Under the auspice of ‘Project Freedom’ a couple of ships have made good on crossing the Strait of Hormuz, guided it is reported by US naval assets. Yet, other reports come in, and from reliable sources such as the UKMTO that a tanker in the strait and a bulk carrier north of Dubai have been hit by small aircrafts.
Although prices fell yesterday—perhaps due to the Brent expiry or a reassessment of the damage the Persian Gulf stalemate has caused so far—the weakness was observed on the front-end, the fundamental backdrop has not changed, and the reopening of the Strait of Hormuz is anything but imminent. In fact, the Middle East menu is becoming increasingly Mexican: the appetiser is NACHO (Not A Chance Hormuz Opens), followed by TACO (Trump Always Chickens Out).
Whether or not there is any truth to a story in ‘Axios’ overnight that the US is contemplating a fresh wave of airstrikes on Iran to break the current deadlock in negotiations remains to be seen. But oil prices need little encouragement to tempt them higher at present. After warning that the US blockade of Iran could run to many months, the US President is widely reported to have consulted the heads of major oil companies if there are any measures as to how any effect of a lasting closure of the Strait of Hormuz might be mitigated. The market can answer that for you Mr President, the answer is no, bearing in mind the eight-straight days of rally seen in Brent futures to achieve levels this morning not seen since March 2022, just after the outbreak of the Ukraine war.
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