Key insights
- Trump's claim of a permanently open Strait of Hormuz and a China-Iran arms deal triggered a minor oil sell-off but a Nasdaq rally, suggesting differing market interpretations. Crude's muted response, coupled with a US probe into pre-pivot oil trades, hints at skepticism regarding the deal's durability. The Senate's blocking of a bill limiting Trump's war powers further complicates the situation, creating uncertainty about future US-Iran relations and their impact on energy markets and risk assets.
Trump said yesterday the Strait of Hormuz is ‘permanently open’ and that China agreed to stop arming Iran. If true, that’s a meaningful de-escalation of the Gulf situation that had crude elevated for months. Oil sold off on the news, but only about 1%. WTI is still sitting above $91, Brent above $95. For a permanent resolution to a strait-closure risk that's been embedded in prices for months, thats a pretty underwhelming response. Iran hasn't confirmed any deal publicly. And on the same day the US Senate blocked a bill limiting Trump’s Iran war power, so the military option didn’t actually go anywhere. The split atm is interesting: Nasdaq ripped about 1.4%on the same headlines. Tech is treating this like it’s real. Crude is not. Also buried in Reuters: the US is now probing suspicious oil trades made before Trump’s recent Iran pivots. Not sure what to do with that detail but it feels like a signal imo. Genuinely curious whether crude is just slow to reprice or whether the commodity market sees something about this deal’s durability that equity traders are missing.