End of Day Summary – 3/10/2026

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US Treasuries

On Deck: Tomorrow, Wednesday, 3/11/26: $39 billion UST 10y Note Auction 

Bloomberg: Amazon Attracts About $126 Billion of Orders for US Bond Sales

I would argue that Wall Street will be wrong about the crude oil narrative twice this year. When the US arrested Maduro, the street said this was bearish for crude oil, implying more production.

The problem is that Venezuela’s oil production is so poorly maintained that it cannot increase production for some time (I called it a “broken spigot”).

Subsequently, we found that oil companies are not interested in rushing back into Venezuela to spend billions to fix it because they have been nationalized twice since the 1950s (nice way of saying the Venezuelan government stole their property and kicked them out).

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Conversely, Wall Street is very bullish on crude oil now because of the blockage of the Strait of Hormuz. I’ve argued that preventing ships from transiting the Strait is temporary, and the Goldman chart says they started moving yesterday. As long as oil infrastructure is not seriously damaged, this spike will only last a few months. Currently, there are no reports of serious damage to oil infrastructure.

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The east‑to‑west pipeline is known as the Petroline (East–West Crude Oil Pipeline). It runs from Abqaiq, near the Ras Tanura oil terminal on the Persian Gulf, to the Red Sea export terminals at Yanbu and Al Muajjiz.Before the war, this pipeline carried roughly 1 million b/d east‑to‑west. Saudi officials now say they are only a few days away from ramping throughput to capacity of about 7 million b/d. Tankers are lining up in the Red Sea to lift these redirected cargos.

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Some good color about the east-west pipeline I noted above.

This pipeline was built in the 1980s as a hedge against the Iran-Iraq War. It was designed for exactly this scenario — but it hasn’t operated anywhere near 7M bpd in decades. The pumping stations along 1,200 km need to work flawlessly at 7x throughput. These aren’t parallel redundant systems — one pump station failure and throughput drops to zero until repaired.

Running aging infrastructure at nameplate capacity under emergency conditions is a roll of the dice.

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You can see this is the Crude Oil Futures Curve.

The drop off (backwardation) over the next 3 to 6 months is huge, then it levels out. It suggests the market thinks the disruption lasts about another month, then 6 weeks to 2 months to get everything back to normal.

And the backwardation is the most extreme in 30 years.

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Yesterday was day 8 of the war. The national average of gas prices is up 54 cents (18%) since it started. Prices were up 6 cents yesterday.

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Crude Oil has to be impossible to trade right now

Red = Transportation Secretary Chris Wright says the Navy escort a ship through the Strait of Hormuz, down 8.3%

Blue =  Social Media post deleted, +5.49%

Green, post above, potential mines in the Strait.

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