteriorate further. So I decided to take a gamble, betting that oil prices would continue to soar!"
Alden became even more curious and asked, "I'm really curious, is that all it takes for you to make such a big bet?"
"This reason is crucial!"
Gu Yuhan said calmly, "What does it mean that a demonstration can last for four whole months? It means that the Pahlavi dynasty has completely lost its ability to control the situation and is simply unable to maintain its rule. Besides that, there is another crucial factor!"
Alden pressed on curiously, "What factor?"
Gu Yuhan spread his hands and said with a smile, "The United States didn't interfere!"
Alden froze instantly: "What?"
"Given America's strength, these Pahlavi dynasty protesters are utterly insignificant. If the US were willing to intervene, the situation would have stabilized long ago. But for four whole months since the summer, the US has taken no action whatsoever—that's the crux of the problem. America's inaction only emboldens the protesters!"
At this point, Gu Yuhan slowly continued, "Therefore, I predict that the Pahlavi dynasty will inevitably collapse, and Iran's oil production will certainly be disrupted. This situation will continue until a new government fully seizes power!"
"Why do you think that the new government taking power means the end of the situation, instead of the Pahlavi dynasty finally stabilizing things? Maybe we Americans will intervene militarily?" Alden asked, even more puzzled.
"I think that possibility is extremely slim. It's obvious that the Pahlavi dynasty is beyond saving; if they had the ability to stabilize the situation, they would have done so long ago. Similarly, if the United States intended to intervene, they would have done so already; it's impossible for it to have dragged on until now!"
Gu Yuhan held up two fingers and said with a smile, "If the United States had intervened to suppress the protests when they first broke out, it would have only needed to exert 20% of its effort. But now..."
Gu Yuhan then made an eight-shaped hand gesture and slowly said, "It will require at least 80% of our effort, and... a huge amount of money. The US economy is currently in a state of stagflation; I don't think they would be willing to pay such a high price to intervene militarily!"
Alden nodded thoughtfully. "I understand. But I have another question. Are you really that confident that you can take out HK$100 million and leverage it a hundredfold?"
"First of all, I'm not short of money. Besides, my father gave me 200 million to do whatever I want with, and I'd be happy to take out 100 million to test whether my judgment is correct!"
Gu Yuhan smiled and said, "If I win, I'll make a fortune; even if I lose, I'll only lose 100 million, which is just a fraction of my family's wealth!"
"While my family may not be as wealthy as the Morgan tycoon, we still have considerable assets and income in Hong Kong. Even if this investment fails, I can simply go home and inherit the family business!"
Seeing Gu Yuhan's nonchalant demeanor, Alden was speechless.
Thinking about it carefully, it's true. If it were an ordinary person, who would dare to go all in like that? Only a rich second-generation with a solid family background could afford to lose, since they still have the family business to inherit.
However, the analyses and ideas that Gu Yuhan presented today were truly enlightening and greatly beneficial to Alden. He took a deep breath and quickly said, "Thank you very much, Mr. Gu, for providing us with such valuable insights!"
"You're too kind!"
Gu Yuhan smiled and said, "I only offered some insignificant suggestions!"
He really couldn't afford to offend a behemoth like the Morgan Group.
Their willingness to participate and jointly predict oil price increases is actually a good thing for them.
Oil prices would surge for sixty consecutive days until the new regime was established. Around the fortieth day, he could begin gradually selling off his futures holdings. Alden then immediately transmitted Gu Yuhan's analysis report back to the Morgan Group headquarters.
The core basis for Gu Yuhan's judgment is that the United States will not intervene militarily.
"Is this some kind of joke?" John Morgan Jr. exclaimed, looking at the report Alden sent back. "He's concluding that oil prices will skyrocket based on this alone?"
"That's just how it is!" It was John Morgan Sr. who spoke. "His idea may be a bit outrageously bold, but it has to be said, it's indeed the truth!"
"But, Father!"
John couldn't help but retort, "New oil fields are being developed all over the world right now. After OPEC announced the oil embargo and suspended exports, the whole world has been stepping up its exploration and development of new oil resources. The Ekfisk and Fordist oil fields have already been discovered in the North Sea. Currently, the proven reserves of the North Sea oil fields in Norway and the UK are 57.5 billion barrels and 154 billion barrels respectively, making the UK one of the world's major oil-producing countries!"
"Little John!"
Old John gently shook his head, then slowly said, "These are not the key issues!"
John was slightly taken aback: "What?"
"You need to understand that Iran remains one of the world's most important oil exporters. According to our calculations, if the situation in Iran gets out of control, global oil production could decrease by at least one-tenth. What do you think the consequences would be?"
Little John paused, somewhat bewildered, and asked, "What...is that?"
"Oil prices won't just rise by a tenth; they'll keep rising until those who originally needed that tenth of oil can't afford it anymore!" Old John laughed heartily, then continued, "If the US doesn't intervene, then Iranian oil production cuts are a foregone conclusion. And at that time, a large number of oil traders will definitely take the opportunity to fan the flames and frantically speculate on oil prices!"
John gasped, then couldn't help but ask, "Father, do you mean we should invest heavily in going long on oil futures?"
"Of course!" Old John laughed heartily. "Just like this young man named Gu Yuhan, if he can afford to lose, surely our Morgan Group can afford to lose too? Of course, we don't need to invest our entire fortune!"
John took another deep breath, then nodded emphatically: "Understood!"
……
……
The global futures market quickly descended into a frenzy.
Oil prices began to soar, rising wildly.
As soon as the coup attempt broke out in Iran, a ban on oil exports was immediately announced. This news sent the capital markets into a frenzy, like sharks smelling blood, flooding into the oil futures market.
Oil prices began to fluctuate dramatically.
Initially, the fluctuations were somewhat predictable, but soon, when the capital markets realized that the United States showed no signs of intervention, the entire market immediately plunged into even more frenzied volatility.
If the United States does not intervene, it means that there is a greater than 90% chance that this coup will succeed.
Immediately afterwards, oil prices skyrocketed at an almost vertical 90-degree angle.
This rate of increase is even more alarming than during the first oil crisis.
Faced with this frenzied surge, Gu Yuhan remained unusually calm and unhurried. He had already precisely calculated the timing, going all in with 100x leverage, aiming to earn 3 billion US dollars.
Oil futures prices rose almost three times a day, a remarkable surge.
During this 60-day surge, the first key point is that oil prices will rise to $39 per barrel.
Gu Yuhan wasn't in a hurry at all; all he needed to do now was wait patiently. The involvement of the Morgan Group was actually a good thing, as they could leverage their vast capital to push oil prices even higher.
Once the news of Iran's oil production cuts spreads widely...
The first to jump out and stir up trouble were the oil tycoons behind the United States. In addition, the Morgan Group also participated and fueled the flames.
The tactic they used was actually not complicated at all; in fact, it could be described as very simple and brutal.
First, they exaggerated the enormous harm that Iran's oil production cuts would cause to global industry through major media outlets, creating panic. Then, they deliberately reduced the oil supply in the market.
Once an oil shortage occurs in the market, oil companies of all sizes will frantically raise oil prices according to pre-agreed prices.
This tactic is very simple; its core is to create anxiety and panic.
Ultimately, it's all about playing the media and public opinion game.
It can only be said that these capitalists have long since mastered this trick.
As for how oil prices would rise specifically, and what the process would be like, Gu Yuhan didn't care at all. The amount of money he had wasn't enough to leverage such a large capital market. What he needed to do was simple: follow behind these big capital players and steadily make a profit.
He didn't need to worry about anything; those oil traders would naturally drive up oil prices to the highest point they could reach.
I only need to get a share of the profits.
$15 a barrel.
$16 a barrel.
$17 a barrel!
Initially, the increase was within a reasonable range.
But on the twentieth day...
This surge completely veered off course from rationality, skyrocketing at an almost vertical angle to $26 per barrel, doubling the price of oil in just twenty days.
Su Rongrong watched in stunned silence, unable to believe her eyes.
Gu Yuhan initially invested $14 million, which, after being leveraged 100 times, became an oil futures contract worth $1.4 billion.
Oil prices have now risen by $13 per barrel.
Gu Yuhan made a real $1.4 billion in one go.
This way of making money is much faster and more useful than painstakingly learning financial knowledge.
Gu Yuhan remained calm and composed throughout. He knew that the situation in Iran could not be resolved unless the United States intervened.
Time passed day by day.
The United States has still not taken any action to resolve the Iranian issue; more accurately, the United States never intended to resolve the issue in the first place.
The United States' current global strategy is mainly focused on strategic retrenchment.
Furthermore, President Carter was indeed a mild-mannered person who was unwilling to use force easily, so the United States never took any military action.
By mid-December, the situation in Iran had completely spiraled out of control and was entirely beyond the reach of the United States.
The king had already humbled himself greatly, hoping only to be allowed to remain in Iran, but the opposition categorically rejected his request.
By the end of December, the king expressed his willingness to temporarily leave Iran, but the opposition still refused to accept it. Their slogan was very clear: We do not need the king, and the king must be expelled from the country.
So...
It's about time!
Now, Gu Yuhan has witnessed a piece of history unfold. Around the fortieth day, Gu Yuhan began to gradually cash out his oil futures contracts and exit the market.
The first upward trend has almost reached its peak, so there's not much point in continuing to hold on. At that point, the situation will stabilize temporarily, and oil prices will experience a period of decline, likely falling back to around $13 per barrel.
As for the second upward trend, that will come at the end of 1979 when the Iran-Iraq War broke out. That was when the real oil crisis fully erupted, severely impacting global oil production and causing a sharp decline in output. The global market experienced a daily oil shortage of 560 million barrels, completely shattering the fragile supply and demand balance in the global crude oil market at that time.
Oil supplies have become tight again, triggering another sharp rise in oil prices.
Moreover, during this period, divisions may arise within OPEC. Most member states advocate for raising oil prices in line with market conditions, while Saudi Arabia advocates freezing oil prices, even at the cost of unilaterally and significantly increasing production to suppress prices.
As a result, OPEC completely lost its ability to regulate the market, and major oil-exporting countries took turns raising official oil prices, adding fuel to the fire of already soaring oil prices.
The Soviet Union must have been overjoyed at the time, but ultimately, it was resources that made it and also brought it down.