I don’t know who will win the U.S.-Iran war. But if you ask me who’s prevailing in the battle over the Strait of Hormuz, it’s clear U.S. President Donald Trump has the advantage. As much as Tehran says the opposite, the strait is effectively wide open. Crude oil exports from regional U.S. allies via the waterway, plus bypass routes, have risen to about 80% of prewar levels. Iran, meanwhile, has seen its own oil exports plunge to zero.
A couple of months ago, the surge in oil shipments would have been seen as a major American victory. Yet Brent crude, the oil price benchmark, is hovering around $100 a barrel. Inside the White House, some must be asking themselves: If this is winning, what would losing look like?
To understand what’s happening, a good place to start is market psychology and the fascination with using a triple-digit price level as a benchmark for success or failure: Thumbs up for Trump if Brent stays below $100 a barrel; thumbs down if it rises above that.
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