In this commentary, the speaker examines recent U.S. dollar strength and contrasts it with oil market movements, emphasizing that oil price changes often lag due to multi‑month supply contracts that lock in prices for large buyers. He illustrates how this lag shields countries and corporations from immediate price volatility, but notes that prolonged high oil prices could strain subsidies, using Malaysia as a case study where historically low fuel prices (around 40‑50 cents per liter) are subsidized, yet rising costs may force a price hike. The speaker also points out Japan’s sizable strategic oil reserves (8‑9 months) that buffer short‑term impacts. Finally, he cautions that if the underlying geopolitical conflict (implied war) persists, the crypto market could face a rough period, though he refrains from making firm predictions.
Chapters
If we take a look at the dollar, the dollar has already been going up for the past couple of weeks. Now, is it a huge move compared to what's happening on oil? No. But the problem with oil is that it doesn't always have negative implications right away. After all, most of these big companies and most of these, you know, big countries, they've got contracts with these oil companies for, you know, 2, 3, 6, 12 months in advance that, okay, I'm gonna lock in this contract right now and I'm gonna be purchasing oil from you at this price. This is just like a gesture of goodwill, like a bulk order, kind of like volume purchase. of thing where, all right, we get to lock in this price for the next, you know, 2 to 3 months. This just helps keep everything stable so that countries and these big organizations, they're not dealing with oil fluctuations like day in, day out. It's, you're not gonna see the effects yet, but just as a couple of examples, my home country Malaysia has basically came out and said that if the oil prices remain this high, then they're gonna have to bump the oil prices. And if there's any Malaysians here watching, you know that we have some of the lowest oil prices in the world. Like, for as long as I can remember, and I'm talking like for more than a decade, the oil prices have been at a constant 40 or 50 cents per liter. And that's because the government is subsidizing the difference in, you know, whatever the oil prices are. But it's gotten so bad now that if the oil continues to remain this way, then the government is no longer able to continue tanking these bullets and just eating the damage, and they're going to have to raise prices. You take a look at Japan, they have 8 to 9 months worth of oil reserves. So In the immediate short term, right, within the next couple of months, maybe 3 months, it's not going to have widely negative implications. But if this war continues, which I'm not one to say and I'm not one to make predictions, but if it does, like, crypto is going to be in for a rough ride.
