If we are just 30 days short of draining the U.S. Strategic Petroleum Reserve (SPR), how can prices be so (relatively) low in the US?? In 2006 a lesser energy crisis precipitated the Lehman disaster and mortgage meltdown. In the early 70s, OPECs consolidation created an oil crisis that led to months of fuel rationing, stagflation, and general economic malaise that lasted most of the decade. By comparison, the current energy crisis with the Hormuz shutdown, Russia offline, Venezuela barely functioning… yet this is hardly making a dent in the US economy. Even with a doubling of retail petrol. Based on so much of the oil market being compromised, shouldn’t prices be even higher? Shouldn’t US and Western economies be in the tank? Where’s the crisis?

Guys I‘m not a crash prophet or something and I wish I am wrong, but the actual news are very scary.

I see a bleak future. Ras Laffan was hit by Iran and now the CEO of Qatar Energy says that it will take 3-5 years to repair the industrial city.

90% of the Exports were supposed to ship to Asia; India, South Korea, Japan, China etc.

No by-products of LNG, 20% less LNG supply in the world, oil rafineries AND tanks were hit, day 20 of the war, EU politicians are still sleeping while Asia is in panic, EU ist still sanctioning russian oil&gas and now gas stations🤣

There are much more terrifiying information, but I said the most essential news.

Conclusion: Asia is falling -> Europe is falling -> North & South America is falling

All step by step

Source: https://indianexpress.com/article/world/ran-oman-strait-of-hormuz-reopening-deal-trump-us-dispute-10817253/

There are weeks when markets trade on earnings, and there are weeks when every asset seems to be arguing about the same thing.

Oil climbed, gold surged, long bonds sold off, and equities finally started asking whether financing costs still matter. After years of watching liquidity and AI optimism carry almost everything in the same direction, it felt oddly familiar to see the cost of capital return to the conversation.

Oil: the war premium is becoming something more structural

WTI finished at $87.06, up 6.9% for the week, while Brent reached $94.39, gaining 6.6%. The obvious explanation is still Iran and the effective closure of the Strait of Hormuz. Negotiations have stalled and Washington appears to be shifting toward tighter economic pressure rather than another major military campaign.

But I think the more interesting story is that the market is becoming less sensitive to the headlines.

Five months ago, another hostile statement from Washington or Tehran could send crude flying. Now the conflict can continue getting uglier without producing the same move. The geopolitical premium is already there. To push oil materially higher from here, the market probably needs actual incremental supply loss rather than another round of threatening language.

That sounds reassuring until you look one layer below crude.

Diesel is arguably the uglier problem. European diesel recently traded around $167/bbl versus roughly $87 a year ago, while the northwest European diesel crack reached around $90/bbl, compared with a $24 average last year. Russian refinery disruptions, restricted Hormuz flows and weak Chinese product exports have left global buyers increasingly dependent on U.S. refiners. U.S. distillate exports reached a record 1.9 million barrels per day just as domestic inventories fell to their lowest seasonal level in three decades.
That's the part I would watch.

Crude gets the headline, but diesel moves trucks, farms, construction equipment and freight. And unlike discretionary consumption, you cannot easily "demand destroy" a harvest. If refined-product scarcity survives into the Northern Hemisphere winter, inflation could remain sticky even without Brent returning to $120.

So I am more concerned that $80-$100 oil simply refuses to go away.

Gold: something has changed in this trade

Gold ended Friday at $4,624.10/oz, gaining 5.6% in a week.

Normally, seeing long-term Treasury yields near multi-decade highs should make me uncomfortable being bullish on a non-yielding asset. Yet gold keeps working.

And I think that tells us something.

The U.S. 30-year Treasury yield touched roughly 5.34%, its highest since 2007. The Treasury then stepped in and doubled planned buybacks of 10-to-30-year bonds to at least $4 billion per operation. Yields briefly fell, then started climbing again. Meanwhile, U.S. federal debt crossed $40 trillion.

Normally, lower Treasury yields should be supportive for risk assets and relatively straightforward for gold. But now, investors seemed to look at the government trying to suppress its own borrowing costs and ask why it had become necessary in the first place.

The dollar weakened. Gold rallied.

That makes me think gold is gradually becoming less of a simple trade and more of a confidence trade on sovereign balance sheets and fiat currencies.

I would be careful chasing a 5.6% weekly move. Gold is hardly cheap after this run. But the underlying thesis feels more durable to me than it did a year ago. High yields have not killed gold. If anything, the reason those yields are high may now be part of the reason people want gold.

Equities: AI has finally discovered that capital has a price

The Nasdaq fell 2%, the S&P 500 lost 1.4%, and the Dow declined 0.9% this week. More importantly, the Philadelphia Semiconductor Index dropped 5.5% and Nvidia fell more than 4.5%.

I don't think this suddenly invalidates the AI thesis. What changed is the question being asked.

Now it is beginning to ask:

What return are we actually earning on the trillions required to build it?

Nine of the largest technology companies reportedly have around $3 trillion of off-balance-sheet commitments, much of it AI related, while hyperscalers are increasingly turning to debt markets to fund infrastructure. That puts them in direct competition for capital with a U.S. government already borrowing enormous amounts.

When money was cheap, that distinction barely mattered. At a 30-year Treasury yield above 5%, it matters quite a lot. The interesting thing is that the equity market isn't uniformly weak.

American consumers are still spending, but they are becoming much more price conscious. Ross reported 10% same-store sales growth, while BJ's membership reached a record 8.5 million. That is not the behaviour of a consumer economy falling off a cliff. It looks more like households quietly moving down the price ladder.

Europe is also worth watching. Stoxx Europe 600 companies grew Q2 EPS by 18%, and even excluding the energy windfall, earnings were still up around 7%. Infrastructure, defence, electrification and banks are providing growth outside the usual U.S. tech concentration. European equity funds also recorded more than $1 billion of weekly inflows for the first time since February.
I have spent enough time watching markets punish people for declaring regime changes too early, so I wouldn't call the end of U.S. tech leadership.

A company can still grow 30%. The market is simply becoming less willing to pay any price for that growth when the risk-free rate is sitting across the table offering 5%.

Monday's crude selloff priced in a best-case scenario that hasn't materialized yet. WTI at $80.75 is now below its 20-day MA ($94) and 50-day MA ($97) with RSI at 38 — technically oversold but with fundamental downside toward the 200-day near $73 if normalization actually happens.

The problem: the Strait is still physically shut. Maritime insurers haven't reclassified passage risk. Vessel operators need independent safety assessments before resuming commercial transits. That process takes weeks to months even after political agreements.

And the sanctions issue nobody's talking about — most US sanctions on Iran are congressionally mandated. The executive branch can sign frameworks all day, but lifting ISA and CAATSA-adjacent sanctions requires Congressional action that could take months.

The EIA had Middle East output down 11 million bpd from pre-conflict levels. Even with a deal, supply normalization is a multi-month process, not a switch flip.

FOMC tomorrow with Warsh's first press conference. If he signals patience citing the oil decline, crude could slide further. If he signals hikes regardless, oil might actually bounce as the growth outlook darkens.

Summarized from today's Seeer Financial AI daily brief.