Bang, bang, bang, the prelude to a major crash

Source: Wall Street Intelligence Circle

Bang, Trump has turned his guns on Iran, and Iran is targeting oil prices.

Although global markets are calming down, the overall trend remains “rising oil and dollar, everything else falling.”

• Brent crude oil briefly broke through the $100 mark;

• The US dollar index is close to the 100 level;

• The 10-year US Treasury yield surpassed 4.20%.

The development of the situation seems more like a prelude to a major decline.

First, Iran launched a new round of attacks on ships in the Persian Gulf, pushing oil prices back above $100 per barrel. The timing favors rising oil prices; the longer the conflict persists, the greater the impact on energy markets, and the higher the probability of declines in other markets.

Second, market concerns previously focused on the Strait of Hormuz, but today they have extended to the Strait of Mandeb — an area not yet priced in by the market (both critical energy chokepoints are at risk). This is the entrance to the Red Sea. If it is also blocked, Middle Eastern oil entering Europe will be hindered (possibly involving Houthi rebels in Yemen). If the Strait of Hormuz is the “supply gate,” then the Strait of Mandeb is the “delivery gateway.” Once blocked, Middle Eastern oil bound for Europe would have to reroute around the Cape of Good Hope in Africa, adding approximately 10-14 days to the voyage. This is not only an oil supply issue but could also trigger a secondary surge in global container shipping costs.

Third, the International Energy Agency has provided a very alarming figure: this conflict could reduce global oil supply by 8 million barrels per day, the largest supply disruption in history.

Fourth, the war may enter a new phase — the traditional phase might be ending, and harassment warfare is just beginning. US intelligence believes the Iranian leadership remains largely intact, meaning the conflict is unlikely to end soon. This includes drone attacks, mines, tanker attacks, and submarine cable disruptions — all low-cost but highly destructive tactics. This “harassment war” is least favorable to Trump. He needs a quick victory to declare “mission accomplished,” but Iran is using oil prices and the straits as a “long-range defensive wall,” attempting to drag the conflict into an election cycle where inflation becomes unbearable for him.