Thread by @albertrjf

Markets just printed a 100th percentile 10-day return. New all-time highs. Headlines say peace is near.

Meanwhile, the Strait of Hormuz remains effectively closed. Daily flows are still down ~90% from normal.

One of these readings is wrong 🧵

Last Friday's Aragchi statement was misread. He didn't announce a reopening — he said the conditions of the ceasefire had been met, and that vessels would now circulate under Iranian supervision, capped at 12-15 per day.

Since then, the strait has closed again. Traffic remains near zero.

Three structural friction points still block any stable resolution:
— US refuses any toll system on Hormuz
— Iran demanded to surrender its near-weapons-grade enriched uranium
— Iran wants $27B$ in frozen assets released, plus damages

Hormuz is the real breaking point.

Iran has already played its biggest card. Walking it back without a structural concession would mean admitting it has lost its main deterrent for good.

Partial reopening is possible. A formal toll system is politically unacceptable to the GCC. Saudi and the UAE cannot let Iran rent the chokepoint.

Iran can absorb the initial shock. Roughly 170M barrels in floating storage and transit, worth ~$23B at $135/b physical prices.

That's not a structural fix. It's enough oxygen to wait, which is exactly why the blockade is the real lever, not the headline diplomacy.

The math for the global market gets ugly fast.

Iran exports cut: -1.6 to -2.0 mb/d
Total Gulf shut-ins so far: ~11 mb/d
Cumulative unproduced barrels if Hormuz stays shut through April 20: >800M

This is not a number you offset with SPR releases or OPEC+ (nor Trump) rhetoric.

And that's just the base case. If the Houthis disrupt Bab el-Mandeb and Saudi exports from Yanbu, you add another 4.5-5 mb/d at risk. Total potential supply shock: 17-18 mb/d. There is no inventory cushion, no diplomatic pivot, no production tweak that absorbs that.

The IMF's own April WEO already concedes the point indirectly. Their reference case assumes oil normalizes to $82 average in 2026. Their chief economist admitted minutes later that reality already looks closer to the adverse scenario.
Severe scenario: $110 in 2026, $125 in 2027. Global growth at 2%. That is effectively a global recession that the equity market is not pricing.

Here is the part the rally is ignoring: even if Hormuz reopened tomorrow, the ~11 mb/d currently shut in does not come back instantly. Tanker logistics alone push normalization past late June. Cumulative loss by then: >800M barrels.
You do not rally to all-time highs on "peace is near" while the physical market is in its largest disruption in decades.

Energy investing is painful in the short term and the volatility is brutal. But the dislocation between physical reality and equity prices is the widest I have seen in years.

The market is pricing a return to normal that the physical market is not delivering.