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

Iran announced plans to leave US negotiations on Sunday, citing hostilities between Israel and Hezbollah in Lebanon, though talks were still ongoing at the time of recording. A memorandum of understanding between Iran and the US had been signed mid last week, and oil flow through the Strait of Hormuz reached levels close to pre-war on Friday and Saturday following that signing. After the Sunday hiccup, only one major cargo left the Strait, carrying roughly three to three and a half million barrels, leaving the Strait partially open. Unofficial oil flows out of Abu Dhabi to destinations including the US occurred during May and were not captured in official data, with both sides having an incentive to keep those flows secret to preserve negotiating leverage.

Oil prices have moved lower in one-way traffic since early April, though approximately a 25 percent war premium remains in the current price above pre-war levels. Jet fuel prices in Singapore are almost half their early April peak, and urea prices in the US Gulf are trading below pre-war levels, leading Andreas Steenuwand to dismiss earlier fears about famine and fertilizer shortages as no longer warranted. With oil short positions in futures near an all-time record high, Steenuwand said he would not short oil at current levels given the unfavorable risk-reward, and would instead redirect attention to second-order effects in other asset classes.

Inflation has rolled over since approximately the first week of May based on NowCastIQ live data, with disinflation occurring across the basket including core goods and housing, not just energy. Despite this, central banks remain hawkish because their rhetoric was shaped by the earlier energy price shock rather than the current decline. The ECB hiked rates and forward guided toward further hikes without adjusting its tone, and its mild inflation scenario for the third quarter assumes an oil price of 88 dollars per barrel, well above current levels. The Federal Reserve marked its inflation forecast to the latest known print without pricing in meaningful relief from the Strait of Hormuz opening. Steenuwand predicted inflation will come in under both the Fed's and especially the ECB's forecasts, representing a macro regime shift that central banks have not yet appreciated.

The liquidity channel is described as the main driver of assets in the current environment, with meaningful liquidity additions expected over the coming four to five weeks as tariffs are paid back to corporates, keeping liquidity development fairly benign until approximately the first week of August. Declining inflation combined with sideways growth is seen as positive for multiples and the front end of the yield curve, with one speaker favoring receiving interest rates and anticipating a slight rotation toward cyclical names such as industrials.

South Korea exports for the first 20 days of the month accelerated 60 to 65 percent year over year, an acceleration versus May, and spot prices for DRAM are still rising. Micron's bottom line is expected to improve roughly 1000 percent versus a year ago, and one speaker argued the market is too pessimistic ahead of Micron earnings due Wednesday given that underlying parameters for the AI memory trade are still accelerating.

Trump indicated on Truth Social on Sunday that Keir Starmer would resign, which Starmer subsequently did. Sterling assets underperformed during Starmer's tenure, and the five-year real rate differential between the US and the UK versus sterling is at an unusually wide spread. Andy Burnham is widely expected to become the next UK Prime Minister, and one speaker suggested that if the new prime minister accepts fiscal reality, sterling assets and gilts could become attractive buys.

Definium Therapeutics, formerly Mind Medicine, rose approximately 55 percent on the day following positive Phase 3 results for its LSD-like depression treatment. The company has been one of the largest positions in the pro portfolio generating several times return over one to two years, and psilocybin trial results expected around August could reprice the stock higher. MicroStrategy's STRC preferred share instrument traded aggressively lower over the past week before partially rebounding, though the next major refinancing date is 2028 with no signs of imminent balance sheet pressure, making near-term concerns about forced Bitcoin selling misguided. However, if MicroStrategy were forced to refinance during hostile capital market conditions it would need to sell Bitcoin to meet obligations, creating a self-feeding negative feedback loop damaging both the broader Bitcoin market and the credibility of the MicroStrategy treasury model, with the same mechanism amplifying Bitcoin volatility in both directions under favorable conditions.