Not everyone has powers like this.
Synopsis
- Trump blockaded the Strait of Hormuz today
- Trump claims the strait is open. The market vehemently disagrees.
- In addition to closing the strait, Trump wants a 20 percent fee for safe passage that the US cannot even supply.
- Iran has successfully hit US escorted tankers.
- As a result, the price of WTIC has surged from $72.70 at 5:32 AM this morning to $79.41 at 8:12 PM this evening.
- That’s an increase of $6.71 per barrel, 9.2 percent in a matter of hours.
- Brent Crude is up from $77.38 to $85.47 in the same timeframe. That’s an increase of $8.09 or 10.6 percent.
Bond Yields
- 30-Year: 5.112 Percent.
- 10-Year: 4.630 percent.
If the long bond yield tops 5.179 percent, it will be the highest since mid-2007.
July Rate Hike Odds
- 8.3 percent a month ago
- 25.7 percent a week ago
- 34.2 yesterday
- 45.4 percent today
September Rate Hike Odds
- At Least One Hike: 77.7 percent
- Two Quarter Point Hikes (July and September): 26.9 percent
- Stand Pat: 22.3 percent, down from 30.4 percent yesterday and 70.5 percent a month ago
Given the odds of two hikes is greater than holding steady, the market has now effectively priced in a hike by September.
For Whom the Toll Bells
Mere Mortals Don’t Have This Power
Congratulations are in order. Mere mortals don’t have this kind of influence on the markets.
So tut-tut to all of you protesting Trump as a king. Trump is not a king. He is a god, and acts like it.
In edit, WTI is now $79.83 poised to be back over $80 soon.
But that’s OK.
On What Basis Is This OK?
Please look at things this way. It’s a small price to pay for Republicans getting crushed in the midterm elections.
At least six Republican seats are in play. Rising oil prices, rate hikes, and more inflation overall will help the cause.
Note: I am not a Democrat and do not align with them on fiscal and other issues. But I have had it with Trump worship, wars, deficit spending, tariffs, and many other issues.
Trump has destroyed the Republican party and will pay a price at the midterms no matter what party you support.
Fees Are OK Now
Please note that a $1 million fee by Iran is not OK but a 30 million fee for safe passage collected by the US is OK.
For discussion, please see Trump Says the US Is the Hormuz Strait Guardian, Will Charge 20 Percent Fee
Instead of paying Iran $1 million per ship, Trump wants 20 percent of cargo.
And Trump cannot even guarantee safe passage!
US Escorts Under Attack
Why Republicans Will Lose the Senate
For further discussion of the election, please see Why I Expect Democrats to Win the Senate in the Midterms Elections
It’s the economy stupid, plus betting markets, Republican infighting, and momentum.
Expect a heathy serving of Taco’s as it is Tuesday.
Closing of the Bab al-Mandeb strait now more likely
https://www.presstv.ir/Detail/2026/07/13/772185/Yemen-threatens-to-close-Bab-al-Mandeb-Strait,-warns-of–200-a-barrel-oil-amid-Saudi-aggression
This would further restrict oil coming from the Middle East
Neutralizing and/or displacing the Iranian Regime is MORE IMPORTANT than the price of oil! People have plenty of money now. Stop the whining. Whew.
The average net worth of individuals in a bar when Elon Musk walks is in the tens of billions of dollars.
What an idiotic assessment when three-fourth are worried about putting food on the table.
And if the idiot in charge had not started this stupid war in the first place 100% of us would be better off.
thank you My electric bill has increased form 69 to 92 dollars for my minuscule one bedroom apt Vegetables/fruits have increased many fold so I now go to a second food pantry and I am joined by MANY of my peers And dont tell me that they are all ‘queens’ wanting free food. I would much prefer to fill my grocery cart at Aldis but I just dont have the leisure monies to do that. I drive my hybrid below 60mph to keep it running on electric so I only fill my tank every 3 weeks. Every day I see more and more vagabonds homeless hobos in ALL levels of neighborhoods. I know something is terribly wrong. But I stay strong. “I prefer the company of peasants because they have not been educated sufficiently to reason incorrectly.”
― Michel de Montaigne
I thought you said with ALL CAPS that the Strait was not closed.
If this Hormuz fee threat caused oil to surge $10.00 in one day, imagine what would happen to oil prices if any or all of the following oil supply disruptors occurred:
Brazil’s main oil production fields are thousands of miles South of hurricane prone areas. They sit around the coast of the states of Rio and Sao Paulo.
Caracas is almost twice as distant to Rio de Janeiro as it is to Toronto.
Reasonable point.
While rare, hurricanes and tropical storms have occurred such as 2004’s Hurricane Catarina. Since that time, waters in the Gulf have warmed significantly and deepwater production has moved north. Also the media loves to spin anything that even threatens oil production so the rationale of prices rising with any combination of the above stands.
As an aside, the Pacific water temperatures are now rising significantly with the intensifying El Nino and prediction models have little experience with an anomaly above 2 degrees.
Mish may experience some intense “Monsoon Season” activities in Saint George, UT.
Food for thought in any case.
If anyone knows how to talk anything up…
it is most certainly King Chaos the Shit Talker.
Now serving: a Republican Party of One!
Trump just legitimized Iran’s claim for transit fees (protection money)
He’s a genius at undercutting his previous position (right of free transitP
Dementia patients often do that.
I believe international law on the high seas also makes it illegal to murder unarmed people on boats. But what do I know…
Like in Venezuela.
That is why Rubio wants to end the ICC.
You can bet that taco’s billionaire buddies are on the right side of the related trades in equities, bonds and commodities, including his personal trades.
Trump didn’t cause interest rates to go up. 10 year bond yields were already heading higher due to the beginning of the 20 week cycle at the end of June. Already the present cycle is a hair weaker than the previous one, which rallied early from 3.96 to 4.48%. I expect the present 20 week cycle to reach at least 4.80%.
The 2 years of general horizontal movement into the second post-COVID 54 month cycle has me thinking the cycle may be inverting and will blast higher over the next 3 years as the last 15 years of the 60 year cycle makes its top.
Well for the prudent investor positioned with sold bond calls and oil stocks, it’s a great day to be alive and banking profits. Did I tell you guys about the cruel summer, it’s right on schedule!
Musical tribute:
https://www.youtube.com/watch?v=d4tSE2w53ts
Do worry, Trump, Walrus and the GOP will find a way to make things even worse.™
Welcome to the Trump Golden Age of crazy.
When the war began, the world was fortunate to have a fair bit of oil on water and in land inventory. That has mostly been used up now. Refined product inventories are quite low as well.
The oil execs that said historically low inventories could lead to a big price spike in July might be proven correct.
Well… I’ve sure got some words to eat if Iran is able to sustain hitting escorted ships!
The market agrees that Trump can not protect oil cargoes exiting the strait at this time. Perhaps all Trump is doing is front running the WTI oil trade again and using his bully pulpit to make money off of all of us.
Taco Tuesday is tomorrow, so…
Do you know what caused oil and stocks to rise from mid December up until the start of the war? I had been reading about a glut but for some reason prices kept rising. And whatever that reason was, is it still in play now?
Yes. A surplus of supply of around 1-3 mbpd over those 3 months leading to inventory growth of over150 mb. Most of the surplus was from increases in OPEC quotas. That was added to 200 mb of sanctioned, stranded oil on water from Venezuela, Russia, and Iran. All of which got used up when the strait was closed.
If the war escalates again, we no longer have such a surplus of inventories. Plus we have run down SPRs.
Thank you for your reply. So…a surplus lead to a price increases? CVX rose in that time from about 146 to 186, which is slightly under that now but hit 166 a couple of weeks ago. I’m confused why the price rose during inventory growth and why it is now lower than what it was before the war began.
GOP is gonna get crushed. They need to be punished.
We’ve been presented with another great opportunity to short oil… The nonsense will pass. The only question is whether or not it reaches the highs back in May. Probably not.
LOL who downvoted me? TDS should be in the DSM.
Curious. Did you short oil two months ago?
Yes. I shorted USO OCT 100/135 call spreads toward the beginning of June and closed them at the end of the month. I’m currently in USO OCT 90/135’s and will add more if it the price increases.
Thanks.
The unelected Fed chair has a much pricing power.
World oil demand set for first annual decline since 2020, IEA says
demand destruction?
https://www.cnbc.com/2026/07/10/iea-world-oil-demand-declines-iran-war.html
An interesting point of view.
Annual Demand has only declined twice since 2000. That was 2008 and 2020. Both significant recession years.
What reason is given for lower demand in 2026?
1. Global recession (the usual reason)
2. High prices?
3. Lack of supply?
Both 2 and 3 are basically the same thing. Lack of supply leads to high prices, which can zap demand.