Market Report.
❓ Will traffic return to the Strait of Hormuz or will we continue in the inflationary spiral?
🎯 Our bet on this war is that it was a strategic mistake, the operation epic fure becomes an operation epic fail, and as the days go by, the facts are proving us right.
⚓ The U.S. military “eliminated” 16 Iranian mine-laying vessels near the Strait of Hormuz on Tuesday, as President Trump warned that any mines laid in the Strait by Iran must be removed immediately.
⚠️ Trump previously said the U.S. had “completely destroyed” 10 inactive mine-laying vessels. He warned Iran that if it does not remove any mines it has laid, it will face military consequences.
🚢 The top U.S. general said the military is looking at ways to potentially escort ships through the Strait, but the U.S. Navy has so far refused near-daily requests from the shipping industry for military escorts.
🗑️ A post by the U.S. Secretary of Energy claiming the Navy had successfully escorted an oil tanker through the Strait was later deleted, and the White House confirmed the U.S. has not yet escorted any vessels through the Strait.
🚀 The Iranian Revolutionary Guards have denied the report of a U.S.-escorted tanker traversing the Strait, warning that any movement of the U.S. fleet and its allies will be stopped by Iranian missiles and drones.
🛰️ U.S. intelligence assets have begun to see indications that Iran is taking steps to deploy mines in the Strait of Hormuz shipping lane. Iran reportedly has an estimated 2,000 to 6,000 naval mines of Iranian, Chinese and Russian-made variants.
🔄 The potential for the U.S. to escort oil tankers through the Strait of Hormuz would be a “game-changer”, as it could release millions of barrels of Middle Eastern oil currently stranded inside the Persian Gulf and dramatically increase U.S. leverage over the crisis.
🔥 The weekend bombings of Iranian oil storage facilities have been described by some observers as resembling a “chemical attack” due to their effects: oil reportedly fell over parts of the capital hours later, and fires erupted in underground depots, with flames emerging from drainage systems.
🎙️ When asked about the incident, US Defence Secretary Pete Hegseth stated that those sites were not US military targets, suggesting that Israel may have independently decided to carry out the strikes.
🛑 Ehgseth also clarified that although the president said he had finished, operations would not cease until they had ended the Iranian regime.
🇸🇦 Senator Lindsey Graham stated on Fox News that Saudi Arabia should join the war against Iran following the reported attack on the US Embassy in Riyadh. He added that if the Saudis choose not to participate, “perhaps we should not remain partners any longer,” signalling potential strain in bilateral relations.
🇷🇺 Sergey Glazyev es un economista y político ruso, académico de la Academia de Ciencias y actualmente comisionado de Integración y Macroeconomía en la Unión Económica Euroasiática. En sus pronósticos recientes, Glazyev sostiene que el sistema monetario basado en el dólar está en una fase terminal y se encamina a una “desintegración inminente”, acelerada por las sanciones y el uso del dólar como arma.
💥 Among his forecasts is the prospect of an explosive surge in oil prices that could ultimately destabilise — or even collapse — the petrodollar system.
🌍 For some analysts, current events may provide the perfect backdrop for Gulf states — long‑time pillars of the petrodollar arrangement — to accelerate a shift towards alternative currencies. This could include Saudi Arabia selling crude to China in yuan.
💱 If that were to happen on a meaningful scale, it could mark the beginning of the end of energy being traded exclusively in US dollars — and signal a structural shift away from the petrodollar era.
🏦 The International Energy Agency (IEA) has proposed the largest ever coordinated release of strategic oil reserves to try to curb the surge in prices caused by the U.S.-Israel-Iran war and the near-total blockage of the Strait of Hormuz.
📦 The proposed volume would exceed the 182 million barrels released by IEA member countries in two rounds in 2022 after Russia’s invasion of Ukraine, making it the largest coordinated stock draw ever by the IEA.
📈 The trigger is the sharp rise in crude oil due to the disruption of flows through the Strait of Hormuz. Up to 6% of global production is affected and millions of barrels are trapped in tankers unable to cross.
🛢️ The IEA and G7 countries have over 1.8 billion barrels in public and private reserves that could be released in a coordinated effort to try to contain prices.
🏛️ Politically, the scale of the operation suggests governments want to avoid repeating an inflationary shock like 2022, just as central banks are fighting inflation.
🇪🇺 ECB President Christine Lagarde used an interview on France 2, to make it clear that the ECB is willing to maintain or tighten its stance if the new energy shock from the war with Iran reignites inflation, even though they had said just a month ago that “we were in a good place.”
🗣️ Lagarde stated that the ECB “will do whatever is necessary to keep inflation under control and ensure that the French and Europeans do not suffer the same increases in inflation that we saw in 2022 and 2023.”
📉 She emphasized that the eurozone is now in a “different economic situation”, “in a better position” -It’s not true, Germany has suffered three consecutive years of GDP reduction, it’s a recession- and “with greater capacity to absorb shocks”, referring explicitly to the war in Iran and the rebound in energy prices.
⚖️ In summary, the ECB is signaling its willingness to maintain or even tighten its policy stance if the new energy shock from the Iran conflict reignites inflation concerns, even at the cost of weaker growth, in order to avoid repeating the 2022-2023 inflation episode.
📐 Asymmetric economics: The real problem of this war.
⚔️ As we mentioned in Monday’s report, this is an asymmetric war, but not necessarily in favor of the US.
🛸 Iran is attacking U.S., Israeli, and Gulf targets with large numbers of relatively cheap Shahed-type drones and short-range missiles.
🛡️ U.S. and allied defenses rely heavily on expensive interceptor systems like Patriot and THAAD, where each interceptor can cost several million dollars. This creates an inverted economics where “$20,000 drones [are] taking on $4 million Patriots.”
⏳ Internal assessments indicate that at the current rate of fire, Patriot stockpiles in places like Qatar and other Gulf states could be severely depleted within days, and broader U.S./Gulf interceptor inventories could come under pressure in weeks if the tempo continues.
⚠️ Remember that we have already mentioned the grievances of the Gulf countries, in some cases they reported that the US was prioritizing the reestablishment of defensive systems in Israel over a possible missile shortage.
🇰🇷 The US has moved Patriot and THAAD air defense systems from South Korea to the Middle East, Yonhap reports. “South Korea’s President was reportedly upset over the decision, and voiced his opposition to the “US withdrawal of some air defense weapons, but we [South Korea] cannot fully enforce our opinion.”
🏛️ Political criticism of the war continues in the US:
🗣️ Sen. Chris Murphy said that after attending a two‑hour classified briefing on Iran, he believes the administration’s strategy is deeply flawed.
💬 Murphy described the plan as “so incoherent” that it is clear, in his view, the Trump administration will not achieve its stated objectives. He went further, calling the war “a disaster of epic proportions.” “We have not yet heard a consistent explanation of why all this has happened”.
⚰️ “Americans are already dying, price shocks looming in our country, and relations with allies are being damaged. And there’s no way to destroy their nuclear program because it’s underground, unless the regime is wiped out, which could mean sending in troops, which could be even more disastrous and unpopular”.
🤷 Steve Witkoff, special envoy to the Middle East for the Trump administration and Trump’s trusted negotiator in an interview on CNBC, when asked how he sees the war ending, replied confused: I don’t know… the only thing we know is that we shouldn’t go against Trump.
❓ After convincing Trump to attack Iran, Witkoff now says he has no idea how the war will end.
🇮🇱 From the side of Israel, the government has forbidden to issue pictures about the attacks that could be being suffered by the war.
📡 BBC correspondent Kasra Naji from Tel Aviv reports that the situation is very bad:
🚧 Israel is in a partial lockdown, the streets are empty due to fear of Iranian attacks. Shops are closed, and this situation is becoming unbearable for the population. Even large Hezbollah missiles are hitting Tel Aviv without the sirens going off, and this is unprecedented.
Market View.
📉 Optimism initially resurfaced in the markets following President Trump’s statements that the Strait of Hormuz would be reopened and that the National Energy Agency would release strategic fuel reserves to prevent a further spike in oil prices. However, as the hours pass, that positive sentiment appears to be fading.
📉 S&P 500 futures are once again struggling to hold the 6,800 level.
📉 Nasdaq 100 futures are attempting to remain above 25,000 points, though they too are pulling back.
🛢️ Oil, which yesterday fell towards $81.15 per barrel (spot Brent), is rebounding sharply and is now trading around $90 per barrel.
💲 In this context, the US dollar index (DXY) — which had previously weakened — is climbing back towards 98.95, pushing EUR/USD lower again, currently trading near 1.1610.
🇪🇺 In Europe, futures are turning negative.
📉 DAX 40 futures are falling below 23,700, while Euro Stoxx 50 futures have dropped under 5,800 and continue to decline.
🥇 Gold futures remain firm, having temporarily surpassed $5,200 per ounce yesterday.
₿ Meanwhile, Bitcoin, after breaking above $71,700 yesterday, is retreating to around $69,520.
