Onyx: Trump’s Hormuz Blockade Threat 'Makes No Sense'

Summary

Jorge Montepeque analyzes the potential U.S. blockade of the Strait of Hormuz, criticizing it as irrational and highlighting its severe implications for global oil markets. He argues that oil prices are mispriced and should be much higher, with Asian economies facing significant risk while the U.S. benefits from increased energy exports. The discussion covers supply disruptions, alternative routes, and economic impacts on specific countries.

• Trump's threat to blockade the Strait of Hormuz is called 'demented' and 'makes no sense'.
• A blockade could cut off 12 million barrels per day of oil, leading to supply shortages.
• Oil prices are currently mispriced and should be around $140-$150 if the risk materializes.
• Asian countries like Korea, Japan, and Australia are heavily exposed and would suffer economically.
• The U.S. is a net beneficiary due to its crude oil and LNG exports.
• Alternative routes are limited, and demand destruction may occur at higher oil prices.
• Global GDP from the region could drop by 10-15% due to disruptions.
• Jorge predicts oil prices will remain elevated, closer to $100 for the rest of the year.