Dipping my toes
Events over the weekend suggest to me that a stabilization is taking shape in the Iran conflict. Iran is showing a willingness to negotiate, and Trump finally has a semblance of a plan.
In order for Iran to get oil to $200 or even $150, the closure of the Strait of Hormuz would have to choke off all flow of oil out of the Strait. However, it now appears that Iran is open to allowing oil to selectively flow to certain countries such as India. This would only be a partial blockade and it suggests that Iran is either seeking an off ramp or is desperate to sell its oil in order to support its finances.
Meanwhile, the US attacked Kharg Island - a move that is possibly a precursor to putting boots on the ground to take control of Iran’s oil. Taking control of Kharg Island poses an existential threat to Iran and would give the US significant leverage in this conflict.
Trump is also building an international coalition to help escort ships and secure the SoH.
On the surface, the headlines can be interpreted as bullish for oil and bearish for risk as it suggests the conflict will extend for at least another few weeks. However, I see it differently as the developments suggest that Trump has finally defined his objectives (securing Kharg Island and the SoH) and is taking military steps to achieve them. Iran, meanwhile, is showing cracks in its resolve by its willingness and need to selectively allow some tankers to pass through.
