Oil prices jumped because Trump said he'd charge ships to use the Strait of Hormuz. The Strait of Hormuz. A body of water that exists between Iran and Oman. A place where thirty percent of the world's seaborne oil passes through every single day. Trump looked at it and thought, "What if we put a f*cking toll booth there?"
Traders bought oil. They always buy oil when someone threatens to make moving oil harder. It's their one move. Someone sneezes near a pipeline in Texas and these people are hitting the buy button like it's a slot machine that owes them money.
The headline also mentions airstrikes on Iran. U.S. launches new Iran airstrikes. That happened too. Actual bombs. Actual military action in the region that controls the actual waterway Trump wants to monetize. But sure, let's focus on the theoretical shipping fee that will definitely hold up under international maritime law and not the part where we're actively bombing the country that could close the strait whenever it feels like it.
The technical picture says oil is oversold on the weekly but overbought on the four-hour and none of that matters because it never does. Price went up because a man said words. Tomorrow he'll say different words and price will do something else. You could replace every oil trader with a soundboard of Trump quotes and a random number generator and get the same results.
Retail accounts are now long crude at levels not seen since the last time they got liquidated buying a geopolitical headline. They'll hold through the reversal. They always do. They'll watch their accounts bleed out while refreshing Twitter to see if Trump has any updates on his maritime toll plaza that will never exist.
The Strait of Hormuz remains free to use, the airstrikes will be memory-holed by Friday, and oil will close the week exactly where it opened because nothing ever happens.
Photo by Saifee Art on Unsplash
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