Good week, friends
The Strait of Hormuz continues to drive headlines in the markets ahead of the week's open -
Let's review the latest developments in the Middle East war front
1. Last weekend, initial reports emerged of diplomatic contacts between various countries and Iran aimed at allowing ship passage. The countries involved are Turkey, France, and Italy.
2. The price of fuel in the United States reached $3.65, marking an increase of almost 24% since the start of the war.
3. Iran continues to target oil facilities in neighboring countries, including the oil facility in Fujairah in the United Arab Emirates, which caused a partial halt to operations there. Iran also hit the Balanaz facility in Iraq, which led to a complete halt of operations until the fires were extinguished.
4. And most importantly, the United States attacked facilities on Kharg Island for the first time in the current campaign. Although no attacks on oil facilities were reported, Trump updated on his social media that he does not rule out striking oil facilities on the island if Iran continues to interfere with oil supply through the Strait of Hormuz.
To understand the magnitude of this event, it is important to recognize the economic significance of this strategic point, which is likely the true Achilles' heel of the Iranian economy:
Kharg Island, located in the northern Persian Gulf, handles about 90% of Iran's total crude oil exports, so any damage to it is essentially a direct and severe blow to the Iranian economy.
The island handles about 2% of the entire global oil supply, and on the eve of the war, it transported an enormous amount of up to 3 million barrels of oil per day! (According to various reports, Iran not only did not slow down activity during the war but increased oil production during this period).
So, although the US military has currently chosen not to completely destroy the oil infrastructure on the island, the president made it clear that this decision could change rapidly, especially if Iran continues to interfere with the free passage of ships in the Strait of Hormuz.
The question is whether the US administration is preparing the ground for the possibility of destroying oil infrastructure in one of the world's most important ports, which could shock energy markets?
Is the fact that these statements were published just two hours after the market close for the weekend not coincidental?
You thought the post was over? Not yet, there are a few more very important updates!
Trump posted two very important updates last night
Let's try to summarize the two posts:
Trump updated the world's nations that they must be physically involved in securing the Strait of Hormuz with warships.
Trump added that the United States would work in full cooperation with any country that joins, and "help a lot" in his words.
In response, France announced the transfer of no less than ten warships to Egypt.
Meanwhile, the New York Post reports something very unusual: Iran announced the comprehensive opening of the Strait of Hormuz to all countries except Israel and the United States.
We are closely monitoring the developments