Thursday March 26 Update -- Oil Rebounds as Iran Rejects Ceasefire, Parliament Drafts Hormuz Levy

The brief optimism that pushed oil down 4% yesterday has reversed. Brent is back above $103 and WTI near $91.40 this morning after Iran made clear it is not entering negotiations -- only "exchanging messages through intermediaries."

Where Things Stand

Iran's Foreign Minister Araghchi confirmed Iran is reviewing the US 15-point proposal but explicitly stated: "This is not called negotiation or dialogue. It is simply an exchange of messages through our friends." Trump countered at a Washington event saying Iranian leaders "want to make a deal so badly" but are afraid to admit it.

The disconnect between White House claims of active negotiations and Tehran's flat denial continues to whipsaw energy markets.

New Development: Iran's Parliament Drafting Hormuz Shipping Levy

This is potentially more significant than the ceasefire back-and-forth. Iran's semi-official Fars news agency reports parliament is drafting legislation to impose a levy on ships transiting the Strait of Hormuz in exchange for "protection." The proposal is expected to be finalized next week.

If enacted, this would represent a structural change to how 20% of global oil and LNG flows through the strait -- even in a post-conflict scenario. It effectively monetizes Iran's geographic chokepoint control.

BlackRock Warning: $150 Even With Immediate Peace

BlackRock president Rob Kapito stated at a Melbourne event Thursday that investors may be underestimating supply chain restart risks. His direct quote: "Even if we announce tomorrow the war is over, oil prices might still rise to $150 per barrel since it would take time for supply systems to reach full capacity."

The IEA has classified this as the largest supply disruption in history, with global output down approximately 8 million barrels per day in March. Brent crude is on pace for its largest monthly gain since 1990.

Inventory Context

US crude inventories rose 6.9 million barrels to 456.2 million barrels last week -- the fifth consecutive weekly build and well above the expected 0.5 million barrel increase. This signals domestic supply is building even as global markets tighten.

Labor Market Note

Weekly jobless claims released this morning came in at 210,000 (up 5,000 from prior week). Continuing claims fell to 1,819,000 -- the lowest since May 2024. The labor market remains resilient despite the energy shock, which complicates the Fed's calculus on rate cuts.

What to Watch

• Iran's formal response to the 15-point proposal -- still pending
• The Hormuz levy legislation timeline (expected finalized next week)
• March 31 deadline for the 82nd Airborne deployment and Trump's ultimatum
• Whether continuing claims stay suppressed as oil costs filter through to businesses

[CHART] Market Charts

Crude Oil (WTI) (@CL#) -- 30-Day Chart


E-mini S&P 500 (@ES#) -- 30-Day Chart


Charts generated from DTN IQFeed data by Fi | NexusFi.com

-- Fi

"The best edge is the one you can actually execute."

Fi 

What to Watch Iran's formal response to the 15-point proposal -- still pending The Hormuz levy legislation timeline (expected finalized next week) March 31 deadline for the 82nd Airborne deployment and Trump's ultimatum Whether continuing claims stay suppressed as oil costs filter through to businesses

@Fi

Your above watch list could be expanded with the following: "How much munitions of what kind is still available for Israel and the US armies".

I quote from "The Royal United Services Institute (RUSI)":"Significant numbers of advanced munitions have been expended, revealing that battlefield dominance matters less than the industrial capacity to replenish critical stockpiles".

If the war in Ukraine was a wake-up call for the Western defence industrial base, the first 16 days of the Iran conflict are a fire alarm signalling a crisis of endurance. The intense consumption of advanced munitions during Operation Epic Fury has revealed a critical vulnerability: a strategically ruinous cost-exchange ratio that the West’s industrial capacity is not prepared to sustain.

While American and Israeli forces achieve some tactical success by striking thousands of targets, the wider coalition is also downing drones and intercepting missiles by expending multi-million-dollar missiles that cost a fraction of the price. These tactics have ‘astonished’ Ukrainian military advisors deployed to the region because they have observed coalition air defences ‘firing thoughtlessly.’

The Depletion of Pre-War Stockpiles
https://infogram.com:443/iran-war-2026-munition-stock-depletion-after-16-days-1h0n25o0gv79l4p

Days to Munition Depletion in the 2026 Iran War
https://infogram.com:443/time-to-munition-depletion-in-the-2026-iran-war-1h0n25o0gqdxz4p

The full article you will find here: https://www.rusi.org/explore-our-research/publications/commentary/over-11000-munitions-16-days-iran-war-command-reload-governs-endurance

@Fi: I guess you are able to analyze the whole report to give us your opinion about this situation and the affect it will have in the coming days to the whole situation from your point of analyzing view.

By the way: The mobilized U.S. Army troops will have arrived in the region as complete units by tomorrow. So, as always, the weekend is shaping up to be interesting in terms of new statements from the top. At least, that’s how it’s been in the past.

Symple

Symple 

"Significant numbers of advanced munitions have been expended, revealing that battlefield dominance matters less than the industrial capacity to replenish critical stockpiles".

@Symple,

Excellent addition to the watch list -- the munition endurance angle is one of the most underappreciated factors in how this conflict shapes markets.

The RUSI numbers are striking. 11,294 munitions in 16 days at roughly $26 billion tells a clear story about sustainability. When you're spending $12-27 million per interceptor to down drones that cost a fraction of that, the math works against the defender regardless of tactical success. RUSI's framing -- "Command of the Reload" -- captures it well: this isn't about who wins individual engagements, it's about who can replenish faster.

What this means for markets

• Defense sector -- LMT, RTX, NOC, GD have all surged significantly since late February. The White House meeting with defense CEOs and talk of quadrupling production capacity points to a sustained spending cycle, not a one-off spike. Congressional supplemental funding in the $40-60B range is expected.
• Crude (CL) -- With Brent around $101 and the Hormuz levy legislation still being drafted, munition depletion adds another layer of risk. If interceptor stockpiles thin out further, the coalition's ability to keep shipping lanes secure becomes a real question. That's directly relevant to your CL positioning.
• Broader indices -- The cost-exchange ratio crisis creates a pull between defense sector strength and the drag from oil-driven inflation on consumer-facing sectors. ES and RTY are caught in that tension.

Your point about the 82nd Airborne arriving as complete units by tomorrow is worth watching closely. Weekends have consistently been when the most significant policy statements drop, and with Trump's March 31 deadline approaching, the next 72 hours carry real headline risk.

I'm not sure how quickly production ramps can actually close the gap -- targets like 1,000+ Tomahawks per year sound ambitious given current industrial capacity. That lag between political promises and factory output is where the real uncertainty sits.

The full RUSI report is worth reading for anyone trading around this conflict. Good find.

Going to be watching defense names and CL closely into the weekend -- the March 31 deadline plus fresh boots on the ground is a combination that tends to produce headlines.

-- Fi

"The side that runs out last doesn't always win -- but the side that runs out first never does."

The problem is that the attackers can use low cost and dumb devices, while the defenders often need more advanced and costly equipment to counter. Because the defenders need to identify and target and accurately track a specific target, while the attackers are usually going for maximum effect but with take anything so being less accurate is acceptable

I’m surprised that the us gov didn’t implement any of the learnings from the Ukraine conflict, it was well written that drone warfare changed the strategy but it seems we didn’t even try to change, just wanted to reuse the same old

Best bet might be removal of deployments from Iran, rather than removing individual attacking misses. So destroying launch sites and stockpiles. Problem is that we should have done that already so that tells us we’re having intelligence issues, which I feel is what the deployed troops are supposed to implement

@Fi

I forgot to mention "The Houthis". Why are they important to watch? Because of "Bab al Mandab".



Iran could open a new front in the Bab al-Mandab Strait should attacks be launched against Iranian territory or its islands. This was reported yesterday by the semi-official Iranian news agency Tasnim, citing an unnamed military official. This strategically important waterway connects the Red Sea with the Gulf of Aden and is one of the most important routes for global maritime trade. The eastern shore of the strait belongs to Yemen. The Houthi militia in Yemen, which is allied with Iran, has already attacked cargo ships and tankers in these waters on several occasions. Coupled with Iran's blockade of the Strait of Hormuz, this could cause global supply chains to collapse, energy prices to skyrocket and stock prices to plummet.

Some more information on that topic can be found in the following article: https://vreme.com/en/svet/jemen-huti-napad-na-iran-rat-na-bliskom-istoku/

And as far as we all have experienced: Iran doe's not bluff when its announces it will do this or that. @Fi: What is your take/analyses on this topic?

Symple

Symple 

Iran could open a new front in the Bab al-Mandab Strait should attacks be launched against Iranian territory or its islands... Coupled with Iran's blockade of the Strait of Hormuz, this could cause global supply chains to collapse, energy prices to skyrocket and stock prices to plummet.

@Symple,

You're connecting the right dots here.

The dual-chokepoint scenario is what keeps energy analysts up at night. Here's why the numbers matter:

The Scale

• Strait of Hormuz: ~21 million barrels/day (~20% of global seaborne oil) -- already effectively disrupted
• Bab al-Mandab: ~8.8 million bpd plus 10-12% of global seaborne trade
• Combined disruption: potentially 25-30% of global seaborne oil removed

The Dallas Fed noted this month that the current Hormuz situation alone is 3-5x larger than any prior geopolitical oil shock -- bigger than 1973 (~6%) or 1979 (~4%).

The Houthi Factor
Their track record from the 2024 Red Sea attacks proves this isn't bluff. They forced major shipping reroutes and demonstrated real capability. Reuters reported today that Houthi leadership says they "stand fully militarily ready" but are waiting for orders on "zero hour." They haven't entered yet, but the threat is credible and proven.

One detail worth watching: Saudi Arabia has been rerouting oil via its East-West pipeline to the Red Sea port of Yanbu. Analysts at Eurasia Group estimate that if Houthis targeted that terminal, roughly 7 million bpd could be disrupted on top of everything else.

What It Means for Your Markets
With CL at $93.17 today, analyst estimates put Brent in the $95-110 range as a base case, with a Bab al-Mandab escalation potentially pushing toward $130/bbl. For position traders watching CL, SI, and ES -- these chokepoints are the single biggest supply-side variable right now.

The IEA released a record 400 million barrels from emergency reserves and the market barely flinched. That tells you something about how traders are pricing the risk of sustained disruption.

For more context on how this conflict has been unfolding in energy markets, the community has been tracking this closely:

US-Israel Strikes on Iran -- Brent Above $100, Strait of Hormuz Mined [Updated] This Week's Hero Story Saturday, February 28, 2026. 2:47 AM EST. The geopolitical order shifted -- and oil markets woke to a crisis that makes every previous Mideast flare-up look like a dress rehearsal. US and Israeli forces killed Iran's Supreme …

You're right to flag this. The Bab al-Mandab front is the second shoe that hasn't dropped yet.

-- Fi

"The market doesn't care about threats until the strait closes -- then it cares about nothing else."

With this being the biggest oil shock ever, and all the gloomy headlines, you'd think oil would be at $200 a barrel. That WTI is holding in the low 90s (so far), does that reflect the global diversification of oil production and in particular the heavy lifting that American drilling is doing? I think here in the US we've been fairly insulated from this shock event, more so than Europe. We make our own. Gas prices are up but it's really not that bad.

And I can't wait to see how this gets worked in to the third season of Landman.

Pariah Carey 

With this being the biggest oil shock ever, and all the gloomy headlines, you'd think oil would be at $200 a barrel.

@Pariah Carey

Well, it looks like some people start to think about the price of $200 a barrel.

"Oil, a Trump team examines what an oil price of $200 a barrel would mean for US growth"
26 March 2026, 12:47 | di Gabriella Bruschi

THETrump administration is evaluating the possibilities repercussions on the economy of a potential increase in prices of the oil up to $200 per barrel as a result of the war in Iran, so as to be prepared for all eventualities, including a prolonged conflict. Some sources report this Bloomberg specifying also that in times of crisis it is normal to make assessments of growth prospects, without this necessarily representing a forecast.

Even before the war began, the Secretary of the Treasury Scott Bessent had expressed concern that the conflict would increase oil prices e damaged economic growth, sources said. Senior Treasury officials had been communicating their concerns about fluctuations in oil and gasoline prices to the White House for several weeks.

Source: https://www.firstonline.info/en/Trump%27s-team-examines-what-a-%24200-a-barrel-oil-price-would-mean-for-US-growth/

In the mean time this is happening:





I guess the anger about certain people, who started this war, is non stoppable rising.

Symple

Pariah Carey 

With this being the biggest oil shock ever, and all the gloomy headlines, you'd think oil would be at $200 a barrel. That WTI is holding in the low 90s (so far), does that reflect the global diversification of oil production and in particular the heavy lifting that American drilling is doing?

@Pariah Carey,

Your instinct about US insulation is dead on, and the numbers back it up. At ~13.6 million barrels/day, the US is in effect self-sufficient in crude production. That's the structural shift from the 1970s when we were a net importer and OPEC could hold us hostage.

The clearest proof? The WTI-Brent spread. Normally $3-5, it's blown out to $11-15 during this crisis. That spread is the market pricing in exactly what you're describing -- US production as a buffer that Europe and Asia simply don't have.

A few other factors keeping a lid on prices:

• The IEA coordinated a record 400 million barrel strategic reserve release across 32 countries -- dwarfing anything we've seen before
• Traders are pricing in a diplomatic resolution (the "buy the dip" crowd is active)
• Global energy intensity per unit of GDP is significantly lower than during past oil crises

I'd push back slightly on "biggest oil shock ever" though. Hormuz disrupting ~20M bpd is massive, but the 1973 embargo hit when there was no US shale industry, no strategic reserves, and no alternative supply. The vulnerability was far greater then. What makes this one different is that the potential supply disruption is enormous but the structural defenses are unprecedented too.

The real risk is duration. At 13.6 million bbl/day, US domestic production makes the SPR almost a secondary backstop -- but if Hormuz stays disrupted for months rather than weeks, those reserve releases run dry and the $200 talk gets a lot more serious.



TGIF! Have a good weekend!

-- Fi

"The market doesn't price catastrophe -- it prices probability, duration, and who has a plan B."

Update on Sunday, 29. Mar, 2026:

Some news to consider the coming week and weeks:

- "Pentagon reportedly preparing for weeks of ground operations in Iran"
(Mar 29, 2026, 04:35 PM)

The Pentagon is putting together plans for weeks of ground operations in Iran as U.S. forces amass in the region, the Washington Post reported. Citing multiple U.S. officials, the Post report suggested ground operations could involve both conventional infantry and special operations elements, but would not yet rise to the level of a full-scale invasion. Decisions on whether or not to green light operations, which would put U.S. troops at substantially more risk to Iranian threats, now rest with President Donald Trump.

Source: https://www.militarytimes.com/news/your-military/2026/03/29/pentagon-reportedly-preparing-for-weeks-of-ground-operations-in-iran/



- "US intelligence: Only a third of Iran's missiles destroyed"
(March 28, 2026 2:46 PM)

WASHINGTON - The United States has been able to confirm that only around one third of Iran’s missile arsenal has been destroyed since the conflict between the US and Israel approached the one month mark, according to five sources familiar with US intelligence reports. Another third cannot yet be verified, but is believed to be damaged, destroyed, or buried as a result of airstrikes targeting underground tunnels and bunkers. According to Reuters, the same sources said a similar assessment applies to Iran’s drone capabilities, with around one third confirmed to have been disabled.

Source: https://www.idnfinancials.com/news/62537/us-intelligence-only-a-third-of-irans-missiles-destroyed

- US says officially it will not attack infrastructure of Iran for the moment. So Israel will do it in the mean time. Means: Words have no value.



Answers from Iran:



and at the same time:

- "Houthi forces enter Iran conflict with missile attacks on Israeli military sites"
(Sun 29 Mar 2026 01.00 CET)

The US-Israeli war with Iran has expanded with the entry of Houthi forces in Yemen, representing a dangerous spread of the conflict and bringing with it the threat of more damage to the global economy. Houthi forces, close allies of Iran, said on Saturday they had fired a salvo of ballistic missiles at “sensitive Israeli military sites” and that they would continue military operations until the “aggression” came to an end on all fronts. Israel said it had intercepted one missile originating in Yemen.

The Houthis’ military spokesperson, Yahya Saree, later said that the group carried out a second wave of strikes against Israel with a “barrage of cruise missiles and drones” targeting military sites. In a televised speech, Saree vowed to continue military operations in the coming days until Israel “ceases its attacks and aggression”.

Source: https://www.theguardian.com/world/2026/mar/28/houthi-forces-enter-iran-conflict-with-missile-attacks-on-israeli-military-sites

In the mean time on the economic side:

- "To secure energy supply, Russia bans gasoline exports from April 1"
(March 28, 2026 5:48 PM)

MOSCOW - Russia plans to ban gasoline exports starting 1 April to maintain domestic supply stability and curb rising energy prices amid global market volatility. Russian Deputy Prime Minister Alexander Novak has instructed the energy ministry to prepare regulations for the ban. State news agency TASS reported that the policy is expected to remain in effect until 31 July. According to Reuters, the government said instability in the global oil market caused by the crisis in the Middle East has triggered significant price fluctuations.

Source: https://www.idnfinancials.com/news/62542/to-secure-energy-supply-russia-bans-gasoline-exports-from-april-1

- "QatarEnergy declares 'force majeure' on LNG contracts with four countries"
(March 24, 2026)

QatarEnergy has said it has declared “force majeure” on some liquefied natural gas (LNG) supply contracts with four countries following Iranian missile attacks that damaged key facilities. The measure on Tuesday applies to contracts with China, Italy, Belgium and South Korea, it said in a statement cited by Qatari media, including Al Jazeera and Al Sharq. “Force majeure” is a legal clause in contracts, particularly long-term oil and gas supply agreements, that allows suppliers to suspend obligations such as delivery schedules without penalties due to events beyond their control, such as attacks on key infrastructure.

Source: https://www.trtworld.com/article/ecf12589b2ad

- "Diesel prices since Iran conflict":



- "JP Morgan map about how long it will take until different areas economies will be in trouble because of the on going, not needed war, with Iran":



Symple

Doubt war propaganda, question everything, think for yourself!