Tag: geopolitical
All the articles with the tag "geopolitical".
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Week 27: The War Returns, the Barrel Shrugs, Inflation Sticks
Day 121 of the Hormuz crisis. The US-Iran MOU cracked into a live kinetic exchange over the weekend: US strikes on Iran June 26, drones hitting the containership Ever Lovely (June 25) and the tanker Kiku (June 27), US counter-strikes on ten targets, and IRGC missiles at US bases in Kuwait and Bahrain June 28, before a fragile stand-down. Oil's verdict: WTI printed below $70 for the first time since February and opened Monday up just 1.6%. The barrel shrugged a hot-war weekend, because OPEC+ keeps adding and Gulf exports are back to ~75% of pre-war. Meanwhile May core PCE came in-line, not soft (3.4% y/y, headline 4.1%), so the falling barrel has not yet shown up as disinflation. Warsh's hawkish reset held, the dollar hit a 13-month high, but the 2-year slipped to 4.09% as the market trims the hike. W26 calls graded 3 right, 1 partial, 1 miss (the MOU).
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Week 26: Oil Caves, Warsh Hawks, the Strait Cracks Open
Day 114 of the Hormuz crisis. Brent fell to a four-month low near $78.6 as the 14-point US-Iran MOU was signed and the strait began trickling open (CENTCOM counted 55 transits June 20; Iran re-declared closure June 20-21 over Lebanon). The twist came from the Fed: Warsh held 12-0 but the dot plot flipped to a median hike, he killed forward guidance, and the dollar broke 100 (2y 4.19%, 10y 4.50%) in a hawkish shock. The Fed is fighting the last war as the oil-driven disinflation arrives; May PCE Thursday is the test. The barrel is cheap, the freight stays dear (Fujairah bunker 82% over Rotterdam, war-risk unmoved). W25 calls graded 3 right, 2 partial, no misses.
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Week 25: The Barrel Gets Cheap, the Freight Stays Dear. Peace Breaks Out, Warsh Steps Up.
Day 107 of the Hormuz crisis, and peace broke out on paper. The US and Iran announced an unsigned framework to end the war and reopen the strait; Trump said start your engines and Brent collapsed ~12% to $83 as equities ripped and gold rose. But the deal is not signed (ceremony June 19, Israel refuses to leave Lebanon), the strait is still mined and shut with ~600 vessels queued, and the freight premium did not budge: container rates kept climbing to $3,549, Fujairah bunker held ~92% over Rotterdam, and Gulf war-risk stays war-priced into 2027. May CPI split hot-headline (+0.5%) soft-core (+0.2%), the dollar stalled below 100, the SPR drew under 350mb, and Warsh chairs his first FOMC Wednesday with the dot plot the only live variable. The barrel got cheap; the freight stayed dear.
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Week 24: The War Escalates, the Barrel Doesn't. Jobs Blow Out, the Hike Tail Wakes.
Day 100 of the Hormuz crisis. The war got hotter and oil got cheaper. Iran and Israel traded direct missile fire for the first time since April (a Haifa apartment hit killed four), the US disabled a tanker with a Hellfire and boarded a sanctioned VLCC, and Iran hit Kuwait's airport. Yet Brent slipped to ~$94.5 and every risk asset sold off, because a blowout May jobs report (+172K vs 85K expected, +93K in revisions) flipped the regime from growth scare to hike risk. Traders fully priced a 2026 Fed hike, Polymarket no-cuts jumped to 80%, the 2y added 13bps to 4.17%, and the dollar firmed to ~99.9. Iran took no Hormuz closure action. OPEC+ added another 188kbd for July. Drewry's freight index exploded 23% to $3,433 on peak-season pull-forward. The SPR drew ~8mb to 357mb. For the first time in this crisis, the spreadsheet beat the strait.
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Week 23: Talks Collapse. The US and Iran Trade Strikes. Oil Snaps Back to $97.
Day 93 of the Hormuz crisis. Last week's deal optimism detonated. Trump's Thursday Situation Room meeting ended with no decision. The US and Iran traded strikes over the weekend, the US hitting radar and drone sites at Goruk and Qeshm and intercepting two Iranian ballistic missiles aimed at Kuwait. On Monday Iran formally suspended talks through mediators, blaming Israel's expanded Lebanon campaign, and resolved with the Axis of Resistance to pursue complete closure of Hormuz plus Bab al-Mandab. Brent round-tripped: down to $91 Friday on the no-deal print and soft GDP, then surged roughly 7% to $97 Monday on the collapse. Core PCE cooled to +0.2% MoM but headline held 3.8% YoY. Q1 GDP was revised down to +1.6%. The SPR drained another 9mb to 365mb, the lowest since October 2024. Drewry WCI added 3% to $2,800, a fourth straight weekly gain.
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Week 22: Trump Says Iran Deal 'Largely Negotiated.' Oil Cracks $15. Warsh Takes the Chair.
Day 86 of the Hormuz crisis. The first concrete diplomatic breakthrough since the conflict began. Trump posted May 23 that the deal is 'largely negotiated.' Axios scooped the draft terms Sunday: a 60-day MoU with Iran clearing mines, lifting Hormuz tolls, and pledging never to pursue weapons in exchange for US lifting the port blockade and sanctions waivers tied to performance. Brent cracked from $112 Monday to $97 today (-14% WoW). Kevin Warsh was sworn in at the White House on Friday, the first Fed ceremony there since Greenspan in 1987. UMich consumer sentiment final hit an all-time record low of 44.8. The SPR drained another 10mb to below 375mb, the largest weekly draw on record. FOMC minutes showed a hawkish minority floating policy firming. Drewry WCI added another 6% to $2,712. Note: Monday May 25 was Memorial Day, markets closed.
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Week 21: PPI Detonates. Warsh Confirmed. The Re-Hawkening Begins.
Day 79 of the Hormuz crisis. The week the inflation thesis came back. PPI April detonated at +1.4% MoM (largest since March 2022), YoY +6.0% (hottest since December 2022). CPI April core re-accelerated to +0.4% MoM. Kevin Warsh confirmed as the 17th Fed chair on a 54-45 Senate vote, the narrowest margin in modern Fed history. Powell handed off May 15 and stays as governor through the renovation probe. Markets re-priced cuts out: 10y +14bps to 4.59% Friday, 30y above 5.1%, DXY cleared 99 for the first time in five weeks. The MSV Haji Ali sank near Oman after a drone strike. Saudi and Kuwait lifted restrictions on US airspace and basing access Sunday, clearing the path for Project Freedom Plus. SPR drained another 8.6mb to roughly 384mb. Gold gave back $182. Crypto cracked: BTC −6%, ETH −10%, SOL −12% as ETF flows turned to net outflows of ~$1B. Drewry WCI surged +12% to $2,553.
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Week 20: The 48-Hour War. Brent Round-Trips. Saudi Says No to US Airspace.
Day 72 of the Hormuz crisis. Project Freedom launched Monday with 15,000 personnel and missile destroyers. By Wednesday it was paused. In 48 hours, US Navy sank ~7 IRGC speedboats, Iran hit two UAE targets with ballistic missiles, three commercial ships took fire (JV Innovation, HMM Namu, CMA CGM San Antonio), Iran formalized a Persian Gulf Strait Authority to collect tolls, and Saudi Arabia denied US airspace access. Brent spiked to $114.44 Tuesday then cracked through $100 Thursday on Trump's pause. Aramco said one billion barrels have been removed from global supply since February. The Fed-speaker chorus turned hawkish; the dollar fell anyway. Gold reclaimed the bid, copper broke back through $6, UMich consumer sentiment hit a record low of 48.2.