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The ceasefire hit the wires on the evening of April 7th, and markets didn’t wait for the details.
Oil fell 13% the next day...one of the biggest single-day drops in four or five years. Equities snapped a four-week losing streak. Financial Twitter updated its de-escalation takes in real time. The same crowd that spent six weeks predicting petrodollar collapse was now declaring the crisis contained, the system resilient, the shock transitory.
You know this pattern. The narrative runs ahead of the mechanics. And when the narrative runs ahead of the mechanics, you get hurt.
Here’s what markets are actually pricing in right now: the end of the energy shock. Here’s what they’re not pricing in: the beginning of the food shock. And those two things are on completely different clocks.
Step back. The Strait of Hormuz is still not fully normalized. A few ships are transiting. A two-week pause is not a reopening. And even if it was a full reopening...which it isn’t...the problems we’ve been tracking for the past several weeks are already baked into the ground. Literally.
If you read The Last Ships...and if you haven’t, that needs to change before you make another allocation decision...you already understand what’s in motion. The Persian Gulf supplies roughly 30 to 35% of global urea exports, 20 to 30% of global ammonia exports, and approximately 25% of globally traded sulfur. Iran’s ammonia plants are still suspended. Qatar’s Ras Laffan complex declared Force Majeure. The planting windows for spring and summer crops across the Northern Hemisphere are closing now, on a biological schedule that has no interest in diplomatic calendars.
A ceasefire doesn’t restart the ammonia plants. It doesn’t normalize war-risk insurance premiums that rose four to six times. It doesn’t put fertilizer on a ship that needed to leave six weeks ago.
What you’re watching in the equity bounce and the oil sell-off is markets confusing a cessation of hostilities with a resolution of the supply chain problems. These are completely different things. Let’s dig in.
