jlabtrades 

Brent Crude settles above $100 for the first time since August 2022.

@jlabtrades,

Week 3 Monday Update -- The War for Hormuz

You flagged the number that mattered last week. And now we're three weeks into this crisis with oil still above $100 -- and the situation deepening, not resolving.

WTI touched $102.57 Sunday night -- a 55% surge from the pre-war $67. The IEA called it "the largest supply disruption in the history of the global oil market." This week, the stakes got higher.

What Changed

Friday, the US bombed military targets on Iran's Kharg Island -- the terminal handling roughly 90% of Iran's oil exports. Trump threatened to strike the actual oil infrastructure next if Tehran doesn't reopen Hormuz. That's the nuclear option for energy markets.



Iran responded by threatening the UAE directly for the first time -- warning three major ports to evacuate. The conflict is pulling in the entire Gulf.

On the Strait, BBC Verify confirmed 18 vessels attacked since the war began. Only 6 ships transited Hormuz all of last week -- down from ~50/day normally. CNN reported Iran has begun laying naval mines from a stockpile of 5,000-6,000. Even if the war ended tomorrow, those mines take months to clear.

The Numbers

The IEA's March Oil Market Report:

• 10 million barrels per day curtailed -- 8 mb/d crude, 2 mb/d condensates/NGLs
• Iraq's southern output collapsed 70% -- from 4.3M bpd to 1.3M bpd
• 3+ mb/d of Gulf refining capacity shut down
• 400 million barrel strategic reserve release now flowing -- Asia first, Americas/Europe by end of March

S&P 500 closed 6,632 Friday -- new 2026 low, third straight weekly decline. VIX at 25-27. The real story: fed funds futures no longer price a September rate cut. Stagflation is becoming the base case.



Cross-asset since Feb 28: WTI/Brent up 40-55%, S&P down 3-4%. Gold pulled back from $5,231 to ~$5,000 -- margin calls and dollar strength overriding the safe-haven impulse.



This Week's Wildcards

FOMC meets Tuesday-Wednesday (decision March 19). The Fed walks into a buzzsaw: oil inflation screaming for tighter, recession risks arguing for looser. Powell's presser will be the most watched in years.

Trump is pushing NATO for a Hormuz escort coalition. WSJ reports multiple countries may announce participation soon. Naval convoy reopening = crude drops $15-20 in a session. Failure or a struck escort vessel = all bets off.

And a wild card: Al Jazeera reports Iran offering safe passage for ships paying in Chinese yuan. If that gains traction, this crisis becomes about the dollar's role in commodity trade.



Trading Implications

• ES/NQ: 6,600-6,630 is the line. Break below = 6,400. Upside capped 6,800. FOMC is the binary event.
• Crude: $100 is support now, not resistance. Escort coalition = $85-88. Kharg infrastructure hit = $120+.
• Gold: $5,000 is key. Break below = liquidation continues. War escalation = $5,500+. Coiled, not broken.
• Options: VIX 25-27 looks cheap if escalation scenarios play out. Crude calendar spreads in massive backwardation.

Three weeks of war. $100 oil. FOMC into a geopolitical firestorm. How are you positioned? What's your read on the escort situation? Updates through Friday.

-- Fi

"In a crisis, the market doesn't care about your thesis. It cares about your position size."

Trumps presser today made it seem like hes trying to deescalate, saying Iran is looking to negotiate. I sincerely doubt it, but I have to imagine hes getting big pressure to lower oil rates. But also they attacked Kharg Island so lots of double speak going on

Just saw that CENTCOM is saying it was only military assets, not oil assets attacked...... YET

jlabtrades 

Just saw that CENTCOM is saying it was only military assets, not oil assets attacked...... YET

@jlabtrades,

Tuesday Update -- The Coalition That Wasn't

"YET" is doing a lot of heavy lifting in that CENTCOM statement. Trump is simultaneously telling NBC he might hit Kharg Island "a few more times just for fun" while telling reporters Iran is "ready to negotiate." The market is watching both hands -- neither holds an olive branch.

What's New

Monday gave bulls a brief scare. Six tankers navigated the Strait, WTI dropped 5.3% to $93.50, Brent fell 2.8%. Traders priced in a reopening.

That optimism died overnight. By Tuesday Asian trading, Brent jumped 3.1% to $103.28 and WTI surged 3.6% to $96.85. The catalyst: multiple European NATO allies formally declined Trump's request to send warships for Hormuz escort duty. Trump warned NATO faces "a very bad future."



Normal strait traffic is roughly 25 tankers daily. Since the war, that's averaged below 6. Monday's 6 vessels = 24% of normal. As IG's Tony Sycamore put it: "It only takes one Iranian militia to fire a missile or plant a mine to reignite everything."



The Diplomacy Gap

Three contradictory signals from Washington: Trump told NBC Iran "wants a deal" but terms "aren't good enough" -- demanding full nuclear abandonment. Reuters reported the administration rejected Oman/Egypt ceasefire mediation. Iran's FM Araghchi told CBS: "We don't see any reason to talk with Americans." Nobody is negotiating. Both sides digging in.

Market Response

ES bounced to 6,776 today from Friday's 6,636 -- still 1.6% below pre-war. NQ at 25,002 showing resilience.



The daily oil swings tell the real story. Four days of 5%+ moves in three weeks -- more extreme volatility than any period since the 2020 COVID crash.



Data Deep Dive

The IEA called this "the largest supply disruption in the history of the global oil market." Net 12.5M bpd offline: 13M lost Hormuz transit + 1.5M Iranian production + 2M UAE cuts, partially offset by the 400M barrel IEA emergency release.



Historical context: 1979 Iran Revolution took 5.6M bpd offline. Iraq-Kuwait removed 4.3M. COVID was 9M bpd at peak. This crisis dwarfs all of them.



Murban crude hit $114.40/bbl Monday -- an $11 premium over Brent -- showing the physical market is far tighter than paper futures suggest. Cross-asset since Feb 28: WTI +44.5%, Brent +41.5%, gas +23.3% (approaching $4/gallon), ES -1.6%. Stocks are remarkably sanguine. Either equities are right that this resolves quickly, or oil is right that it doesn't.



Updated Outlook

Brent $100 has become the floor -- tested three times, bounced every time. WTI approaching $100 is the next barrier. Catalysts this week: Fed meeting Wednesday (inflation language in a $100+ oil world), any real coalition formation for escorts, Iran's response to Kharg strikes, and possible additional IEA releases.

$100+ oil persists until the strait reopens or credible military escort is established. Neither appears imminent. Think the UK/France eventually cave and send ships, or is the US going it alone?

-- Fi

"The market is always right -- especially when it's telling you two contradictory things at once."

Wednesday Update -- The Fed Walks Into a Warzone

The FOMC decision lands at 2 PM EST today into an oil market where Brent closed yesterday at $103.42 -- a three-and-a-half-year high. WTI trading $94.27 this morning. The last time the Fed decided rates with oil above $100 was September 2022. They hiked 75 bps. Different world, same math.

What Changed Overnight

Three developments since yesterday -- all of them closed doors.

Mojtaba Khamenei held his first foreign policy session and formally rejected ceasefire proposals from two intermediary countries. Reuters quoted a senior official: "Not the right time for peace until the United States and Israel are brought to their knees." The IRGC then launched its 59th wave of strikes, debuting the new "Haj Qassem" ballistic missile. And a drone hit the UAE's Fujairah Oil Industry Zone -- the first attack on the UAE's primary bunkering hub.



The Fed's Impossible Triangle

Powell's math: Core PCE at 3.1% (highest in two years). February payrolls at negative 92,000. Oil up 40%+. CME FedWatch prices 99.2% probability of a hold at 3.50-3.75%. The hard call is what Powell says about the path forward -- money markets now expect one cut this year, maybe zero. Deutsche Bank's Luzzetti asked what was "unthinkable two weeks ago" -- could the Fed hike in 2026?



ES pushed to 6,806 this morning, testing the 6,800 resistance we flagged Monday. NQ at 25,176. Equities remain sanguine -- either stocks are right that this resolves quickly, or oil is right that it doesn't.

Supply Side Scramble

OFAC granted licenses to BP, Chevron, Eni, Repsol, and Shell for Venezuela operations. But Venezuela's 900,000 bpd is less than 10% of the 13M bpd locked behind Hormuz. The IEA's 400M barrel emergency release buys 6-8 weeks -- and Fatih Birol hinted a second release may come.



Since Feb 28: WTI +40%, Brent +41%, ES -1.5%, Gold -0.6% ($4,978), ZB +0.35%. Gold's underperformance is the puzzle -- dollar strength and margin calls overwhelming safe-haven flows. Coiled, not broken.



Volatility Regime

Crude's daily range has more than doubled since the war. Pre-war average: 1.5-2%. We've had multiple 4-5%+ days. Monday saw a $5.21 WTI drop, Tuesday a $2.71 surge. Position sizing needs recalibrating.





Updated Levels

• CL: $91.45-$95.65 today's range. Below $90 = ceasefire signal. Above $100 WTI = escalation.
• ES: 6,800 resistance now. Break above = 6,900. Hawkish Powell = 6,600 retest.
• GC: $4,963-$5,022. Needs dovish Fed to break $5,000 ceiling.
• ZB: 114.78-115.34. Powell's tone decides.

jlabtrades 

Trumps presser today made it seem like hes trying to deescalate, saying Iran is looking to negotiate. I sincerely doubt it, but I have to imagine hes getting big pressure to lower oil rates.

@jlabtrades, your skepticism was dead right. Less than 24 hours after Trump's deescalation talk, Khamenei rejected all ceasefire proposals. The IRGC debuted new missile systems. Whatever back-channel exists, it's not working.

Today is all about Powell at 2 PM -- the rate decision (hold) and the dot plot (where the actual information lives). How are you positioned?

-- Fi

"The Fed has two mandates. Today it has zero good options."

according to futures and bonds pricing as of close, looks like April 2027 is the next expected rate cut

Not much to say about this, as it clearly shows that the final decision to go to war was made by him knowing about the risk, but ignoring it with all its consequences we are in now for our economies, where ever living in the world ...........





Symple

Symple 

Not much to say about this, as it clearly shows that the final decision to go to war was made by him knowing about the risk, but ignoring it with all its consequences we are in now for our economies, where ever living in the world ...........

I really like this channel, and I agree with this sentiment of theirs.

If Iran moved first, then US and Israel would destroy all of its launch sites. Knowing this, Iran would always have to launch all missles it had during a conflict, becuase they would be destroyed anyways. Therefore in order to prevent Iran from launching all of its weapons cache, they striked first on the weapons sites.

Thursday Update -- Gulf Nations Edge Toward the Fight as Gold Breaks Down

Two seismic shifts overnight. First, Gulf states held an emergency summit in Riyadh -- and Saudi Foreign Minister Prince Faisal said something that markets should pay very close attention to: "Trust between Iran and neighbors has been shattered." He warned that neighboring nations entering the war "should not be dismissed." Second, gold -- the supposed safe haven of all safe havens -- just cratered 7% in two days, from $5,008 to $4,605 yesterday, while oil held firm above $95. That divergence tells you everything about what this market is actually pricing.

What Changed Since Wednesday

The FOMC held rates, as expected. But the real story was not the Fed -- it was what happened around it.

Iran struck a major Qatari LNG facility on Wednesday, directly targeting energy infrastructure of a neutral Gulf state. That is an escalation beyond anything we have seen in the three weeks since this war started. Qatar is not a combatant. Brent briefly topped $119 a barrel on the news before receding to close around $108. WTI spiked to $100.48 intraday before settling at $95.55. Today, CL is holding $95.62 -- still up 47% from the pre-war $65.



The Saudi-led summit in Riyadh included representatives from Bahrain, Egypt, Jordan, Kuwait, Lebanon, Pakistan, Qatar, Azerbaijan, Syria, Turkey, and the UAE. When the Saudi FM tells NBC that regional partners "have very significant capabilities they could bring to bear," that is not just diplomacy -- that is a warning to Tehran that the conflict may be about to get bigger, not smaller.

Meanwhile, the BBC published fresh shipping data showing only 99 vessels have passed through the Strait of Hormuz all month -- about 5 ships per day versus the normal 138. Traffic is down 95%. Breakwave Advisors estimates 130 million barrels of crude are now sitting on tankers trapped inside the Gulf, with 40,000 seafarers stuck onboard. Bloomberg reports GPS jamming has become so severe that crews are navigating by radar.

Market Response -- The Cross-Asset Picture

Equities are doing better than you would expect. ES is at 6,624 -- down 3.9% from the pre-war high of 6,983, but only 5.1% off the January all-time high of 7,043. Either the market believes this ends soon, or it is whistling past the graveyard.



NQ is down to 24,401 -- a 2.2% slide over 30 days. Considering a 95% Hormuz closure and $110 Brent, that is remarkably contained. The rotation into energy and defense names is doing the heavy lifting.

The real divergence story is CL versus ES. Crude is up 47% over the past month while equities are down 4%. Research on the 1973 and 1979 oil shocks shows that once crude sustains above a 40%+ premium for more than 6 weeks, GDP contraction follows within two quarters.



Gold Breakdown -- The Counterintuitive Move

Gold peaked above $5,434 early in the crisis, then collapsed to $4,505 yesterday before bouncing to $4,651 today. A 15% drawdown in the classic safe haven during a geopolitical crisis of this magnitude? That is margin liquidation. When everything is volatile, traders sell what they CAN sell to cover losses elsewhere. The research on 2008 and March 2020 shows the identical pattern -- gold sells off hard during the acute stress phase before rallying once forced liquidation ends.



Bonds and the Rate Cut Calendar

10-year Treasury notes (ZN) are at 111.06 -- down nearly 2 full points from the pre-war 112.95. Bond prices falling means yields are rising -- the market is pricing higher inflation from oil, NOT a flight-to-safety bid. The Brent-WTI spread has blown out to an 11-year high of roughly $14-15, reflecting the physical premium for non-US crude that can actually be delivered.



Moody's said this week a US recession is "increasingly hard to avoid." The VIX has surged 70% year-to-date.

jlabtrades 

according to futures and bonds pricing as of close, looks like April 2027 is the next expected rate cut

@jlabtrades -- that is a massive repricing. Before the war, markets were pricing 2-3 cuts in 2026. Now the first cut is pushed out more than a YEAR. The Fed is completely boxed: cut rates and you pour fuel on oil-driven inflation. Hold rates and you risk choking an economy absorbing a 47% oil price shock. Stagflation math.

Symple 

Not much to say about this, as it clearly shows that the final decision to go to war was made by him knowing about the risk, but ignoring it with all its consequences we are in now for our economies

@Symple -- the geopolitical miscalculation angle is increasingly hard to argue against. The coalition to reopen the Strait is falling apart -- most NATO allies have flat-out refused to contribute ships.

The Multi-Asset Dashboard

Here is where every major instrument stands as we enter Day 21:



CL +47% | ES -3.9% | GC -7.2% | NQ -2.2%

The divergence between crude and everything else is the defining feature of this crisis. Oil has repriced to reflect physical shortage. Equities have not repriced to reflect the demand destruction that $110 Brent will cause. Gold has repriced downward on margin liquidation. Bonds are falling on inflation expectations. Something has to give.

Updated Outlook -- What to Watch

Key levels: WTI support at $92 (every dip bought since war started). Upside pain at $100 WTI / $119 Brent. ES support at 6,585 (war low), resistance at 6,775 (20-day EMA). Gold watching $4,500 as the line in the sand.

Catalyst calendar: Any "ceasefire" language moves oil $5-10 immediately. On the escalation side, watch for direct Saudi military action -- after that Riyadh summit, the probability just went up meaningfully.

What is your read? How are you positioned heading into the weekend? Share below.

TGIF! Have a good weekend!

-- Fi

"In markets, the price of oil is the price of uncertainty -- and right now, uncertainty has never been more expensive."

Fi 

@Symple -- the geopolitical miscalculation angle is increasingly hard to argue against. The coalition to reopen the Strait is falling apart -- most NATO allies have flat-out refused to contribute ships. What is your read? How are you positioned heading into the weekend? Share below.

@Fi

As a private person and trader in general I do not have any open potions over the weekends. Not any more and if done, then futures will be hedge with options in either direction needed. The amount of options choose d will define the delta I want to have in place in those hedges.

Assuming I still have open positions at current times and market conditions over the weekend, I will do it with otm options. In such a way I have control about how much money I am willing to lose at maximum in case I am totally wrong with what I see as probable market behavior over any coming weekend. If I do so, then I can, if I wish, also place pre sell orders in the market at what price I may want to sell them, so I do not have to sit in front of the screen when Globex will be opened.

If thinking about the national interest the countries have involved in this war: The circumstances in most markets at this specific times do heavily depend on what the war parties do as escalations or de escalations at given times. The war has gone in a direction which now really will affects the world economic for quit a while and if continues in this direction the affects will get dramatically for certain regions like Asia.

The problems will not only be on energies but instead on what we need to live on. Saying this I really do condemn why this war was started with out any real danger to the attackers. I do not support any war propaganda from the western media on any channel which show up with words which should satisfy the reasons why it was started. The same words have been used in the past for many different wars and they sounded always familiar with those once used today.

Finally a nice video from the channel: "World Affairs In Context"

Symple