u/Doditty6567

Physical oil (Dated Brent) trades >$40 above futures, signaling an acute supply emergency the equity market (SPY) is ignoring as it rebounds. If the physical oil shortage persists or worsens, it will violently reprice risk assets, leading to a market crash. The author is explicitly short SPY, believing equities are complacent and due for a severe correction. The Hormuz Strait reopens; the supply shock is absorbed without major economic impact; continued central bank or government intervention supports markets.

Physical oil prices are at record highs due to the Hormuz closure, creating a massive backwardation (front-month premium). This supply shock is not transient, and the price of oil-linked securities must eventually converge higher with physical reality. The author states they are "holding my oil positions" and views the physical market's signal as correct. A swift resolution to the conflict; coordinated global reserve releases; a sharp drop in demand.