If the Strait of Hormuz doesn't open soon, as seems likely, there will be a massive economic crash

[GreatGazoo]

22. Futures lock in a price right now

All of the large companies which use lots of gasoline, diesel and jet fuel, have traders on staff who buy and trade oil futures.

In a sense it is the oil companies who are selling short. eg they are selling December's oil right now so even if the price goes way up they are locked in and must deliver at $80. That is why UPS, AA, Pepsi, Amazon, etc. buy futures -- it lets them know what their costs are going to be. The airlines are a big one. You can buy a ticket right now for Thanksgiving travel so the airline needs to know what they will pay for fuel in November ($82) so that they can price their tickets.

Those stair step declines of about $2 per month in futures prices mean that in general the market sees more alternatives to Hormuz oil becoming available the further into the future you look. Part of that is that they know which pipelines can move oil to other delivery points such as the Red Sea and how much can be moved by rail. In general there has been an oversupply of oil ever since covid which drove prices down last year to about $57. They can't make money unless oil is above $60 so they usually start a war or sanctions or do whatever every time the price of oil goes below $60. Sure enough last year they attacked Iran and snatched Maduro. That pushed prices up not much until Feb 28. Now they have halted sanctions on Russian oil to increase supply to compensate for the Hormuz situation and keep oil under $100. Ideally they want oil between $65 and $80. Once it goes above $80 countries start replacing it with coal, solar, nuke, mass transit, work from home, etc. That can destroy demand in the long term so they don't want oil to stay high. It is big ugly game.