Excellent analysis. It confirms that the closure of the Strait of Hormuz is no longer a hypothetical scenario, but a real drain on our purchasing power. The supply shock will affect every consumer good, far beyond gasoline, leaving the Fed with no room to maneuver on interest rates for 2026. Protecting capital is now a necessity, not a choice.
Truly frightening to see how this hypothetical scenario has now become a reality. The Fed might still lower rates since it can’t really do anything to make gas lower by raising rates
Trump is trying to calm the markets down but the strait is still closed, Oil can get re-priced voilently if the strait remain closed for more then 2 weeks
This is going to depend on how confident markets are in what world leaders are saying. That might be an immediate price shock if people lose confidence in that
Oil has been falling for the last 24 hours. Wars have a way of creating pathways (both good and bad) that were never envisioned. Having lived in this war zone for over 10 years - I would never bet on how the impacts will play out
I am not in the Middle East currently. I would be very skeptical of all information and analysis either for or against what is going on. Most of it leaves out significant information which would change the analysis. You cannot have a conflict where you expose all facts and information.
I think this is creating a perfect storm for a recession, rising input costs like these, mass layoffs, and general uncertainty because of AI. Hopefully, it doesn’t happen though.
The Fed angle here deserves more attention than it's getting. Energy-driven inflation is structurally different from demand-pull inflation — you can't hike your way out of a supply shock without destroying the very demand that keeps the fiscal math working. The real risk isn't $100 oil. It's $100 oil coexisting with negative real wage growth for long enough that discretionary consumption cracks and drags the rest of the economy down with it. That's the scenario OPEC+ fears most, because demand destruction at these prices would force them into cuts they can't politically afford — especially with members already cheating on quotas.
That is a great observation! The Fed only has one lever in this case (hiking interest rates) but that would hurt your average worker while doing nothing to lower energy prices
Excellent analysis. It confirms that the closure of the Strait of Hormuz is no longer a hypothetical scenario, but a real drain on our purchasing power. The supply shock will affect every consumer good, far beyond gasoline, leaving the Fed with no room to maneuver on interest rates for 2026. Protecting capital is now a necessity, not a choice.
Truly frightening to see how this hypothetical scenario has now become a reality. The Fed might still lower rates since it can’t really do anything to make gas lower by raising rates
The Trump Admin. is doing a phenomenal job of controlling the narrative. It is awe inspiring how resilient the market has throughout the week.
I think a lot of people are betting this will be a short lived conflict and that’s why the market is being so resilient
Trump is trying to calm the markets down but the strait is still closed, Oil can get re-priced voilently if the strait remain closed for more then 2 weeks
This is going to depend on how confident markets are in what world leaders are saying. That might be an immediate price shock if people lose confidence in that
Oil has been falling for the last 24 hours. Wars have a way of creating pathways (both good and bad) that were never envisioned. Having lived in this war zone for over 10 years - I would never bet on how the impacts will play out
Do you live in the Middle East? Could you give us your opinion on how things look from the ground there?
I am not in the Middle East currently. I would be very skeptical of all information and analysis either for or against what is going on. Most of it leaves out significant information which would change the analysis. You cannot have a conflict where you expose all facts and information.
Good read!
I think this is creating a perfect storm for a recession, rising input costs like these, mass layoffs, and general uncertainty because of AI. Hopefully, it doesn’t happen though.
Yes! I’m hoping that a lot of these issues can be worked through and we don’t go into a recession
The Fed angle here deserves more attention than it's getting. Energy-driven inflation is structurally different from demand-pull inflation — you can't hike your way out of a supply shock without destroying the very demand that keeps the fiscal math working. The real risk isn't $100 oil. It's $100 oil coexisting with negative real wage growth for long enough that discretionary consumption cracks and drags the rest of the economy down with it. That's the scenario OPEC+ fears most, because demand destruction at these prices would force them into cuts they can't politically afford — especially with members already cheating on quotas.
That is a great observation! The Fed only has one lever in this case (hiking interest rates) but that would hurt your average worker while doing nothing to lower energy prices