We open the week with another wide swing in markets.
It was led by Trump’s TruthSocial post on Saturday, threatening to “obliterate” Iranian power plants unless they “fully open” the Strait of Hormuz — in 48 hours!
Stocks gapped down Sunday night, and oil was trading back above $100.
But it was all reversed this morning with another Trump post — he called a five-day pause on any energy infrastructure strikes, citing “productive conversations” with the Iranians.
That was good for a 4% rally off of the morning lows in the S&P futures, and a $16 collapse in crude oil futures (peak to trough on the session).
Look familiar?
It’s the third time in three weeks the administration has talked down the temperature — calming markets on a day that could have turned into a slippery speculative frenzy.
Remember, three days into the war, Scott Bessent went on CNBC to calm markets — stocks ripped, oil dropped. On Day 10, talk of a coordinated supply release crashed oil from $119 to $76. And today, a “5-day extension” talk is doing the same work.
Each time, the sentiment massage has worked temporarily. But each time, the physical reality on the ground hasn’t changed.
The CENTCOM commander summed it up today: the Strait of Hormuz is physically open, but operationally closed — because Iran continues to target any vessel attempting transit.
The 11 million barrels a day of global oil supply lost is not coming back on a 5-day timeline (or a 5-week timeline). The insurance market remains frozen. The shipping lanes remain threatened. And Qatar’s LNG infrastructure remains physically damaged (key European energy supply).
On the latter, the leading commodity data provider (Kpler) confirmed that 19 million tonnes of LNG supply is offline through at least the end of May. And this is what matters for the European doom loop we’ve been discussing.
The U.S. can use tools to manage oil prices at home — and they are. As a net energy exporter, the oil shock is partially offset by domestic production profits. The Fed said as much last week.
But the market and sentiment massaging in the U.S doesn’t help Europe.
They are energy dependent. And the squeeze on Europe continues.
