Hormuz on the Edge: Oil Markets Brace for Monday Shock as US-Iran War Escalates

Let's skip the pleasantries: the Strait of Hormuz — the narrow waterway through which roughly 20% of the world's oil flows — is one presidential tweet away from a full blockade. Iran's Revolutionary Guards have explicitly threatened to close it entirely if Trump follows through on threats to Iranian energy infrastructure. Brent crude is already trading above $107, shipping traffic through the strait has been at a near standstill for over 10 weeks, and Saudi Aramco's CEO just pulled out of a major international energy conference over the conflict. That's not a good omen.

Meanwhile, Bloomberg's Daybreak coverage confirms Trump rejected Iran's latest ceasefire counter-proposal, calling it 'a piece of garbage' and describing the truce as on 'massive life support.' Treasury Secretary Bessent says the US has 'plenty' of funds for the war — which is either reassuring or terrifying depending on your portfolio. Asian shares are sliding, the dollar is surging on haven demand, and UK PM Starmer has called an emergency economic meeting. The whole world is suddenly very interested in a geography lesson about the Persian Gulf.

Oh, and April CPI came in at 3.8% year-over-year — hottest since May 2023 — which means the Fed is trying to fight inflation while the Middle East is actively trying to light the energy complex on fire. Good luck with that, Jerome.