Hormuz Oil Disruption Tracker

Today's Conclusion

Conviction

HIGH

Iran offers to reopen the Strait within 7 days if the US eases its blockade, and Saudi Arabia began restoring its East-West pipeline — but commercial transit is still near record lows (3 vessels/day vs. a ~15-day average) and no terms have been verified.

Expected Brent (Prob-Weighted)

$95–120

Based on scenario matrix below

Current Brent Crude

$98.37

-0.9% d/d (WTI: $89.16)

Brent fell to $98.37 (-0.9%), a sixth straight losing session — the longest streak in a year — as Saudi Arabia began restoring its East-West pipeline and hopes grew for a US-Iran breakthrough. A senior Iranian official told Reuters the Strait could reopen within 7 days if the US eases its naval blockade, and Trump called envoy talks in New York "very productive." That optimism is tempered by physical reality: Hormuz commercial transits fell to just 3 vessels Tuesday, down from 4 the day before and well below the ~15-vessel 10-day average, and UKMTO reported the bulk carrier Minoan Dignity struck by an unknown projectile outbound in the strait with a crew casualty. The US Strategic Petroleum Reserve remains critically depleted at ~284M barrels.

Portfolio Allocation

Cash 20%

Producers 25%

Storage 15%

Tankers 15%

Calls 15%

Hedge 10%

Cash20%

Oil Producers25%

Midstream / Storage15%

Tankers15%

Brent Calls15%

Short Hedge10%

Allocation stays defensive despite Iran's offer to reopen the Strait within 7 days and Saudi Arabia's partial East-West pipeline restart. War-risk insurance remains elevated at 9-13% and commercial transit is still near record lows (~3%) with no verified change on the ground. Re-escalation risk still dominates the scenario mix until terms are confirmed.

Model Performance

Since Inception (Jun 17, 2026)

Day 99 — Iran offers 7-day Hormuz reopening; Saudi pipeline restarts; Brent falls 6th session to $98.37

Allocation Return +30.0%

Brent Spot +28.8%

S&P 500 +2.9%

Model Brent Range $85–120

Actual Brent $98.37

Past 7 Days (Aug 24-31)

Tanker strike near Khasab + renewed US-Iran strikes near Larak Island

Allocation Return -5.2%

Brent Spot -2.4%

S&P 500 -1.2%

Key Event Deal uncertainty

Past 30 Days (Jul 12–Aug 11)

Fragile stalemate + deal negotiations

Allocation Return +14.5%

Brent Spot +14.5%

S&P 500 +1.4%

Key Arc $80 → $72 → $92

Brent fell to $98.37/bbl (-0.9% d/d), a sixth straight losing session, as Saudi Arabia began restoring its East-West pipeline and a senior Iranian official said the Strait could reopen within 7 days if the US eases its naval blockade. That optimism is offset by physical reality: Hormuz commercial transits fell to 3 vessels Tuesday, down from 4 the day before and well below the ~15-vessel 10-day average, and UKMTO logged a fresh projectile strike on the bulk carrier Minoan Dignity outbound in the strait. Net shortage holds at ~11 mb/d against gross Hormuz disruption of ~19.5 mb/d, with pipeline bypass improving to ~5.0 mb/d as Saudi Petroline resumes partial flow. War-risk insurance is running 9–13% of hull value and US SPR remains critically depleted at ~284M bbl. Conviction stays HIGH, with an expected Brent range of $95–120.

The Thesis

We believe the market is systematically underpricing the true risk of prolonged oil supply disruption through the Strait of Hormuz.

Our model is built on real-time oil SUPPLY data — not price forecasting. We estimate the physical shortage first, then derive price implications.
We monitor 30+ daily data streams across 6 supply vectors to calculate net global oil shortage in mb/d.
The model generates an aggressive but disciplined trading strategy designed to capture the asymmetry between market pricing and physical reality.

30+ Daily Data Streams Hormuz Traffic • Shipping Risk • Pipeline Bypass • Inventories • Demand Destruction • Non-Hormuz Supply

Net Shortage Calculation

Gross Hormuz Disruption 19.5 mb/d

Pipeline Bypass Capacity − 5.0 mb/d

Inventory Offset (SPR + Commercial) − 0.1 mb/d

Demand Destruction − 1.2 mb/d

Additional Non-Hormuz Supply − 0.8 mb/d

Net Shortage = 10.5 mb/d

Where Are We? Scenario Gauge

D — MOST LIKELY

▼

MODEL

▼

MARKET

$75–95

$95–120

$120–150

$150–200+

The MARKET arrow shows where Brent is priced today ($80 — deep in Scenario A/B territory). The MODEL arrow shows where our supply analysis says we actually are. The gap between these arrows is the trade.

SCENARIO A — Fast Normalization

Strait reopens fully within 90 days. Mines cleared, carriers resume, insurance normalizes. Brent falls to $75–95. This is what the market is pricing.

Strategy return: -5% to -15% (calls expire worthless, producers flat)

SCENARIO B — Slow Recovery

15%

Transit reaches 60–80% in 90 days. Mine clearance progresses but slowly. Some carriers resume with escort. Brent rebounds to $95–120 as market corrects.

Strategy return: +20% to +50% (calls gain, producers rally, tankers hold)

SCENARIO C — Fragile Stalemate ★

40%

Ceasefire holds loosely but 80 mines block the main channel for months. Transit reaches 40–60%. Iran retains leverage. Brent climbs to $120–150. This is where our model says we are heading.

Strategy return: +60% to +120% (calls print, producers surge, deep OTM pays)

SCENARIO D — Re-Escalation

40%

MOU collapses. Iran re-mines cleared corridors or seizes tankers. Transit drops below 40%. SPR exhausted. Brent spikes to $150–200+. Energy crisis deepens.

Strategy return: +200% to +500%+ (deep OTM calls explode, producers moon)

Probability-Weighted Expected Return

+120% to +250%

over 90 days, based on current allocation

The strategy is designed to lose small if the market is right (Scenario A: -5 to -15%) and win big if the physics are right (Scenarios C/D: +60 to 500%+). The asymmetry is the edge.

Supply Vector Dashboards

Hormuz Traffic

Current Transit

of normal pre-war traffic; commercial transit near zero

7-Day Avg

Trend

3 vessels/day Tuesday vs ~15/day 10-day avg; ~125/day pre-war baseline

Pre-crisis, ~125 vessels transited daily. Strait of Hormuz vessel transits fell to just 3 on Tuesday, down from 4 the day before, well below the 10-day average of ~15 and far below the pre-war baseline, even as UKMTO reported the bulk carrier Minoan Dignity struck by an unknown projectile outbound. Transit is at ~3% of pre-crisis normal. No commercial carrier has resumed independent transit as the strait remains effectively closed to unescorted traffic.

Shipping Risk

Confidence Index

5/100

War Risk Insurance

9–12%

of hull value, vs 0.1% pre-crisis

Premium Multiple

90–120x

War-risk freight rates broke to fresh highs on escalating Iran-US strikes, with war-risk insurance running 9–12% of hull value. Freight now represents 25% of delivered crude value for Gulf-to-China VLCC routes — the highest share of the conflict to date. Major carriers remain absent, with no commercial carrier resuming independent transit through the strait.

Pipeline Bypass

Current Bypass

5.0 mb/d

Saudi Petroline

2.75

UAE ADCOP

1.75

Iraq-Turkey

0.5

Pipeline bypass improves to ~5.0 mb/d as Saudi Arabia began restoring partial flow on its East-West Petroline to Yanbu after repeated drone-strike outages this month. UAE's ADCOP and the Iraq-Turkey line continue running at their prior 1.75 mb/d and 0.5 mb/d respectively, but the bypass network remains a small fraction of the ~19.5 mb/d gross Hormuz disruption.

Inventory Response

US SPR

284M bbl

Critical — lowest in 40+ years

OECD Stocks

Critical

Lowest in 40+ years

Inventory Offset

~0.1 mb/d

The safety net remains severely depleted. US SPR at ~284M barrels — still historically low — with the draw rate slowing to ~0.1 mb/d as Saudi pipeline flows partially offset Hormuz losses. OECD stocks remain at critical lows not seen since the 1980s. IEA coordinated releases continue but headroom is exhausted. SPR is now near the 300M barrel alert threshold.

Demand Destruction

~1.2 mb/d

China Imports

7.3 mb/d

Down 33% YoY

India Imports

5.0 mb/d

IEA projects 1.1 mb/d annual demand decline for 2026 — first since COVID. China seaborne imports at 8-year low. But demand destruction is easing as Brent falls from $111 to $80. US PMI at 54.0 (expansion). The demand response is partially reversible — as prices stabilize, demand recovers, tightening the balance again.

Non-Hormuz Supply

Additional Supply

~1.0 mb/d

above trend

US Production

13.9 mb/d

Brazil

4.24 mb/d

Record

Guyana

903k bpd

Non-Hormuz producers are responding but incrementally. US at 13.8 mb/d (+0.2 above trend). Brazil hit an all-time record 4.24 mb/d. Guyana at 903k bpd with 30k expansion pending. The critical gap: ~4+ mb/d of OPEC spare capacity exists on paper but is TRAPPED behind Hormuz — Saudi producing 6.57 vs 10.23 mb/d target.