Strait of Hormuz, Oil Surge & Dump, Trump's "Near Complete" War & Transit Security

*It’s been a topsy-turvy few days in the market with strong structurally negative bias, and of significant note, the divergence between the official narrative and the operational reality is dumbfoundingly obvious yet yielded a market bounce...*

*So let's digest the situation & key geopolitical factors; I hope this acts as an overview for those who haven't been finely following the events lately.*

**The So-called Near Complete War**

President Trump recent claimed that the war is "pretty much" finished.

I am quite surprised the market consumed this blatant attempt to stabilize global liquidity & markets. With crude oil having breached $100-120/bbl at peak, the political pressure on the administration to deliver a peace is immense, despite zero real indicators of this.

By claiming conventional victory over Iran’s navy and air force, the White House is preying on the market's desperation for a risk-off appetite, and ignorance of how Iran operates on a political and kinetic (military operations) level, in order to stall a vertical plunge.

**The /New/ Khamenei & The Mosaic Deadlock**

After deposing of Ayatollah Ali Khamenei, we have now seen quite possibly the least likely candidate to negotiate peace elevated to role of Supreme Leader - the deceased's son, Mojtaba Khamenei.

Talk about adding a blood feud on top of political & ideological antithesis.

As the son of a slain Ayatollah, his domestic legitimacy is now rooted in and reliant upon retribution, not de-escalation; reaching a deal now would be viewed by the IRGC as capitulation on political, ideological and moral fronts. Any attempts by the new Ayatollah to negotiate would undoubtedly result in internal deposition/coup.

Critically...

the "near complete" claim assumes a central leadership exists to sign a treaty. Estimation of a functional ceasefire would be erroneous. Under Iran’s decentralized “Mosaic Defense” provincial commanders have pre-delegated authority to operationally act independently.

On top of that, US and Israel strikes have removed key figureheads who would have been previously able to negotiate universal & synchronous de-escalation, and destroyed command-and-control nodes and means of communication.

Iran has effectively become a military machine with no off switch.

For the US to withdraw will effectively cede control of the Strait to Iran, handing over a large political and global leveraging tool and result in significant moral setback to the US, questioning the de facto military supremacy status it currently enjoys.

Neither side has incentive to withdraw from this conflict, with mutual agreement a close second prize to hard power victory; the above points concluding mutual agreement may be almost impossible to obtaining.

*Political de-escalation is the farthest from feasibility in decades on moral, ideological, political, and mechanical levels.*

**Strat of Hormuz: Asymmetric Denial**

Looking at the bottleneck from a maritime perspective, any narrative of the Strait being open is premature.

Traffic remains at the mercy of subsea mines, fast-boat teams, drone swarms, and mobile land & sea missile cells. Asymmetric warfare that it challenging to fully intercept & protect on a singular Navy-to-tanker vessel route, let alone to ensure safe and viable commercial scale thoroughfare.

The UKMTO has flagged several suspicious vessel transits as possible mining risks. Operations by MCM vessels to clear pathways sufficiently to ensure sentiment/confidence in the route, reduce insurance premiums sufficiently, can take weeks-to-months alone in a safe working environment; this is not a safe working environment for such operations to even begin.

To put this in perspective most US Navy vessels are currently sitting at an approximate 300km radius from the Strait, when I last ran my maritime vessel scraper (filtered for and flagged vessels of naval dimensions, weight, speed capabilities, and designations that were analogous to the known US combatants).

Even *if* the US Navy were able to secure the corridor, the large question looms, for how long and at what expense?

To sum it nicely:

Foreign Minister Araghchi has already explicitly rejected any form of negotiations.

**Regional fallout**

I'll keep this part exceptionally short, although I'd love to delve further.

We are also seeing Iran's key modus operandi in causing maximum economic fallout by targeting numerous adjacent gulf nation oil pipelines and refineries.

These nations in turn targeting Iran's own resources.

Cumulatively the effective blockade in transit is causing an upstream chain reaction of storage exhaustion, and forced refinery/production shutdowns. These shutdowns cause subsequent later inherent lag in resumption even in the event of a full blockade resolution.

The alpha here will likely lie in:

* GEOINT - I traded BKSY, SATL for this. Sorry, it was a small window in which to enter, and writing this kind of post takes time. Although they likely are still good candidates.

* Asymmetric defense and the need for munitions replenishment

* Maritime autonomy and security

* Bullish oil positioning, warning that political manipulation here is almost imminent

I fear the Trump rhetoric for war success and oil manipulation is likely a bull trap.

I may add edits here as I scrape and analyse viable stock entries that satisfy my fundamentals and macro criteria, so feel free to re-view this page at later points.

LFG. Goodnight & good luck.

🍀

Interesting naval analysis for those who enjoy the finer details:

https://navalinstitute.com.au/protecting-hormuz-passage/?hl=en-GB#:~:text=There%20are%20eight%20destroyers%20in,enough%20ships%20for%20the%20task.