War Note: Seeing Through the Noise

In this War Note... which may or may not be the final one - we 'see through the noise' - analyzing what's real, what happened today, the Strait of Hormuz realities, digest the CL move, and more.

Don Johnson (@DonMiami3), Chief Economist

Good Tuesday evening MacroEdge Readers & Community,

As promised on Sunday evening, we are delivering the War Note this evening to cover the latest developments in the Israel-Iran conflict today, of which there were many. Markets started the day with US spot crude oil surpassing $118/bbl and Brent (dated) at $144 - an all-time high - while diesel made it within cents of its last all-time high from the 2022 inflation wave driven by the Russian-Ukraine war and shut-ins. Why the abrupt end at this deadline? It had little to do with the fact that this was actually the ‘hard deadline’ and more to do with energy prices nearing & hitting all-time highs. Odds are that China finally stepped in, and now we’re left with an extremely fragile two-week ceasefire, and in the interim, Iran & Oman are overseeing the Strait with a toll of $1-2mm per boat passing through the Strait. If traffic returned the Strait to pre-war levels, which is unlikely for at least the rest of the month, that would be tens of billions in new revenue for Iran & the IRGC. Given all of the noise - the goal this evening is to just cut to the chase on what we know is real: here and now, and digest the critical details so that we can find and position intelligently as we either move beyond this period and digest the energy shock over the next 6 months, or fall back into it and deal with the consequences of that - too.

Due to the distraction, it’s pulled us away from really looking at the broader macro situation in the United States - and even though oil prices are down substantially now from the highs of the day (spot $96.50 at the time of this writing) - it’s going to likely be 6-12 months to see things normalize to a degree on the supply front. Shutting off and shutting-in 13mbpd on the supply front in GCC countries won’t just be turned back overnight, and the SPR release is still just making a dent in the overall outages. In the Midweek Macro Note - we will break down traffic in the Strait to see if things improve meaningfully over the next 2 days - and given the backlog of boats, we likely see the overall number of boats passing through rising to about 20-30 on the tanker front at least for the next couple of days.

A notable exception to the ceasefire agreement is Lebanon, which was omitted from the deal, and where we still see Hezbollah & IDF forces going back and forth. Likely no change there. Below, we’ll break down the actual reality of what happened today - in ‘seeing through the record noise’, look at the shifting Strait of Hormuz dynamics, highlight the changing world orders, discuss what will happen to oil prices in the coming days and months, highlight a brief energy portfolio strategy update, and look ahead to the Midweek Macro Note.

If you’re not yet upgraded to MacroEdge Ozone, do so below, and get all of our research, data, portfolio strategy, and more. This week marked the first time we landed on the Top #100 rising in finance profiles on Substack for three days in a row, and I (and the entire MacroEdge Team) thank you for your support.

A few notable posts from late February to early March from my feed were being surfaced by community members in the afternoon:

And from early March:

Seeing Through the Record Noise

Whether or not this remains the last ‘War Note’ remains to be seen - both sides will actually begin negotiations on 4/10 - and after the final salvo of attacks from both sides (which are likely complete for the time being), we will see how the negotiations progress. After the last 40 or so days, I am quite confident that we are seeing power shift away from traditional hegemons and toward asymmetric power dynamics… we saw that with Iran, and we’re still seeing it in Ukraine. The days of conventional warfare and naval superpowers still matter - but with $30,000 drones that a nation can produce in the hundreds per week, power and defense can be projected in very non-traditional ways to keep the other side on their feet. The element of economic warfare, as well, given Iran’s status as a major oil exporter, has cemented its ability to use the Strait as an economic tool in the future. While the Strait was thought to be a tool during the 12-day war last year, few thought that Iran actually had the ability to control its flow for ~40 days. $118/bbl.

Something we learned over the past month is the massive interventions governments are willing to embark on now to intervene in markets (even with tiny moves) - the US Administration returned to its April 2025 style market interventions - in both energy and equity markets - and even foreign governments got involved in the action. In the ‘fog of war’ fake news dominated news feeds across social media - and pages like ‘FirstSquawk, FinancialJuice, The K-Letter, and other random no-name journalists’ became the leaders in reposting ‘sources’ in all caps clickbait-style posts. The shifting news dynamic has made it hard in a world where new news appears by the minute - to actually stay on top of the situation - and that makes what we do even more relevant… the minute by minute shouldn’t actually matter that much, but right now it does - in a market obsessed with the ‘minutes’.

A Changing World and Shifting Strait of Hormuz Dynamics

As of April 7, Iran’s Foreign Ministry has announced a provisional two-week “safe passage” window for the Strait of Hormuz. While headlines suggest a reopening, the proposed terms represent a military-controlled channel with extreme friction, not yet a functional return to global energy markets…

INTERIM TERMS (APRIL 8 – APRIL 22) Under current negotiations for a potential ceasefire, any transit is subject to the following constraints:

• Vessel Cap: A maximum of 10–15 ships total permitted over the entire 14-day window.

• IRGC Oversight: Mandatory coordination with the IRGC Navy, subject to “technical limitations” and toll payments.

• Political Reciprocity: Potential release of frozen Iranian assets by the U.S.

• Terminal Openness: Analysts (Johnston) indicate the Strait will likely never return to pre-war openness. Post-conflict volume is described as a “crack in the door” at best.

SUPPLY DYNAMICS & THE 13 MMbpd DEFICIT Field analysis from Johnston and HFI Research confirms that diplomatic rhetoric will not yet translate into physical flow:

• Net Supply Loss: Approximately 13 MMbpd remains shut-in. Existing bypasses, including the Saudi East-West pipeline, the UAE Fujairah bypass, and Iraq’s Kirkuk pipeline, provide only marginal offsets.

• Inventory Buffers: Temporary stock draws (IEA SPR releases and oil-on-water) are accounting maneuvers that do not address the core production shut-in across Iraq, Saudi Arabia, UAE, and Kuwait.

• Normalization Lag: A full operational restart requires 6–8 weeks to drain onshore storage and cycle empty tankers through the corridor. A ceasefire in April will not resolve the global supply deficit until at least June.

How We Can Verify It

• Visual Confirmation: MarineTraffic and HFI Research SAR data show near-zero tanker movement through the Strait over the last 48 hours.

• The AIS Test: If genuine transits begin, vessels will utilize AIS transponders. Watch daily tanker counts, specifically starting April 9. Until physical hulls move, all political statements are noise.

(Continued below: A Changing World and Shifting Strait Dynamics, Details of Iran’s 10 Point Plan, What Will Happen to Oil Prices? Energy Portfolio Strategy Update, A Look to the Midweek Macro Note, & More)…