Good morning! We are entering the second week of the Iran war and the situation is, well... dire. Oil briefly breached $100 per barrel, but went down after SPR release was teased.
On the ground, Iran continues to strike Gulf countries, including now desalination plants as in Bahrain. At the same time Iran is getting badly hurt with joint US-Israel strikes that have recently targeted oil reserves near Tehran, creating an ecological crisis you can see on the title photo.
Read on if you want to understand where we are headed!
Iran Tracker
#1 The Ceasefire
After initial optimism regarding a swift ceasefire, traders now no longer see it as likely by the end of April.
Trump continues to double down on the conflict, now demanding an unconditional surrender. However, Iran continues to say and show that it is ready for a prolonged conflict, aiming to impose outsized costs on team west (and the whole world to be honest).
Recent flat trend on the market suggests that traders want to believe in a fast resolution, but pretty soon, if no major breakthrough is achieved, the April market will experience decay as well.
#2 The Strait Of Hormuz
The Strait of Hormuz continues to be effectively closed as the market is now on the brink of satisfying the Yes criterion of at least 80% traffic reduction calculated as 7-day moving average.
Even Trump's reinsurance program might be not enough to resume traffic. Not only is $20 billion not nearly enough to make insurers at ease, but also the real risk is in sailors not being willing to cross as the risk to. their lives has nothing to do with insurance.
So oil continues to climb and even the teased SPR release won't keep it contained for too long as traders now see more chances of oil above $140 than of a ceasefire by the end of the month:
#3 Boots On The Ground
Chances of US forces on the ground in Iran continue to climb as Trump teases a special operation to retrieve the highly enriched uranium from the country.
As the special combat operation drags on, chances are boots on the ground will be a necessity rather than an option. In fact, it seems that there will be no other option if Trump really wants to achieve regime change. Especially since the Kurds denied to get involved for now:
#4 Iranian Regime Fall
As days go by, traders are also less and less bullish on the prospects of a regime fall.
The regime surviving the initial decapitation strikes made people realize that no Venezuela scenario is possible. In fact, it seems that the power was swiftly consolidated in the new hands.
#5 Next Supreme Leader
It is a really bad news for Israel and the US. Not only did the new leader lose his entire family in recent decapitation strikes, but also he is rumored to be natively more radical than his father. Additionally, he is perceived as an IRGC-backed option, further consolidating the power in the hands of the highly motivated and ideological revolutionary force.
However, traders see his chances of surviving till the end of the year as slim with only 32% allocated to him on the Supreme Leader at the end of 2026 market.
Wrap up
Situation remains extremely volatile so make sure to follow the markets live to get fresh information on the conflict. See you tomorrow for another Morning Brief!
This is not official investment or life advice. Do your own research. This are only my opinions and I encourage anyone to do their own research before putting any money anywhere.