In the eyes of algorithms, there is no difference between oil and Memecoin

In 1974, then-U.S. Secretary of State Henry Kissinger flew to Riyadh and struck a deal with Saudi Arabia that would reshape the global order: Saudi Arabia would sell oil exclusively for U.S. dollars, and those dollars would then be recycled into U.S. Treasury bonds.

At that time, Nixon had just severed the link between the dollar and gold. The U.S. was grappling with runaway domestic inflation, depleted dollar reserves, and massive gold outflows, leading to the collapse of the Bretton Woods system. In that moment, many believed the golden age of the dollar had come to an end.

But the deal Kissinger struck with Saudi Arabia established what later became known as the "petrodollar" system. It was this very system that granted the dollar another half-century of life after the demise of the gold standard.

This is precisely why any threat to block oil shipping lanes is not merely an energy issue for the United States; it is an assault on the very foundation of the dollar system. This also explains why the narrow, throat-like Strait of Hormuz has been viewed by the U.S. for the past fifty years as a critical chokepoint that must be held, even through military force if necessary.

Understanding this historical context helps us, fifty years later, better comprehend today's situation.

In the early hours this morning, while most of China was still asleep, a violent shockwave lasting less than an hour in the global crude oil futures market wiped out tens of billions of dollars in market value.

The trigger was a social media post.

U.S. Secretary of Energy Chris Wright posted on X: "The U.S. Navy has successfully escorted an oil tanker through the Strait of Hormuz to ensure oil continues to flow to global markets."

Following this tweet, WTI crude oil prices plummeted within minutes, with the drop at one point reaching 17%, briefly falling below $80 per barrel. In the preceding weeks, due to tensions in the Middle East, Brent crude had surged from $70 all the way to $120.

For traders betting on continued oil price increases, that moment was a nightmare.

However, the plot quickly reversed.

Less than an hour later, White House Press Secretary Karoline Leavitt urgently clarified at a press briefing that the U.S. Navy was not currently escorting any oil tankers. Subsequently, Energy Secretary Chris Wright quietly deleted the post without offering any explanation. Oil prices rebounded but failed to return to their initial levels.

A single post, from publication to deletion, lasted less than sixty minutes. Yet the mark it left on global financial markets extends far beyond that single hour.

Since the escalation of U.S.-Iran tensions in late February, the game surrounding oil has intensified. Particularly after Iran announced the blockade of the Strait of Hormuz, the sudden closure of this narrow waterway, which handles about one-fifth of global crude oil shipments, delivered a massive shock to the global energy market. As the situation escalated, international oil prices soared from $70 to $120 per barrel within days, plunging the energy market into a state of high tension.

Nearly every trader was waiting for the same signal: when would the Strait of Hormuz reopen. Under this collective anxiety, any minor development could trigger violent price swings. The rapid decline triggered by the Energy Secretary's post was a concentrated manifestation of this sentiment.

So, why could oil prices drop 17% in just a few minutes? Because humans struggle to react that quickly, but algorithms can. A significant portion of today's financial market trading volume comes from high-frequency trading algorithms and AI trading systems. They scan the entire internet in real-time, including government officials' social media accounts, extracting keywords and automatically executing orders.

The post contained three key words: Navy, Escorted, Hormuz. The algorithms identified these words, combined them with contextual semantics, and quickly reached a conclusion: the blockade is lifted, supply is restored, the logic for rising oil prices is weakened.

So the programs immediately sold.

All of this happened in roughly 0.003 seconds.

The algorithms don't call to confirm if a tanker actually crossed the strait; they only recognize text and pursue speed. An unverified post, within this mechanistic "collective unconscious," was instantly converted into tens of billions of dollars in evaporated market value.

For a real oil tanker to cross the Strait of Hormuz requires hours of sailing, actual military escort, and the assumption of fuel costs and real-world risks. A post about an "escort" took just 0.003 seconds to cause violent fluctuations in the price of this major commodity.

In other words, crude oil, the king of commodities once dominated by supply-demand fundamentals, inventory data, and production agreements, has now, to some extent, become not much different from a meme.

During the last U.S. election cycle, Trump and Musk keenly recognized that this is an information age. One created Truth Social, the other bought Twitter.

And as the information age has evolved to today, government officials' social media accounts have become one of the market's most sensitive information sources. This also implies that power itself has begun to possess a certain meme-like attribute: extremely rapid spread, high emotional intensity, and extreme susceptibility to misinterpretation and amplification.

Traditional policy information dissemination is slow and meticulous. White House statements, State Department bulletins, Defense Department press conferences—these mechanisms inherently involve verification, proofreading, and layers of confirmation. But when officials directly post policy-related information on X, these steps are bypassed.

We can foresee that as we delve further into the era of AI Agents, the speed of information capture and trading will increase exponentially, with surges and crashes occurring within milliseconds.

From a more macro perspective, this incident perhaps signals a larger change: we are entering an era of "comprehensive asset meme-ification." Almost any financial asset can, at any moment, be driven by sentiment, narrative, and social media.

Kissinger used oil to extend the dollar's life by fifty years. But he probably never imagined that one day, oil itself would also become a meme.

No asset possesses a truly unbreakable fundamental moat. All moats are essentially built upon a certain consensus. And under the dual acceleration of social media and algorithmic trading, this consensus is more fragile and more dangerous than ever before.

In a sense, perhaps this is also the victory of the meme.