Oil market prices in Iran's control of Strait of Hormuz
Brent tumbled 6% to $85 after Iran and Oman discussed joint control of the Strait. Mint's editors say the market sees Tehran, not Washington, as the gatekeeper.
Crude oil prices slumped below $90 a barrel and Brent fell about 6% in two days to $85 on Wednesday. The move came after Iran and Oman said they had discussed joint operation of a shipping lane through the Strait of Hormuz, the Mint Editorial Board wrote.
The price action is a market verdict on who holds effective power at the world's most important oil chokepoint. Tighter US economic sanctions designed to squeeze Iran's economy ought to have worsened supply anxiety. Instead, the oil market showed signs of relief.
The market's response reveals who it sees in control of that vital sea passage: Iran, not the US, the Mint Editorial Board said. America's blockade of Iranian trade is in place. China's rejection of US efforts to isolate Iran has made full isolation unlikely, the editors argued.
Beijing's stance signals confidence in keeping its access to Iranian energy intact, which could mean shadow fleets and encrypted dealings continue to move crude, the editors said. President Donald Trump claimed the Strait of Hormuz as US territory, but the market is pricing in a different reality.
With Trump now focused on US mid-term polls due in November, observers are watching for signs of a shift in the global balance of power, according to the Mint Editorial Board. The question for traders is whether the Iran-Oman arrangement holds and how much Iranian crude can flow without triggering a US response that actually disrupts supply.
When Gulf crude flows return to pre-war levels depends on how the dust eventually settles on the war that broke out six months ago, the editors said.
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