Oil Still Has $100 Problems, Even When the Price Falls

The Daily Barrel | Thursday, September 17, 2026

Ole Miss is reportedly adding security for Lane Kiffin's return to Oxford this weekend with LSU, which is a sentence that tells you college football has fully returned. Most coaches come back to their old stadium and get booed. Kiffin apparently gets a crowd-control plan. The irony is that No. 7 LSU may arrive without starting quarterback Sam Leavitt, who is listed as doubtful with a sore throwing shoulder. So everybody is preparing for the headline event while the thing that could actually change the game is happening somewhere else.

Oil traders should recognize the setup.

Brent fell toward $104 Thursday and WTI moved near $101 as fears eased that Saudi Arabia's damaged East West pipeline would remain offline for an extended period. Saudi crude is also being rerouted through Oman, giving the market another reason to believe some lost supply can find its way around the disruption. After watching Brent flirt with $110, a few dollars of relief feels almost normal. It is not.

Only three commercial vessels crossed the Strait of Hormuz on Wednesday, down from 12 the previous day and far below recent averages. Some ships are traveling with tracking systems dark. European gas inventories are only about 69% full versus a five-year average around 85%. Diesel markets remain extremely tight. Russian refining capacity is still being hit. The Saudi bypass system was just attacked.

The benchmark fell.

The problem did not disappear.

That distinction matters because Shell and Equinor are now warning that the energy market's traditional "shock absorbers" are wearing thin. Since the current Middle East conflict began, the market has lost enormous volumes of crude, condensate and LNG, but initially managed through inventory drawdowns, weaker Chinese demand and creative logistics. Those cushions are becoming less comfortable.

Think about what happened this week alone. Saudi Arabia lost part of its major alternative export route, then started offering additional crude through Oman. Buyers scrambled for replacement cargoes. European physical crude traded at enormous premiums. Diesel prices surged. Then traders sold crude when it looked like the pipeline might return sooner than feared.

That is not a normal commodity market.

That is a market bidding every day on which piece of infrastructure works tomorrow morning.

And while everybody watches the Middle East, Washington just made the global crude map more complicated again. India warned Thursday that new U.S. measures targeting countries that buy Russian oil could damage relations between the two countries. The legislation would give Washington authority to impose tariffs as high as 100% on major consumers of Russian energy, including potentially India and China. India is the world's third-largest oil importer, so telling Indian refiners where not to buy oil is not a footnote. It can change trade flows everywhere else.

This is why the conversation in Houston should not simply be, "Is oil going back to $110?"

A better question is: How many more workarounds does the system have left?

Crude inventories can absorb a disruption until inventories get low. China can reduce imports until it needs to refill tanks. Saudi Arabia can bypass Hormuz until its bypass gets damaged. Europe can substitute LNG suppliers until winter arrives with storage at 69%. Refiners can maximize diesel until there is no spare refining capacity left.

The market has spent months finding another answer every time something breaks.

That does not mean it will always have one.

For U.S. operators, this is exactly why $100 oil should be treated as an opportunity rather than permission to lose discipline. Capture the cash flow. Hedge intelligently if it fits the balance sheet. Fix the marginal wells. Pay down expensive debt. Buy something that still works at $70.

Do not hire 40 people because a Saudi pipeline got hit.

The best assets in this market are not merely the ones producing the most hydrocarbons. They are assets with multiple buyers, reliable takeaway, manageable decline, low operating costs and enough margin to survive when the geopolitical premium eventually compresses.

That brings us to the deal market.

Capital Corner: How Do You Buy Producing Oil Wells?

There are few phrases in oil and gas that sound easier than "buy producing wells."

The wells already exist. They are producing. There is revenue. Somebody sends you a production history, an engineering deck and a purchase price. What could possibly go wrong?

Plenty.

The first thing a sophisticated buyer should understand is that you are not buying yesterday's production. You are buying tomorrow's decline.

If a package produced 500 barrels per day last month, the important number is not 500. It is what those same wells are likely to produce six months, twelve months and three years after closing, and how much capital must be spent to keep them there.

Start at the well level. Look at monthly production, downtime, workovers, artificial lift, water cut, gas oil ratio and decline. Identify how much of the package's cash flow depends on the top five wells. One excellent well can make an average package look much better than it really is.

Then reconcile the seller's production deck against regulatory data and purchaser statements. If the teaser says one thing, state production records say another and revenue statements say something else, do not average the three numbers and call it diligence. Figure out why they are different.

Next, rebuild the operating costs.

Lease operating expense is one of the easiest places for an acquisition to look better on paper than it will in your bank account. Ask which costs are actually attached to the property and which costs are being absorbed elsewhere by the seller. Field labor, chemicals, electricity, compression, saltwater disposal, insurance, workovers and supervision do not disappear because the seller classified some of them as corporate overhead.

Then look below ground at the liability.

Every mature well eventually becomes a plugging obligation. A package of 200 low-rate wells may have attractive current cash flow and millions of dollars of future abandonment cost. That liability should be part of the acquisition model before you congratulate yourself for buying production at three times cash flow.

Finally, understand the contracts around the barrel. Who purchases the oil? Where does the gas go? Are gathering contracts assignable? Are there acreage dedications, minimum volumes or unfavorable processing terms? Does the asset have one takeaway route or several?

The seller is offering wells.

You are buying the entire machine required to turn those wells into cash. For the broader version of this same discipline, see how to buy an oil and gas company.

How Do I Find Oil and Gas Deals Before Everyone Else?

This may be the more valuable question.

Most buyers wait until somebody emails them a package.

By then, the deal is no longer an idea. It is an auction.

The better approach is to watch the signals that usually come before a transaction. Permit activity changes. Operators begin consolidating acreage. Non-core wells stop receiving capital. A private equity portfolio reaches the age where its sponsor wants liquidity. A company acquires something in one basin and quietly starts selling another. Debt maturities approach. Management changes. Lease activity accelerates.

Those are not just news items.

They are sourcing signals.

A buyer who sees those patterns early can call the operator before the process has a name.

This is one reason Wildcatters is pushing so heavily into Intelligence alongside the marketplace. The marketplace tells you what somebody has decided to sell. Intelligence should help you identify what may become available next.

Permits matter.

Leases matter.

Operator activity matters.

Ownership matters.

Nearby transactions matter.

And the earlier you can assemble those pieces, the less dependent you are on waiting for somebody else's broker to decide you deserve the teaser.

Wildcatters allows buyers to browse listings for free and sellers to list for free, with no Wildcatters transaction commission when a deal closes. The point is to increase the number of opportunities that reach the market and decrease the friction required to find them.

But the bigger opportunity is what happens when marketplace liquidity meets oil and gas intelligence.

Imagine seeing an operator reduce activity in a county, identifying its producing assets, understanding nearby permits and infrastructure, then discovering the properties before a formal sale process starts.

That is not just browsing deals.

That is sourcing.

And sourcing is where some of the best acquisition returns are created.

How Do You Evaluate an Oil and Gas Deal?

Start with what exists today.

Then separately value what might exist tomorrow.

Current production should be underwritten with realistic decline, operating costs, taxes, differentials and abandonment liabilities. Undeveloped acreage should be evaluated separately using drilling inventory, well performance, expected costs and probability of development. If you are approaching this from the mineral side rather than the working interest side, how to buy mineral rights and the Mineral & Royalty Scenario Model cover that version of the same discipline, and what are my mineral rights worth and where should I sell my mineral interest cover the seller's side.

Do not let undeveloped upside rescue bad PDP.

Do not let $104 Brent rescue an asset that fails at $70.

Do not let a pretty map substitute for title.

And do not pay the seller today for every improvement you plan to create after closing.

That last one matters.

If you believe you can reduce operating costs by $10 a barrel, that is your execution upside.

If you can renegotiate the gathering contract, that is your upside.

If you can reactivate shut-in wells, optimize artificial lift or combine field operations with assets you already own, those improvements belong in your acquisition thesis.

They do not automatically belong in the seller's purchase price.

The entire game is buying a future cash-flow stream for less than it is worth to you.

Everything else is presentation.

Why This Matters Today

Oil is trading above $100 while the physical market tries to rebuild its safety net. That will tempt buyers to move quickly and sellers to mark everything higher.

Good.

Markets need disagreement.

But if you are going to buy an oil company, producing wells, mineral rights or leasehold in this environment, underwrite the asset as though today's crisis eventually ends.

Because it will.

Then ask whether you still want the deal.

If the answer is yes at $70 oil, reasonable service costs and conservative decline, you may actually have something.

If the deal only works because three ships crossed Hormuz yesterday, you do not have an acquisition thesis.

You have a geopolitical bet.

Oil Still Has $100 Problems, Even When the Price Falls

Capital Corner: How Do You Buy Producing Oil Wells?

How Do I Find Oil and Gas Deals Before Everyone Else?

How Do You Evaluate an Oil and Gas Deal?

Why This Matters Today

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