Must read disclaimer: by reading this you agree that it’s purely for entertainment purposes. I am not qualifieid to give financial advice or assist with financial planning. In fact, I am not qualified for anything and you probably shouldn’t even read this, because I didn’t have this opinion until mere hours ago when it hit me. Therefore, it is likely wrong and thus you agree to assume that every word in this article was written by a madman. Thank you!
Let’s jump in.
This is something I didn’t see coming, but America has no choice but to sign the worst deal ever, or commit to a serious campaign in Iran. Either way, I doubt the Strait is going to be open soon with enough flows to ensure supply = demand; in fact, I’m almost certain supply will remain less than demand.
Let’s take a step back and actually consider what’s happening. In a single sentence: the USA has no idea how to open the Strait of Hormuz, and in at most 95 days, tanks around the majority of the globe will be empty or near-empty.
We’re at a point that’s it’s virtually impossible that Iran doesn’t have full control over ship transits through the Strait of Hormuz in the future. The crazy thing, is that Iran didn’t even realize it had this much leverage, they didn’t ask to be put in this situation, it got forced on them, and somehow, they won the first few battles decisively.
Take a moment to consider that the majority of Iran’s profits come from the sale of oil. They’ve now discovered they can ensure oil supply is below oil demand, for at least a few years, by ensuring they’re given total control over the Strait. Alternatively, they can charge an “environmental fee”, although more realistically, it’s probably going to be in tandem with their sole ability to control the number of tankers that can transit the strait.
Honestly, the entire situation is insane, and while I immediately predicted the Strait was going to stay closed when Iran started bombing neighboring country infrastructure, I certainly didn’t have the thought that they could end up with this much leverage over not just the USA, but the world.
I don’t actually have much to say here, so I’ll just walk through the compression of my thoughts. Honestly, I’m shocked that this is the situation, but it is.
Iran now gets to choose which tankers can and can’t transit the Strait. This means they can solely determine the export capacity of OPEC members north of the Strait.
America looks primed to give Iran a pile of money in order to open the Strait, it looks like it will be at least 24 billion, but possibly as much as 0.25 trillion, with most of this coming from unfreezing of their funds. TL;DR: buy cheap gold miners to hedge, cuz that’s going to boost effective circulating M2 and cause some inflation (or weakening in the USD as Iran dumps it for other currencies / gold / etc).
There is virtually no way America can open the strait, other than with an extensive boots on the ground campaign, and at that, it would probably need to require a bunch of other countries helping. It would be all out war, but Trump campaigned on “no more wars”.
Maybe you’re wondering why I think this? Well for one, the deal details that were leaked this last weekend seemed incredibly unfavourable to the USA. Since then, we seem to have confirmation that Qatar is set to “loan” 12billion to Iran, which happens to be the amount they’re asking the USA to pay up front, in order to open the Strait.
But the full reason is much easier to see: the USA signalled they’re unwilling to commit seriously to any kind of real campaign in Iran. That means Iran just has to hold the line: if the Strait stays closed for ~70 more days, due to tanker transit times, oil is going over $200.
Meanwhile, the World Cup is about to begin, and the USA has its 250th anniversary coming up, and seriously, what can they even do?
We’re at this point in the article and we haven’t even talked about Iranian uranium yet, but let’s talk about it. Iran want the current deal to release them a pile of money in the first 30 days, and then, there will be no discussion about uranium until 60 days. Over this time period they will “slowly, but steadily” increase traffic through the strait, which they’ll be charging a toll (read: environmental fee) to transit.
All they have to do is slowly increase traffic through the strait, and by day 60, world oil supplies will be so messed up and low, that oil prices will have already skyrocketed. It’s a fact that tankers won’t be returning to be inbound traffic to Hormuz until this situation is fully and clearly resolved. That means production won’t be un-shut-in, in Iraq, Kuwait, etc.
Like it’s actually insane. Summer driving season is just beginning, and Summer vacationing. and yes, Iran somehow has this much leverage. There’s just no way to get them to open the Strait other than a high commitment military campaign, and the Trump admin just won’t have the support for that. I also have no idea how they could manufacture consent for it. Maybe if oil prices get high enough and they blame Iran? Can people be that stupid? I don’t know!
The point in a single sentence is just to ask yourself a question: what can the USA actually do to get these “crazy bastards” to “open the fuckin strait”? - Donald J Trump, Truth Social, Strait of Hormuz crisis, 2026.
There is no political support for a ground invasion.
Bombing isn’t going to do it.
Nukes would be genocide, and an absolutely abhorrent and egregious crime against humanity: you can’t vaporize cities because you suck and made a mistake.
Unless anyone has any other ideas, it seems like option 4 is the only way forward:
Total and absolute capitulation, where Iran gets everything that it wants.
That’s today’s dose of schizophrenia. I honestly didn’t think this was possible, but the events since this last weekend have made it seem all but guaranteed.
I continue to believe that holding undervalued oil producers combined with undervalued gold (and a minor amount of silver) producers is the best way forward, and of course, my personal portfolio already reflects that. Of course, do your own diligence.
I think if a non-binding “memorandum of understanding” is signed, oil futures will crash a bit, and honestly, when that happens I will be struggling to not full port oil… I will try to remain responsible, but unless Iran don’t realize just how much leverage they have, oil supply isn’t going to increase much in the next 3 to 6 months (surely it’s impossible that Iran don’t know, Russia, who also want high oil prices, must certainly be whispering in their ear that the USA can’t get Hormuz open; Russia supplies intelligence that helps Iran). I just can not see a way that America can open the Strait. Maybe enough bombs would do it, I’m certainly no military general, but surely it would take a lot of bombs if there is a possibility via this route.
Anyway, I remain to have no idea what’s going on, but fortunately for me, my call that the “Strait of Hormuz Aint Openin’ soon” is now deeply correct, and buying virtually any oil producers (that I’m aware of and track) are deeply green since I posted that. I think oil re-rates higher soon, but I think SPRs need to drain a bit more first.
I’d love to hear from paying subs in the comments below. Please tell me if you see a route that America can open the Strait that I’m not seeing, because I don’t want to full port into what I’ve chosen to be my undervalued oil producing race horses (primarily OBE + JOY) but I am starting to see oil as being the easiest trade of my life. How is this not obvious to everyone? Iran has accidentally found out it’s got the world by the balls.
Anyway to explain the title of the article for those who may not get it, Iran are very likely to be given so much power (via control of the Strait) that they can determine OPEC country export quotas by simply throttling the number of ships allowed to leave from north of the Strait.
Best wishes,
G
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