๐ฅ Will the war cause a global recession? ๐
AI Summary
The newsletter analyzes the ongoing Iran war's impact on global oil markets, noting the Strait of Hormuz remains effectively closed with a ~10M barrel/day shortfall even after policy interventions. Contradictory signals emerged Monday around potential U.S.-Iran negotiations, briefly rallying risk assets before overnight missile attacks dashed optimism. Analysts warn that without reopening the strait, either oil prices must rise enough to destroy demand or the global economy faces a pandemic-style shutdown.
Key Facts
Author Takes
U.S.-Iran negotiations
Despite lack of official Iranian acknowledgment, ongoing talks most likely are happening โ but it's unclear if U.S. officials are speaking with anyone actually in control of the Iranian regime.
Oil price outlook
The only two cures for rising oil prices are reopening the Strait of Hormuz or the global economy rolling over โ there is no soft landing scenario without one of these.
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