Monday Situation Report - It's Going Well, So Far

A quick-hit roundup of the current status in the Middle East and around the world.

First, know that Iranians all over the world - including on the streets of Tehran - took to the streets to celebrate the killing of the despot mullah Khameini over the weekend:

That’s wonderful to see.

U.S. investors on the other hand are not nearly so enthusiastic 48 hours into Operation Epic Fury, as market futures show a looming selloff when markets open later today:

That’s really not surprising at all, as investors always hate times of significant uncertainty.

Nothing raises uncertainty to high levels like the effective closing of the Strait of Hormuz through which 20-25% of global crude supplies flow each day. Traders on the crude markets, however, responded only with a modest price increase of about 7.5% in Asian Trading on Monday, with the Brent price jumping up by $5.56/bbl to close at $78.43.

That muted response is no doubt related to the reality that there is no real blockade on traffic transiting the Strait - there’s only the threat of strikes coming from the fading Iranian government. The “closing” of the traffic through the Strait has only to do with insurance companies notifying shippers that they will not insure their cargoes without a big increase in risk premiums.