George PearkesI see we are getting confusion over why equity markets are not reflecting oil price risk again.
I've said this before but to reiterate, fear of PnL downside is just as significant as reality-based expectations. The perceived upside to betting on calamity is minimal, because it will also mean TACO.
The closure of Hormuz *will* create a physical market dislocation (think $150+) if it continues for another few weeks. But because that dislocation will end the thing that created it (again, bc TACO), there's no point in betting on it playing out.
This is true across a range of asset classes btw - spot Brent, short-term CFDs, Brent/WTI futures, #$USO skew, energy markets, credit, liquid rates.
A physical market forcing event will eventually lead to mechanical selling but nobody wants to pre-position for that because it will be very brief.
There's no real scenario I can see where Trump doesn't completely fold and let Iran have whatever they want with Brent in the high-$100s.
RE: https://bsky.app/profile/did:plc:ntozjojtvshojywsym7wbsca/post/3mllg3wfcv22d
RE: https://bsky.app/profile/did:plc:ntozjojtvshojywsym7wbsca/post/3mllg3wfcv22d
Nafnlaus 🇮🇸 🇺🇦Except that Trump keeps looking for that "One Weird Trick!" that will let him win in Iran, except - like the very ideas that got him into this war - they all actually make the situation worse. Like ground invasions to seize islands and the like (leaving US troops just offshore getting shelled)
His most recent "brilliant idea" was to repeatedly try to force the strait with escorted tankers, leading to an exchange of fire with Iran, and in the process, some unrelated tankers getting attacked, along with the UAE itself, and Saudi forcing the US to stop so as to not end up in the crosshairs.