“You been had. You been took. You been hoodwinked, bamboozled, led astray, run amok”. Malcolm X, Juneteenth 1964.
In the news
(Economic Times) “Shell Plc, one of the world’s largest traders of oil and gas, has warned that any disruption in the Strait of Hormuz due to the escalating conflict between Israel and Iran could have serious consequences for global trade. Chief Executive Officer Wael Sawan said Shell has contingency plans in place in case flows from the region are hit.”
Let’s dig into this: The Strait is probably the most protected 21 miles of international waters on the planet (except the Strait of Malacca). The 5th Fleet is on station. The Nimitz is expected to be in the Mediterranean with a powerful strike group on or before June 23. France and the UK have a formidable naval presence.
Since the brief blockage of the Strait in 1980, naval capabilities include sonar and remotely operated vehicles (ROVs) to detect and neutralize mines. Destroyers and patrol craft use 5-inch guns, missile launchers, and helicopters to counter Iran’s fast-boat swarms. If tensions in the theater rise to that level?? Gold will be well over $4,000 and oil at $150, in my opinion.
This morning, Goldman opined the war premium in Brent is $10/barrel, putting fair value at $66. Bloomberg says Iran’s exports are surging. No specifics, but daily reports from the region confirm loadings are brisk.
In other news, Powell chose an old saw to sum things up yesterday: “If it ain’t broke, don’t fix it. Things are good, he said, and until they are not good, steady as she goes.
In the markets
Energy prices cling to highs on the NYMEX, the jury is still out in gold, silver may take a pre-expiration beating as usual, June Spoos look ever more like a pin at 6000… bitcoin is looking for a reason… and a memories of the carwash as a kid in the vibe.
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