The all-or-nothing aspect of this Iran war is fascinating to both trade and observe. Since the start of the war, there was a group of market participants that expected the war to end within days or weeks. Seven months on, that group disappeared, rightfully so. Not only were they wrong beyond belief, but they falsely assumed that Trump could unilaterally exit the war.
Then we reached the June MOU, when another group thought the war was over and that the Strait of Hormuz would return to normal.
Wrong, and once again, that group vanished into the abyss.
Now a new group has emerged: the Iran-has-lost-control group.
They are equipped with tanker data ready to dispel any nonsense about the oil math. “Look at my data,” as they shout loudly from the mountaintops.
Yes, anyone with eyeballs can see how much the Oman lane shuttle trade is flowing.
Yes, it’s no surprise to anyone who actually followed the data, as I wrote 2 weeks ago, that the Saudis are going to ramp up exports in the East, so the Oman lane is going to flow ~12 million b/d.
But as Mark Twain famously said, “It ain’t what you don’t know that gets you into trouble, it’s what you know for sure that just ain’t so.“
Beware of people equipped with data. That warning goes for me as well. If there’s one thing I’ve learned the hard way in investing and trading, it’s that an overreliance on data does more harm than good.
Yes, I understand that the steady increase in oil flow in the Oman lane despite daily tanker attacks implies that Iran is losing control. But when you actually look at the data and see how much of that oil flow from the Saudis is going to China, you have to pause and wonder: did they?
Let me enlighten you.
They did not.