Signal Brief: Iran Update – 4th March AM – Insurance vs Attacks

Cross-Barrel Signal Brief: Iran Update – 4th 𝐌𝐚𝐫𝐜𝐡 AM – Insurance vs Attacks

• Brent responded wildly to the initial headline last night that the US will escort and backstop insurance for Hormuz transits.
• This was followed by growing scepticism about how owners will react given the high threat level and ongoing attacks in the region including on vessels, military bases, oil infrastructure.
• We need more info on real US navy capabilities to escort. More importantly, during Operation Earnest Will (1987-88) transit remained slow due to the logistical difficulties of escorting. Chances are there is no easy channel yet to get 100% flow out of Hormuz, even ignoring the ongoing hits to fixed infrastructure targets in the region as well as production shut-ins.
• Many shipowners and flag states will remain hesitant for the time being. Reports suggest some Greek owners  attempted night time transits last night without AIS.
• Flat price action today is fading the news and in my view we will still incrementally price upward today; we need much more evidence of progress against Iranian asymmetric capabilities before supply chain chaos can be reversed.
• SPR talk is likely to gain ground today; Americas sour crude is getting bid up rapidly as global refiners turn to available alternatives.

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