The Hormuz Strait Is the Market’s Real Risk
The market spent the week relieved. Inflation was cooling, the rate-hike fear had lifted, and the VIX sat calmly at 16. The one thing that can undo all of it is quietly climbing again: oil.
Iran has lost most of its military, so it reached for an asymmetric weapon. It is choking the Hormuz Strait, the narrow channel a large share of the world’s oil passes through, using cheap drones and kamikaze speedboats against tankers that have no room to maneuver in such a tight waterway. Now it has threatened a second chokepoint, the Bab al-Mandab Strait at the mouth of the Red Sea, through its Houthi allies. WTI is back near $80 and Brent near $86, up from about $70 earlier this month, and the report warns a full blockade could send oil back over $100.
That is the danger, because oil is the fastest fuel for inflation. A move above $100 would revive the very price pressure that just eased, and hand the new Fed the worst kind of problem: inflation from a supply shock that rate policy cannot fix. It would also test a market whose own signals have turned unreliable, with false chart patterns tripping up even Nvidia, while Korea’s market just broke down and its two chip giants make up half of it.
The one warning: a VIX at 16 is priced for nothing going wrong. A waterway that even a crippled military can disrupt is a fragile thing to feel calm about.
The focus of the market today: watch oil, because the Hormuz Strait, not the Fed, is the fastest route back to the inflation the market thought it had escaped.
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US Stock Express 20260717 Hormuz Houthis SPCX KOPSI
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.