Is Oil Still Flowing? | Macro Mondays: Monday, June 22, 2026

Oil flow through the Strait of Hormuz deteriorated sharply on Sunday, with only one major cargo leaving the region carrying roughly three to three and a half million barrels of Saudi Arabian oil. Iran signaled it was considering abandoning US negotiations following renewed Israel-Hezbollah hostilities in Lebanon, though talks were still ongoing as of recording. A memorandum of understanding between Iran and the US had been signed less than a week earlier, briefly lifting vessel crossings in the strait. Unofficial oil flows from Abu Dhabi to the US during May were not reflected in official data, with both sides holding an incentive to keep those transfers secret to preserve negotiating leverage.

Approximately 25 percent war premium remains embedded in the dated oil price above pre-war levels, but the bear case from a Strait reopening is already well telegraphed and was a better trade several months ago. Oil shorts in futures are near an all-time record high, making a new short position a poor use of mental bandwidth. Since early April, jet fuel prices in Singapore have nearly halved from their peak and urea prices in the US Gulf are now trading below pre-war levels, allowing earlier concerns about fertilizer shortages and famine to be set aside. The primary conclusion is that mental bandwidth should shift away from energy products and toward positioning for the broader inflation regime change.

Inflation has rolled over since roughly the first week of May, with disinflation occurring across the basket rather than only in energy. Core goods and housing-related prices are also showing benign developments in Nowcast IQ data. Despite this, the ECB hiked rates and forward guided toward further hikes without changing its tone, and the Federal Reserve raised its inflation projections for the year and does not foresee significant relief from a Strait reopening. The ECB's mild inflation scenario for the third quarter assumes an oil price of 88 dollars per barrel, well above current levels, meaning inflation is turning decisively relative to central bank forecasts even though those institutions have not yet acknowledged it.

Growth has entered a sideways environment compared to the acceleration seen earlier in the year, and the liquidity channel is identified as the primary driver of assets and is currently performing well. Tariff payments being returned to corporates are expected to add meaningfully to liquidity over the coming four to five weeks, with benign conditions anticipated through approximately the first week of August. Falling inflation combined with sideways growth and supportive liquidity is seen as favorable for equity multiples, the front end of the yield curve, and a potential rotation into cyclical names such as industrials. The speaker favors receiving interest rates given this backdrop.

South Korean exports in the first 20 days of June accelerated 60 to 65 percent year over year, an acceleration versus May, and spot DRAM prices continue to rise. Micron's bottom line is expected to improve roughly 1000 percent versus a year ago when results are released Wednesday. The market is characterized as too pessimistic ahead of those earnings, with Micron and peers including SAND seen as attractive given accelerating underlying demand parameters.

Trump announced on social media Sunday that Keir Starmer would resign, which Starmer confirmed the following day. Sterling assets underperformed throughout Starmer's tenure and the five-year real rate differential between the US and UK versus sterling sits at an unusually wide spread. If the incoming prime minister, widely expected to be Andy Burnham, accepts the fiscal reality inherited from Starmer, sterling assets and gilts are flagged as potentially attractive buys.

Definium Therapeutics, formerly Mind Medicine, which develops LSD and psilocybin-based treatments for depression and anxiety, saw its shares rise approximately 55 percent following positive Phase 3 results for its LSD-like depression product. Psilocybin trial results are expected around August and could reprice the stock higher. On MicroStrategy, the STRC preferred share instrument was designed with ChatGPT to raise capital to buy Bitcoin, with the next major refinancing date in 2028 and no signs of near-term balance sheet pressure. If MicroStrategy were ever forced to refinance during hostile market conditions it would need to sell Bitcoin, creating a self-feeding negative feedback loop, but that risk is characterized as a misguided primary reason to be bearish on Bitcoin at this time.