Good morning! We are entering day 6 of the war in Iran and the situation is still escalating. Today we saw Iran target Azerbaijan and Georgia as no side is showing deescalatory signs.
There are also rumors of an American F-15 being shot down over Iran, however a successful rescue operation supposedly managed to extract the pilot. We are awaiting the official confirmation of the action.
Iran Tracker
#1 The Ceasefire
Chances of a ceasefire continue to go down on the markets.
Despite initial optimism, traders are turning bearish on the prospects of a quick war as the Pentagon is looking to conduct an operation for at least 100 days. On the Iranian side there are operations supposedly taking place to ensure the government's resilience in the prolonged conflict (whatever that means).
#2 The Strait Of Hormuz
The Strait of Hormuz continues to be effectively closed as we enter another day with traffic down 90%+.
Despite the market being in the active dispute process, we are surely near the point in which the 7-day moving average of traffic is down 80%+. This affects both countries and oil&gas companies, which continue to trigger force majeure clauses. Some countries like South Korea or Japan face shortages in days to weeks while Bangladesh started to implement measures to save fuel.
The forecast for crude oil remains unchanged:
#3 Boots On The Ground
Chances for US forces to enter Iran dramatically increased as we await the confirmation of the rescue mission.
At the same time, there are rumors that Pete Hegseth and Marco Rubio are clashing over the issue of US boots on the ground. There are also rumors of Kurdish forces already entering Iran, however for now they remain unconfirmed and there is no official US support yet. The market remains flat, but continues to see it as likely:
#4 Iranian Regime Fall
The market remains unchanged when it comes to Iranian regime chances of survival.
This market feels like a resultant of the above markets, pricing in ceasefire chances, US boots on the ground and Strait of Hormuz closure time. However, the resulting coin-flip odds only show how volatile the situation remains.
#5 Next Supreme Leader
We are hearing both rumors of Khamanei's imminent confirmation, as well as some opposition voices trying to derail the process.
Supposedly, the IRGC is pushing for a quick confirmation in order to try and consolidate power in the country after Khamenei senior's death. We can expect the US with Israel to try and further derail the process, as they did when they bombed the assembly recently.
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.