I think there’s a very good chance of this happening.
Yes, I consider the chance of political instability in a major oil-producing nation (either political revolution, civil war, or war with another nation) is unquestionably the most significant risk for any short-term bear strategy on the oil sectory.
I have decided no more than 10% of my total portfolio will be put into short oil positions. Today I took a 4% of portfolio position in DUG, the 2X inverse fund.
My short-term gamble is that as market participants transition (in the next five months?) from nervous uncertainty to certainty that we are entering a recession, then oil prices will drop at least 10% simply on expectations of lowered demand.
