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The 8 April ceasefire announcement and parallel discussions around a 45-day truce have not resolved the Strait of Hormuz disruption. They have, for now, capped the worst-case scenario, but tanker traffic remains at a fraction of normal levels and Iran's demand for transit fees signals a structural shift, not a temporary one.
What began as a regional conflict has become a global energy shock, and the question for markets is no longer whether Hormuz was disrupted, but how permanently the disruption changes the pricing floor for oil.
Key takeaways
- Around 20 million barrels per day (bpd) of oil and petroleum products normally pass through the Strait of Hormuz between Iran and Oman, equal to about one-fifth of global oil consumption and roughly 30% of global seaborne oil trade.
- This is a flow shock, not an inventory problem. Oil markets depend on continuous throughput, not static storage.
- If the disruption persists beyond a few weeks, Brent could shift from a short-term spike to a broader price shock, with stagflation risk.
- Tanker traffic through the strait fell from around 135 ships per day to fewer than 15 at the peak of disruption, a reduction of approximately 85%, with more than 150 vessels anchored, diverted, or delayed.
- A two-week ceasefire was announced on 8 April, with 45-day truce negotiations under way. Iran has separately signalled a demand for transit fees on vessels using the strait, which, if formalised, would represent a permanent geopolitical floor on energy costs.
- Markets have begun rotating away from growth and technology exposure toward energy and defence names, reflecting a view that elevated oil is becoming a structural cost rather than a temporary risk premium.
The world’s most critical oil chokepoint
The Strait of Hormuz handles roughly 20 million barrels per day of oil and petroleum products, equal to about 20% of global oil consumption and around 30% of global seaborne oil trade. With global oil demand near 104 million bpd and spare capacity limited, the market was already tightly balanced before the latest escalation.
The strait is also a critical corridor for liquefied natural gas. Around 290 million cubic metres of LNG transited the route each day on average in 2024, representing roughly 20% of global LNG trade, with Asian markets the main destination.
The International Energy Agency (IEA) has described Hormuz as the world’s most important oil transit chokepoint, noting that even partial interruptions may trigger outsized price moves. Brent crude has moved above US$100 a barrel, reflecting both physical tightness and a rising geopolitical risk premium.
Tankers idle as flows slow
Shipping and insurance data now point to strain in real time. More than 85 large crude carriers are reported to be stranded in the Persian Gulf, while more than 150 vessels have been anchored, diverted or delayed as operators reassess safety and insurance cover. That would leave an estimated 120 million to 150 million barrels of crude sitting idle at sea.
Those volumes represent only six to seven days of normal Hormuz throughput, or a little more than one day of global oil consumption.
Updated shipping and insurance data now confirm more than 150 vessels have been anchored, diverted, or delayed, up from the 85 initially reported. The 1.3 days of global consumption coverage from idle crude remains the binding constraint: this is a flow shock, not a storage problem, and the ceasefire has not yet translated into meaningfully restored throughput.
A market built on flow, not storage
Oil markets function on continuous movement. Refineries, petrochemical plants and global supply chains are calibrated to steady deliveries along predictable sea lanes. When flows through a chokepoint that carries roughly one-fifth of global oil consumption and around 30% of global seaborne oil trade are interrupted, the system can move from equilibrium to deficit within days.
Spare production capacity, largely concentrated within OPEC, is estimated at only 3 million to 5 million bpd. That falls well short of the volumes at risk if Hormuz flows are severely disrupted.
Oil market analysis
How long do idle tankers last?
135M idle barrels — days of cover against each demand benchmark
vs. Strait of Hormuz daily flow (20M bbl/day)
vs. Global oil consumption (104M bbl/day)
vs. US Strategic Petroleum Reserve release (1M bbl/day)
135M
idle barrels on tankers (midpoint of 120–150M range)
~33%
of daily Hormuz flow that is idle storage, not transit
<31 hrs
is all idle storage against global daily consumption
Inflation risks and macro spillovers
The inflationary impact of an oil shock typically arrives in waves. Higher fuel and energy prices may lift headline inflation quickly as petrol, diesel and power costs move higher.
Over time, higher energy costs may pass through freight, food, manufacturing and services. If the disruption persists, the combination of elevated inflation and slower growth could raise the risk of a stagflationary environment and leave central banks facing a difficult trade-off.
No easy offset, a system with little slack
What makes the current episode particularly acute is the lack of slack in the global system.
Global supply and demand near 103 million to 104 million bpd leave little spare cushion when a chokepoint handling nearly 20 million bpd, or about one-fifth of global oil consumption, is compromised. Estimated spare capacity of 3 million to 5 million bpd, mostly within OPEC, would cover only a fraction of the volumes at risk.
Alternative routes, including pipelines that bypass Hormuz and rerouted shipping, can only partly offset lost flows, and usually at higher cost and with longer lead times.
Bottom line
Until transit through the Strait of Hormuz is restored and seen as credibly secure, global oil flows are likely to remain impaired and risk premia elevated. For investors, policymakers and corporate decision-makers, the core question is whether oil can move where it needs to go, every day, without interruption.
The USD/CAD pair experienced a relatively uneventful session after Bank of Canada (BoC) decided to keep interest rates on hold. However, what caught the attention of traders was the hawkish tone in the central bank's language. Similar to many central banks globally, the BoC is cautious about raising rates further until they thoroughly assess the inflation landscape.
Still, they've left the door open for potential rate hikes in the future. Surprisingly, this hawkish stance from the BoC didn't have a significant impact on the Canadian dollar against the US. The strength of the US dollar remained dominant, keeping the USD/CAD pair relatively flat during the session.
Currently, the pair finds itself at a crucial resistance level, which it has unsuccessfully attempted to breach three times since April. The BoC's hawkish language appears to have halted the pair's upward momentum, preventing a breakout, but wasn’t enough to push the pair south. Since mid-July, the USD/CAD pair has experienced an impressive 4% surge, driven by a resilient US dollar and the US Federal Reserve's commitment to maintaining higher interest rates to combat inflation.
However, from the technical view, a slightly bearish divergence is forming on the daily RSI, indicating the move might be running out of steam and a potential correction could be on the cards. In this high inflation environment, the pair's direction will likely hinge on crucial upcoming data releases in the weeks ahead. In addition to the technical setups, traders should keep a close watch on the fundamentals to help navigate potential shifts in direction.
The US Dollar Index (DXY) has closed its fourth consecutive day in the red, reaching levels last seen in early May 2023. Despite the recent decline, the DXY is coming into support around the 100 level, which has proven to be a resilient bounce point multiple times. However, each bounce appears to be getting smaller, which might indicate growing downward pressure.
This support level adds an interesting dynamic to the market as traders watch for potential price reaction. Todays US CPI print may hold the key to determining the DXY's future trajectory. If the CPI data is reported higher than expected, it could potentially fuel speculation of tighter monetary policy by the Federal Reserve.
In such a scenario, we might see the DXY experiencing a short-term rebound, as higher interest rates tend to attract investors seeking stronger returns. On the other hand, if the CPI data comes in lower than expected, market participants might interpret it as a sign that the US Federal Reserve will maintain its current pause in interest rate hikes during their upcoming FOMC meetings. If that occurs, it could potentially exert downward pressure on the US Dollar.
A more accommodative monetary policy stance may reduce the attractiveness of the USD to investors seeking higher yields, leading to a potential decline in its value against other currencies and potentially sending the DXY below 100 for the first time since early 2022. US CPI will be released at 08:30 EDT, YoY is expected to come in at 3.1%, with MoM expected at 0.3%
The current market consensus is that the Reserve Bank of New Zealand (RBNZ) would likely keep interest rates at 5.50% at the upcoming meeting on 12th July. This is supported by the RBNZ’s monetary statement indicating that “ monetary policy is having a sufficiently moderating effect on demand and inflation, and that we are yet to see the full effects of past tightening on the economy. A pause would also allow more time to assess the impact of the significant tightening, and the timing of any further increase that might be needed.” However, while the Consumer Price Index (CPI) has turned down from its peak of 7.3%, the most recent data was released at 6.7%, this is still significantly higher than the RBNZ’s target level of 1-3%.
Therefore, another rate hike from the RBNZ cannot be ruled out. In May, the RBNZ released its decision to hike rates to 5.50% but also indicated that the official cash rate has reached its peak at 5.50% but would need to remain at the restrictive level until at least the middle of 2024. This led to the NZDUSD falling steadily from 0.6250 to reach the round number support level of 0.60.
As the NZDUSD climbs toward the 0.6250 price area, formed by the previous swing high and the downward trendline, look for a potential reversal if the RBNZ holds interest rates at 5.50% as forecasted. A reversal to the downside could reach the price level of 0.61, supported by the upward trendline, and beyond that, the 0.60 round number key support level.
Todays NFP figure out of the USA is shaping up to be a pivotal moment in market expectations as to whether we’ve seen peak rates from The Federal Reserve, or if there is more to come and the ramifications that will have for the FX market. NFP figures are always interesting, traditionally the biggest market moving figure of the month on the US calendar, and against the backdrop of the Feds “data dependent” messaging regarding future rate moves this figure will be a big piece of how the market prices in the result of the September Fed meeting. Currently markets are butting heads with the Fed, only pricing in a higher chance of no more hikes from the Fed, despite Fed guidance and dot plots indicating they are looking at least one more hike this cycle.
Current September Fed Fund Future odds are showing only a 17.5% of a hike in the September meeting. Source:CME Fedwatch tool Market expectations are for a slowing in payroll growth in July the consensus being 200k nonfarm payrolls to be added to the US economy in July, slightly cooling from the 209k added in June, with the unemployment rate expected to remain unchanged at 3.6%. A big beat or miss on these expectations, a rapid repricing of hike/hold odds would be likely to see volatility and opportunities in FX markets.
Chart to watch: US Dollar Index (DXY) DXY has rallied strongly since mid-July as the UST 10 Year yields pushed higher and getting an extra boost from some risk-off this week in equity markets which pushed DXY through the S/R level at 102. DXY found resistance at its upper trend line at around the 102.84 level, seeing some of the recent gains being pared. Also an important factor is the close relationship between US10 yields and DXY, the yields now above 4% where they have struggled to go any higher in the recent past, this will also see a headwind against DXY pushing higher from this level.
The levels to watch over todays NFP will be 102.84 to the upside on a big beat, 102 as support to the downside if we get a big miss. Both of those levels will be key in the next trend direction of DXY. Calendar:
The Nasdaq Composite Index has kicked off 2023 with a historic performance, achieving its most impressive start since 1975. Despite concerns about a potential recession, the index has displayed remarkable resilience, surging over 37% year-to-date as of the end of July. The upward trend has been consistent, with green months recorded in 6 out of the 7 months of the year so far.
With only 13.50% more to run before it gets back to all time highs set in November 2021, it will be interesting to watch how this plays out over the second half of the year. From a technical standpoint, traders are closely monitoring the current price action within this crucial resistance zone. The market's reaction here will determine its short-term direction.
Will the resistance zone hold strong and push the price downward, or will the momentum be strong enough to break through and continue its journey toward all-time highs? Zooming out to the weekly timeframe, the Relative Strength Index (RSI) has been floating around overbought territory since mid-June. This confluence with the resistance zone indicates a possible cooling off period in the coming weeks.
This scenario wouldn't be overly surprising, as markets often experience a breather after significant surges.
After a fortnight of trending north, Gold has fallen over the past 5 days. It is currently trading at around $1960, showing a slight decline of approximately 1.35% from its recent high of $1987.53. Price is currently trying to break out of the downward channel that it has been in since late last week, so something to keep an eye on going into the key economic data due out this week.
All eyes are now on the upcoming FOMC meeting, where the market is currently pointing towards a high probability (over 98%) of a 25bps rate hike on Wednesday. Considering the historical inverse relationship between gold and the USD, let's explore potential reactions by Gold to the FOMC meeting: Rate Hike Scenario (USD Strengthens): If the FOMC goes ahead with the 25bps rate hike, it could lead to a strengthening of the USD. Higher interest rates tend to attract more investments into the US currency, potentially dampening demand for gold.
Consequently, gold prices might face downward pressure in this scenario. Rate Pause Scenario (USD Weakens): Conversely, if the Fed decides to maintain interest rates at 5.25% or hints at a more dovish approach, the USD could weaken. A weaker USD often prompts investors to seek refuge in gold as a hedge against currency depreciation and inflation.
As a result, gold prices could see an uptick due to increased demand. Source: CME Fedwatch tool With the markets almost entirely pricing in a 25bps hike, unless we get a surprise in the figure, volatility may stay subdued until Fed Chair Jerome Powell begins his press conference shortly after the announcement. Investors and traders will be eagerly analysing his language to see if there are any hints on future movements by the Fed.