The Strait of Hormuz situation:
Reuters is now reporting that Iran is notifying vessels that it is CLOSING the Strait of Hormuz.
If officially closed, 20+ MILLION barrels of oil PER DAY will be impacted, or 20% of global supply.
The Strait of Hormuz, between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
This body of water controls ~20% of the world’s petroleum liquids consumption.
In other words, ONE FIFTH of global oil consumption flows through here EVERY DAY.
After US strikes on Iran last night, ships in the Strait of Hormuz are now receiving warnings.
As of 12:30 PM ET, the US has recommended ships avoid the Strait of Hormuz.
In their 2025 analysis, JP Morgan described this as their worst case scenario in an Israel-Iran war
In fact, according to JP Morgan estimates, a closure of the Strait of Hormuz could send oil prices to $120-$130/barrel.
This would imply a spike in US CPI inflation to ~5%.
The last time we saw US inflation at 5% was in March 2023, when the Fed was aggressively hiking rates.
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