According to Wikipedia, Lam chau is a Cantonese term used in Hong Kong but now daily accepted as a foreign phrase whose English corresponding term is “If we burn, you burn with us”. It is the state in the Hormuz Strait now.
Iran publicly announced that they would lay mines in the Hormuz Strait, but now it is said only 10 mines had been laid out of the 6,000 inventories, but already 16 laying boats had been sunk by the US. Actually, they can silently go out at midnight and lay hundreds or thousands of mines, then in the morning warned no one can go through. It will be easier than what is happening now. But if the Strait is completely blocked, what would happen?
All shadow fleet tankers, fishery boats and other commercial ships cannot go through also. China is buying Iran oil as a financial back up for them. Will they be so foolish to cut their money income line? In Indo China, that is Cambodia, Laos, Myanmar and Vietnam, there are still 2 million mines on land laid in last century but not yet cleared. How many people are still being hurt and killed now? Including tourists and local people, and not just the army are still being victims nowadays. So, if the war is over, who is responsible to clear them up? One more point, when their inventory is used up, they can still buy another 6000 from Russia or China or both. How to use these 6000 effectively. They can add some fake mines as the nuclear plant and shooting racks. Fake shooting platforms are used to protect the real one. That is, they can lay one real mine and the second is fake, so as to increase the cost and time of clearing. Thus, an inventory of 6000 can become 12000 or 18000 mines under the water.
Why did they announce first and just lay down 10 even though 16 boats were destroyed? Is it a psychological war, or chips for negotiation? Who knows? Anyway, 6000 inventories if fully loaded under water, including the same or double the number of mines, it not only takes years but may take a decade or more to clear them totally. Who will be most hurt? Iran is surely among one of the detrimental countries.
In 2012, the US announced the successful development of shale oil. In 2015, the production of US oil surpassed Saudi Arabia. US became the largest producer of the world and ended the petroleum crisis that lasted for half a century. There is no shortage of oil in the US now. They no longer need to line up in stations for refilling, no need to have panic buying of oil. What they fear is inflation caused by East Asia, since the Hormuz Strait covers most of oil to East Asia including Korea, Japan, Taiwan and China, and that’s why the Korean stock market dropped to circuit breaker point. Iran oil can only sell to China for they are under sanction, no one dares to buy or else will have secondary sanction. Therefore, China can press down the price, it is said to be 20% at least. Anyway, the US afraid of inflation even if there is no shortage.
If Hormuz Strait belongs to international waters, it should be the United Nations that comes out to clear the passage and have escort to maintain all ships passing it safely. But as Barack Obama once said, people would only expect the US and no one else to come out when it needs military power. For when the US navy comes out, it would become a shooting target and they become human shields.
How to read the futures of WTI? On page 4 the top chart is Spot Rate or sometimes called CASH. That is then you pay cash at once you can get the Texas sweet crude oil at $93.62. The middle picture is the front month (Mar). It is a future, you cannot have oil now, but on the last trading day of this month you can get it by paying this price; no matter at that time how high or how low it is. And in the lower chart, a straight highlighted column denotes by the last trading day of that month, how much you should pay to get the oil. You can see, by the end of May, the price is $93.15, it is lower than today and the following months are lower than each other. This is what we call market expectation. It is paid by money for their expectation and not just typing down a number in the mobile or computer.
March is the Wolf Moon, and because there had been a total lunar eclipse and turned the moon from a barren grey color to a bloody red color as Mars which is known as God of Wars. Please refer to The Express of 20260306, the Super Blood Moon and compare the fireball with that of today. Thus, will know the war would not end so soon, for S&P is in a round top and any big black candlestick would trigger a bigger drop to Bear Market which can be another golden pit for buying.
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.