Strait of Hormuz Blockade and Oil — Iran Holds the Negotiation Cards

The number of ships passing through the Strait of Hormuz dropped from 12–13 yesterday to just 4 today.

A ceasefire was announced, yet maritime traffic through the world's most critical oil chokepoint actually declined. Markets celebrated with a gap-up. The physical economy told a different story.

What the Oil Market Is Really Saying

Start with the oil chart.

From yesterday's close at 110, today opened with a gap down toward 96. Prices dipped to around 91 intraday before finding buyers near the close. The ceasefire triggered a selloff in crude, but the fact that buyers stepped in at the lows tells us something important: the market doubts this ceasefire will hold.

The key level to watch is 95 — the 2023 high. Oil holding above this level signals a structural shift in energy markets, not a temporary spike.

Iran Holds the Cards

It sounds counterintuitive, but Iran appears to be in the strongest negotiating position at the table right now.

Vance, Kushner, and Witkoff are reportedly heading to Pakistan this weekend for negotiations with Iran. Iran's demands appear to center on two items: a permanent end to hostilities, and reparations for destroyed infrastructure.

What happens if they don't get what they want? Tolls on the Strait of Hormuz. Some dismiss the toll idea as speculation — but it's actively being discussed across every major news outlet. Trump himself floated the idea today of partnering with Iran to share toll revenues.

Whether that statement was serious or not, the administration's inconsistent messaging is inadvertently strengthening Iran's leverage.

Israel Won't Stop

One variable in this equation is non-negotiable. Israel will continue striking Lebanon.

Regardless of whatever deal emerges from weekend negotiations, Israel has shown no indication of halting its Lebanon campaign. Iran has explicitly stated the strait stays closed as long as Israel attacks Lebanon. The logical outcome: oil continues climbing.

This isn't the kind of problem a ceasefire solves. Israel-Lebanon, Iran-US, Strait of Hormuz — three axes intertwined so tightly that resolving one doesn't untangle the rest.

What Oil at 90–100 Actually Means

If oil stabilizes between the mid-90s and 100, the cascading effects are predictable.

Energy costs transmit through the economy in sequence: transportation → raw materials → consumer goods. The lag exists, but the direction is certain. Fed rate cut expectations get pushed back. Corporate margins start compressing.

The S&P 500 gapped up on ceasefire headlines. That doesn't make the energy cost problem disappear. If oil stays at these levels, markets will have to confront this reality sooner than later.

Equities reacted to the headline. Crude oil reacted to reality. Which one deserves your attention is obvious.

Principles in Uncertainty

Nobody understands what this administration is trying to do. NATO withdrawal signals, Israel distance, toll-sharing proposals with Iran — the direction changes multiple times daily.

In this environment, investors can do one thing: focus on what's controllable. Respect your levels, set your stops, build long-term positions through staged entries. The oil chart and Strait of Hormuz traffic volume — these are the two most honest indicators in the market right now.