Geopolitically speaking, the Iran war is approaching the final escalation phase. From an oil math standpoint, the two main bypasses to the Strait of Hormuz- Fujairah and Bab al-Mandeb are now in the crosshairs. This morning, Houthis announced a blockade of all Saudi ships through the Bab al-Mandeb. We have seen them enforce the closure in the past, so it’s interesting to see the oil market completely shrug off this announcement.
In addition, tanker attacks along the Oman lane in the Strait of Hormuz continue. A 3rd vessel was attacked near Dibba, UAE, which is the closest it’s ever been to Fujairah. If my analysis is correct, Iran will force compliance in Fujairah, which will complete the final escalation of the oil math.
In this article, I will run you through some of the scenarios on the oil math. This should help inform you of the future path of where oil is headed.