You Shall Not Pass: Strait Stays Closed

One month into a war that was supposed to be quick regime change.

I'm not a geopolitical or military expert. I'm watching the same sources you are. But the overwhelming consensus from analysts I respect: this gets worse before it gets better.

The Strait of Hormuz remains closed. Every day, 20 million barrels of oil supply disappears.

Oil analysts are calling for $150-200. People with experience modeling supply shocks say current prices don't reflect a sustained closure.

Escalation is accelerating. More troops heading to the region.

Diplomatic paths don't exist. Look at the negotiating positions:

• US proposal: 15 conditions Iran must meet
• Iran conditions: Full US withdrawal, reparations, sanctions removal

These aren't negotiations. These are victory conditions from both sides. There's no middle ground.

Military solution is uncertain. Modern naval warfare has changed. Luke Gromen thread on missiles/drones vs carrier groups. I'm skeptical the US can force the Strait open militarily.

My Base Case

The Strait remains selectively closed for 3 more months minimum.

Why 3 months?

• Can't force it open militarily (modern warfare dynamics)
• Can't negotiate (positions impossibly far apart)
• Global SPR can shield markets for ~90 days maximum
• After SPR depletes, markets reprice violently

What "selectively closed" means: Iran controls which ships pass (leverage tool) but not normal 20 million bpd flows. Physical oil markets stay in crisis mode.

My base case: Strait closed for 90 days minimum, possibly 6 months. I'm positioning for the 3-4 month window when SPR depletes but war continues.

Let me be more specific since it’s about positions not my beliefs.

1. Long Oil

Thesis: WTI at $99. Physical markets pricing $120+ (Dubai premium $24). Analysts calling $150-200 with sustained closure.

Target: $150-200 range

Timeline: 3-4 months (accounting for SPR suppression capacity)

2. Long VIX

Thesis: VIX at 31 is elevated but not crisis. Previous crises hit 60-80. Oil spike to $150+ triggers equity repricing.

Target: VIX 60+

Timeline: 3-4 months (follows oil spike)

Alternative catalysts:

• Bond volatility spillover (MOVE index)
• Q1 earnings misses
• Big IPO
• Kevin Warsh takes Fed chair (May)
• Private credit BDC redemptions (Q2)

3. Short SPX

Thesis: S&P at 6,368 (-7.4% from highs). Pricing mild slowdown, not sustained $150 oil recession.

Target: Down 25% from ATH = ~5,150 level

Timeline: 3-4 months (similar logic as with VIX)

4. Long Gold

Thesis: Structurally sound long-term, but timing is wrong now. Gold down 14% during war suggests liquidity stress.

Strategy: WAIT. Let the initial liquidation cascade happen. Gold likely sells off with everything else as margin calls hit.

Entry signal: S&P down 15%+ from highs AND gold stabilizes or reverses

Timing is the hardest part. Could be 6 weeks or 6 months. Governments could change rules - price controls, capital controls.

Markets will reprice reality. The question is when. I hope I'm wrong. I hope there's a breakthrough next week and this looks ridiculous in hindsight.