I don’t know about you, but I never want to eat another taco in my life again. Just the sight of a taco makes me want to puke. I think I’ve had enough TACOs (Trump always chickens out) over the last 5 months.
As I wrote on X today:
The Trump administration has played this playbook over and over again since March, and it’s worked 100% of the time.
Bait speculators to buy into oil long positions ahead of some self-imposed deadline (civilization-ending bombing or the latest all-out economic fury). Announce an extension or a nothingburger like the one we saw from Bessent, then immediately run an “imminent” peace-deal headline from the usual suspects: Axios, Pakistan, Al Arabiya, US officials, and a new participant today, RIA Novosti.
Of course, today’s leaked headline contained the usual language:
Neither Washington nor Tehran has confirmed the agreement, while Oman and Iran separately proposed a temporary mechanism to restore Strait traffic.
But once again, the damage was done. The headline came out after CME closed, and oil fell another $1.50/bbl.
Welcome to oil trading, where the world’s most powerful government is against you.
So the question is: how many TACOs can you eat?
Unsurprisingly, despite Iran and Oman’s announcement proposing a temporary mechanism to restore Strait of Hormuz traffic, Iran’s deputy foreign minister clarified that the US must meet all conditions in the MOU (from June) before the Strait of Hormuz could reopen.
In case you forgot, this includes:
Lebanon
Sanctions lifted
Sanctioned funds returned
Oh, and of course, the Strait of Hormuz remaining in Iran’s control.
How can I forget... Silly me.
But if you are like me, you must be sick of these TACOs. I mean, at some point, the oil math should like... matter, right?
The Shuttle Trade
By this point in the conflict, everyone and their grandma knows about the shuttle trade. Mainstream media describes this as dark transits shuttling crude oil and petroleum products through the Oman corridor under the military protection of the US Air Force.
So just how much oil is flowing through this Oman lane?
I have written before that if you track all the increases in OPEC+ crude exports since March, the Oman lane is about ~4.6 to ~5 million b/d.
If you track all of the flows leaving the Gulf of Oman, it’s about ~7 to ~8 million b/d. Now keep in mind this includes Fujairah (1.8 million b/d) and Oman (0.8 million b/d).
Now, if you paid attention to Chris Wright, the Energy Secretary, you would think it’s around ~9 million b/d.
This is where people are getting confused. Who is right?
I’ll be the first to tell you I don’t know. The US has not been exactly honest up to this point so far in the war. I mean, we literally have the Department of War talking about how all of Iran’s missile capabilities have been eliminated, only to get blasted repeatedly by the very same eliminated missiles in July.
And as for Iran, they have not been honest either. It is clear they don’t control the Strait of Hormuz or at least not to the extent they are describing it to be.
But what I do know is this: visible, trackable global oil inventory figures are showing a draw of ~3 million b/d.