The inflation input driving the rate repricing produced a figure worth isolating.
The cost of hiring an oil tanker for the benchmark Middle East to Far East route topped $1 million per day for the first time ever, per Bloomberg's Javier Blas. A year ago it was under $100,000.
That tenfold increase is not priced into the barrel. It sits on top of it and passes through to every refined product moved by sea from the region.
Saudi Arabia closed the East-West pipeline running to the Red Sea port of Yanbu, which exists specifically to bypass the Strait of Hormuz. With Hormuz disrupted, the bypass shut and Bab El-Mandeb now under threat, Saudi production fell to 6.238 million barrels per day — the lowest since 1990. Brent traded above $107.
An export bottleneck unwinds only when a route reopens, which is why this feeds the inflation case in a way monetary policy cannot reach.
The Fed decides Wednesday at 2:00 p.m. ET with updated projections and a Warsh press conference.#CLARITYActKeyVoteAhead #GateUSExpandsTo37StateLicenses #TemasekInvestsSKHynixJapanPlant $BTC

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