Another 40 Days Like This And A Recession Could Hit Us

Markets are seen as overly optimistic on Middle East ceasefire progress, while a potential Strait of Hormuz blockade remains a significant oil supply risk. The physical oil price is trading at a 20% premium to futures, indicating severe tightness in prompt supply and elevated geopolitical stress. The setup is negative for risk assets and bullish for crude volatility and energy prices.

Analysis

Markets are seen as overly optimistic on Middle East ceasefire progress, while a potential Strait of Hormuz blockade remains a significant oil supply risk. The physical oil price is trading at a 20% premium to futures, indicating severe tightness in prompt supply and elevated geopolitical stress. The setup is negative for risk assets and bullish for crude volatility and energy prices.