05.08.2026 - All about the Strait
Markets remain focused on the Strait of Hormuz, where headlines continue to drive oil prices.
Iranian Foreign Ministry spokesperson Esmail Baghaei said Iran and Oman have agreed on the coordinates for a commercial shipping route through the Strait. However, he stressed that this does not mean the waterway is safe, citing the continued US naval presence and ongoing military tensions.
Despite the diplomatic progress, the security situation remains fragile. Attacks on tankers and cargo ships continue, highlighting that one of the world's most important energy corridors is still far from secure.
Meanwhile, geopolitical risks are widening. Reports suggest Yemen's Houthis are preparing for a full-scale confrontation with Saudi Arabia, following the announcement of a "general alertness" phase and renewed threats against regional shipping.
While markets are pricing hopes of de-escalation, the reality on the ground remains highly uncertain.
Markets:
Equities: Global markets mixed as investors continue to rotate between AI and defensive sectors.
Bonds: yields almost unchanged - US 10y yield above 4.64%, Japan 10y yield 2.81%
Commodities: Oil prices almost stable, WTI around USD 75/barrel and Brent around USD 80/barrel
Precious metals prices saw a sharp rally adding more than 4%, gold above USD 4’255/oz, silver trades above USD 62/oz
Currencies: another day without major moves, USDJPY 157
Cryptos: see some gains - Bitcoin at USD 64k
Volatility: The VIX index fell again below 16 (good hedging level)
My View: Markets appear to be pricing hope rather than reality.
An agreement on shipping coordinates is not the same as a guarantee that the Strait of Hormuz is open and safe. The region remains heavily militarized, sea mines continue to pose a threat, and attacks or attempted attacks on tankers and cargo ships remain a regular occurrence.
The recent decline in oil prices reflects expectations of de-escalation rather than a meaningful improvement in security conditions. In my view, investors are once again underestimating the geopolitical risks.
At the same time, President Trump appears to be buying time as he looks for a way to de-escalate the conflict without suffering a political setback. For now, Iran holds significant leverage. It can choose to negotiate on its own terms or continue applying pressure through intermittent drone and proxy attacks, keeping uncertainty elevated and preventing a genuine return to normality in the region.
Therefore, I believe the probability of another sharp spike in oil prices remains high.
Over the past few weeks, oil prices have once again shown a negative correlation with equity markets. A renewed surge in crude prices would likely add inflationary pressure, push bond yields higher, and weigh on investor sentiment. As a result, another oil price spike could also trigger a renewed correction in global equity markets.
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