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Cramer: Oil Declines Could Be the Real Deal

Editor's Note: This article was originally published at 7:06 a.m. ET on Real Money on June 3. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.

NEW YORK (Real Money) -- We are seeing a total collapse in the commodities that have fed the emerging-market world for as long as any of us can remember. Every day we see signs of a wholesale crushing. Last week's crash in iron, the gut-wrenching attempts of copper to stay up here, the endless roll-backs of any rate hikes in steel, the trashing of aluminum: These are all signs that we are on the verge of a slowdown of epic proportions. This is particularly so in China, but also in Latin America, particularly for Brazil.

The inability of the Baltic Freight Dry Index to give us even a couple day's worth of rallying during this last month is mind-boggling. The index, a true measure of commodity uses, is a slow-motion train wreck. The rates for oil tankers can't rally even for a couple of weeks, no matter what the geopolitical tension.

In the midst of all of this chaos, one number stands out for its absurdity: the price of Brent crude, which is still hovering at $100 per barrel, as if there's no slowdown anywhere, nor any increase in production. The number mocks all of the trajectories of the other commodities, because it can't seem to dip even when China slows, when Europe slows, when Brazil slows, when Russia slows or when the U.S. finds more oil. It is pretty evident, moreover, that the U.S. oil production is coming back far more quickly than any of the talking heads say it is, and imports are at a 20-year low -- 36% of current consumption -- and going lower.

Our domestic oil price -- the actual price, not the posted price -- is coming in at about $80. Somehow, though, it hasn't mattered one whit to the global price. The world is awash with oil that would have otherwise been sent here, and it doesn't seem to matter at all to the global price. Meanwhile Iraq adds to production by the day, Libya's back on line and Iran is still able to pump out plenty of oil despite the soft embargo. Yes, the Saudis could retreat from the market a tad if they wanted to support prices, but they haven't had to do so in any meaningful way because the price simply hasn't come down.