This is still the perfect illustration of how we perceive the Hormuz risk.
Everyone is seeing the avalanche coming, yet everyone thinks that somehow it is under control... it isn't.
There is no plan. No alternative routes that can scale fast enough... Hormuz open or closed is all that matters.
For all parties involved, this is existential... so don't expect a quick resolution.
So far, IEA releases and China's oil demand reduction have bought us time... but that is reversing.
- China's oil imports are rebounding sharply
- IEA releases run out within weeks
And it's not just about oil.
- Fertilizer
- Sulfur
- LNG
The building blocks of our modern society all flow through this narrow choke point.
The only thing keeping markets afloat is an unreasonably high amount of hopium... once it's gone, expect a violent rerating.