Oil is back up. WTI traded back to $82 today, up 5%. That's an $8 round-trip inside of a week.
And it's the sixth time the de-escalation campaign (orchestrated by the U.S. administration) has evaporated.
Iran's Revolutionary Guards said over the weekend that they will not reopen the Strait of Hormuz until the U.S. meets its list of demands. Iran wants to retain control of the waterway after the war, and it wants to charge tolls for passage.
That's not going to happen.
As we've discussed for months, Venezuela is the model for how Trump will resolve the Iran war: eradicate the regime, take the oil, remove the leverage.
That said, Trump has made a series of starts and stops on Iran, to massage market sentiment. But the endgame is regime change and control, not a peace deal. Kharg Island, which handles 90% of Iran's crude exports, has to come under American control.
So, clearly this does not resolve with a deal that leaves Iran charging a fee on a fifth of the world's oil and gas.
With that, the U.S. naval blockade remains, and the gas ratio (chart below) is pricing in risk of bigger, longer global energy supply disruption — more war.
Remember, this gas ratio is the multiple that Europeans are paying for natural gas, relative to what Americans are paying. It just printed another new wartime high — trading above the prior highs marked in the early days of the war, and in late July.
Please note: I'll be away the remainder of the week, so you will not receive a Pro Perspectives note from me.
In the meantime, if you're not already a member, I invite you to join my premium services: Our AI-Innovation Portfolio owns the scarce physical inputs the AI buildout cannot exist without. Our Billionaire's Portfolio owns the still-undervalued producers of the hard assets that feed it.
Two portfolios driven by one thesis. Learn more here.