All Talk, No Peace

Oil is at $95.60. Up 33% since the war began. The Strait is mined. The blockade is in effect. Iran is threatening to close the Red Sea. Israel’s Mossad chief just pledged more covert operations to topple Iran’s government. The IAEA has been barred from Iran’s nuclear sites since June.

Something doesn’t add up. I built the table below to help visualize the gap.

Managing the News Cycle, Not the Crisis

Bloomberg flagged the pattern directly: “Trump has vacillated throughout the war between declaring it all but over and threatening a major escalation.” That’s not editorial commentary. That’s a factual description of what happened this week alone. Sunday: “BLOWN TO HELL.” Monday: “they called, they want a deal.” Tuesday: war is “close to over.” Wednesday: still running a naval blockade with 15 warships.

The market response to these statements has been predictable. Each optimistic comment produces a relief rally. Stocks have now erased all losses since the war began on February 28. The S&P is closing in on its January record high. But oil is still at $95.60, gas is at $4.13, the Strait is still closed, and the IMF just downgraded global growth to 3.1%.

Stocks are pricing Trump’s words. Oil is pricing the physical reality. One of them is wrong.

I don’t know which one resolves first. But I do know that every previous relief rally this year (tariff pauses, ceasefire announcements, “they called” comments) faded within 48-72 hours as the structural reality reasserted itself. Yesterday’s TACO bounce is already fading: gold gave back its gains, oil is rising again, and the dollar is firming.

The Blockade is “Fully Implemented” and Already Leaking

CENTCOM claimed it has “completely halted economic trade going into and out of Iran by sea” in less than 36 hours. Admiral Cooper said 90% of Iran’s economy depends on sea trade.

But the data tells a different story. At least 7 Iran-linked vessels passed through the Strait after the blockade began (Kpler data). Two Iranian tankers transited today, according to Fars News. A second sanctioned Chinese vessel (Elpis) passed through yesterday. The Chinese-owned Rich Starry sailed through, then made a U-turn near Larak Island for unclear reasons. A US official confirmed the Navy did not ask it to turn back.

A US official clarified that the blockade is being enforced from the Gulf of Oman, not the Strait itself. Ships can get through Hormuz, but not far past it. An Iraq-bound supertanker made it through on its second attempt, becoming the first crude carrier to head west through the Strait since the blockade began.

So “completely halted” is aspirational, not descriptive. The blockade is real, but it’s porous. Iran is testing it carefully, sending vessels through to see what happens. The US is enforcing selectively, avoiding confrontation with Chinese vessels while trying to squeeze Iranian exports. (One of my subscribers raised an interesting point about China’s role as Iran’s “untapped leverage” that goes well beyond oil shipments.

Iran’s response to the blockade: Iran’s army warned it could block traffic in the Persian Gulf, the Sea of Oman, AND the Red Sea if the US blockade continues. That’s the explicit three-waterway threat. If Iran activates the Houthis to close Bab al-Mandeb simultaneously, global shipping faces two chokepoints closed at once. That scenario is not priced in.

But there’s a more subtle Iranian response happening too. Bloomberg reported that Iranian authorities are considering a pause in their own shipments through Hormuz to avoid testing the blockade and jeopardizing fresh negotiations. That’s strategic restraint, not weakness. Iran is choosing not to provoke an incident that would give Trump a military win while the diplomatic track (where Iran holds stronger cards) is still alive.

The Treasury Tightens While Trump Talks Peace

While Trump says the war is “close to over,” the Treasury Department is doing the opposite. The temporary waiver allowing the purchase of certain Iranian crude oil expires this weekend. A similar waiver for Russian crude already lapsed last week. Treasury warned banks about moving funds supporting the Iranian regime.

This is maximum economic pressure being applied at the same time the President is claiming a deal is imminent. The two messages don’t align. Either the Treasury is running on autopilot and hasn’t received the “close to over” memo, or the “close to over” rhetoric is for markets, and the actual policy is escalation. Based on the pattern of the past seven weeks, I think it’s the latter.

The Mossad Statement Nobody is Talking About

The most important sentence published today got almost no market attention. Israel’s outgoing Mossad chief David Barnea said: “Our mission has yet to be completed.” He pledged more covert efforts to topple Iran’s government.

This is Israel saying, in plain language, that it will continue destabilizing Iran regardless of what Trump negotiates. Any peace deal between Washington and Tehran is undermined the moment Israeli intelligence resumes operations designed to change Iran’s regime.

This is the same structural contradiction that collapsed the ceasefire in 12 hours on April 8: Israel operates independently, with objectives that conflict with US diplomatic goals. Trump can sign whatever deal he wants. Netanyahu and Mossad will pursue their own agenda.

For markets, this means: the risk never fully goes away. Even a signed US-Iran agreement doesn’t eliminate the tail risk of Israeli covert action provoking an Iranian response that restarts the cycle.

IEA: First Global Oil Demand Decline Since 2020

The IEA said Tuesday that surging prices of jet fuel and gasoline are “already squeezing consumers,” pointing toward the first annual decline in global oil demand since 2020. Global oil demand is expected to fall by 80,000 bpd in 2026, with the Middle East and Asia-Pacific seeing the steepest drops.

“Demand destruction will spread as scarcity and higher prices persist,” the IEA said.

This is the point I raised earlier this week about oil’s natural ceiling. Prices high enough to cause demand destruction ($130-170 range) would eventually bring supply and demand back into balance. But we’re not there yet. At $95.60, prices are high enough to hurt consumers and slow growth, but not high enough to force the behavioral changes (rationing, factory shutdowns, flight cancellations) that would meaningfully reduce demand. The IMF’s 3.1% growth forecast reflects the pain without the relief.

In yesterday’s analysis, I featured a chart that showed what happened to precious metals and mining stocks after the previous two times crude oil decisively broke above $100. In both cases, major declines followed in gold, silver, and mining within months. In 2008, GDX erased more than 2/3 of its value, and FCX lost about 4/5. The pattern makes sense: high crude oil means high costs for companies, which crushes profits and stock prices. This is even worse than most investors realize: diesel alone accounts for 46% of total mine energy consumption, and the vast majority of junior miners have no hedging programs to protect against it.

For the gold thesis: demand destruction and slowing growth are normally bullish for gold (flight to safety, rate cut expectations). But this particular slowdown is driven by supply-side inflation (oil), which keeps the Fed frozen. The channel holds: oil up → inflation sticky → Fed frozen → dollar supported → gold pressured. Even if growth slows, the Fed can’t cut into an oil-driven inflation surge. That’s the stagflationary trap.

Today’s Prices: The TACO Fades

Gold: $4,832, down 0.37%. Silver: down 0.66%. Oil (WTI): up 0.92%. Dollar (DXY): up 0.11%. S&P: up 0.06%. Copper: down 0.11%.

It seems that yesterday’s relief rally lasted one session. Gold is giving back gains. Oil is climbing again. The dollar is firming. Silver is fading. The pattern: TACO bounce on Tuesday, channel reasserts on Wednesday.

This is the fifth time in two weeks that the channel has reasserted after a headline-driven disruption. The structural driver (oil elevated → inflation → Fed frozen → dollar strong → gold pressured) is more powerful than any single Trump statement, blockade announcement, or “they called” claim.

The test I outlined yesterday remains: if oil falls for three or more consecutive sessions and Strait traffic increases meaningfully, the channel is breaking. As of today, oil is up, not down. The channel holds. Mining stocks, meanwhile, may have just hit a turning point: the triangle-vertex-based reversal I flagged yesterday for subscribers played out today, and silver’s move to its 38.2% Fibonacci retracement and reversal below $80 added confirmation.

Thank you for reading today’s analysis – I appreciate that you took the time to dig deeper and that you read the entire piece. If you’d like to get more (and extra details not available to 99% investors), I invite you to stay updated with our free analyses – sign up for our free gold newsletter now.

Thank you.

Sincerely,

Przemyslaw K. Radomski, CFA