The Strait of Hormuz Is Closed and Markets Are Still Partying Like It's Fine

Let's get one thing straight: 13 million barrels per day of oil and LNG are stuck in geopolitical purgatory, the Strait of Hormuz has been closed for eight weeks, and US stock futures responded to ceasefire news by going up. Classic. Top traders at Vitol, Gunvor, and Trafigura are flashing recession warnings, ING's Warren Patterson says the supply loss isn't remotely priced into ~$95 crude, and Morgan Stanley's deputy CIO is on record saying markets are "priced for perfection" while ignoring a crisis that's disrupted 17% of Saudi and 40% of Kuwait production — with facilities that take 3-4 years to rebuild.

Meanwhile, the diplomatic situation is a perfect chicken-and-egg disaster: the US won't lift the blockade until Iran negotiates, Iran won't negotiate until the blockade is lifted, and VP Vance's peace trip got canceled before he even packed. Daniel Yergin's calling this a structural reset for global energy — more resource nationalism, higher security premiums, sovereign wealth funds pivoting to defense. That's not a temporary oil spike, that's a new world order for energy investing. $ITA, aerospace/defense ETFs, and anything touching energy diversification just got a very long runway.

Alaska Airlines already told you what happens downstream — $4.75/gallon jet fuel, a $600 million Q2 headwind, and guidance pulled entirely. The energy shock is already transmitting into earnings. The market will catch up eventually; it always does — usually right after you've stopped looking.