Oil was — umm — lower on Monday.

I don’t have a model to “prove” this, but it feels as though the bar to clear for geopolitical escalations to drive material and sustainable upside in crude is higher over the years such that only events with “straight-line” (if you will) implications for supply are material. Events like Russia’s invasion of Ukraine and the Quds-directed attack on Abqaiq and Khurais in September of 2019, for example.

By contrast, the bar to clear for geopolitics to push prices down often seems quite low such that the mere absence of escalation is sufficient to trigger meaningful downside. Have a look at Monday’s intraday decline for WTI:

That’s a big move. Specifically, crude was on track for its worst session since July 5, 2022, when the demand outlook was bedeviled by COVID lockdowns in China and generalized recession concerns.

As the chart text suggests, the proximate cause of the “crash” was the restraint shown over the weekend by the IDF. Under pressure from the White House, Benjamin Netanyahu spared Iran’s nuclear sites and oil facilities, instead striking missile production factories and air defenses in retaliation for the events of October 1.

The measured response effectively gave the regime in Tehran an offramp, at least as it relates to a direct confrontation with Israel. What a bummer, right?!

The chart shows the one-day change in a measure of implied crude vol, which receded pretty sharply.

I don’t want to come across as a warmonger — I’m a lot of things, that isn’t one of them — but as I’ve alluded to on several occasions of late, the regime in Tehran really has to go.

To be clear: It’s highly unfortunate, to say the least, that the Sunni monarchies and fiefdoms America counts as allies continue to arm, fund and support Salafi extremists in the region. If you were to find yourself marooned in the middle of Syria, and you had to choose between getting into a van with five Hezbollah fighters or into a clown car with five Sunni militants, you should choose the Hezbollah van every, single time. You’re more likely to be killed by an Israeli drone strike on the van than you are by the people in it. If you pile into the clown car with the guys dressed in all black… well, just be sure to say “no thank you” if they ask whether you’d be interested in shooting a video with them.

But in the eyes of the West, what sundry Sunni royals do behind closed doors isn’t as important as the image they project. As long as you’re building gleaming skyscrapers, collecting soccer stars, buying golf leagues, planning futuristic desert cities and just — you know — “doing your part,” you can maybe fund a few terror armies on the side, as long as they keep a low profile. If you’re Qatar, you can get away with a lot more than that.

Iran’s Shiite proxies are problematic not so much because they’re “terrorists” in the sense Westerners tend to think of terrorists. These aren’t the guys who’re going to blow you up for no reason at all. Rather, Iran’s proxies are problematic because they’re organized and purpose-driven. They have strategic objectives. Hezbollah and the Houthis are pseudo-state actors and the militias in Iraq are, at any given time and depending on the circumstances, more capable than the Iraqi military.

So, the Shiite crescent’s a military alliance. And Tehran, unlike Riyadh, refuses to play ball, any kind of ball, with the West. The opposite in fact. Khamenei insists on, and relishes, a bugbear role centered around the far-fetched idea that one day, he or a successor will aggravate Israeli Jews into packing up and leaving. 94 nuclear warheads say that isn’t realistic, though, and the pursuit of it’s leading to increasingly awful outcomes for everyone involved, including Khamenei’s pet armies which the IDF’s in the process of destroying.

There’s a deep, deep irony here: The Sunni states and statelets are outwardly modern, but ideologically medieval. They’ll chop your goddamn head off with a sword — “no cap,” as the kids say. Iran’s outwardly medieval, but there’s a very convincing argument that if you just got rid of the regime, you’d have a mostly modern society pretty much overnight.

That’s not to suggest the citizens of Saudi Arabia, the UAE and so on aren’t modern — and God knows the skylines in Abu Dhabi and Doha are straight out of Blade Runner —  it’s just to say that Iran really is a case where the people get an especially bad rap thanks to their government.

And look, I know. Ok? I know. “Death to America!” Flags on fire. Stompin’ around. I get it: That kind of thing doesn’t make for good optics. But, as I’ve put it previously, I don’t worry when I go out in public about being killed by an angry Iranian, but I do worry sometimes about being in the wrong place, at the wrong time, with the wrong Sunni “import.”

I’m the very last person to call for “regime change” where that means a change of government brought on by US military action. We know how that generally works out. (Poorly.) But I can’t help but wonder whether the “best” thing for Iranian society might be an IDF strike on the nuclear sites and the oil if that opens the door to a counter-revolution. I realize that sounds rash, but I have a lot of faith in the Iranian people, and that regime is past its sell-by date.

According to half a dozen Iranian and Israeli defense officials who spoke to The New York Times, the IDF airstrikes on October 26 weren’t as innocuous as originally reported, or were anyway designed to send a very specific message. The air defense systems Israel targeted were “set up to protect several critical oil and petrochemical refineries, as well as a large gas field and a major port.” In other words: “Next time. Next time.”

Coming full circle, if and when the day of reckoning finally arrives for the regime in Tehran, my guess is you’ll see some real upside for crude prices. And then — who knows — maybe some real downside later on, once a quarter of the Mideast’s oil reserves are no longer OFAC-designated contraband.