David Hay — Red Sea Reality Check
"This is a key reason… why we are anticipating another resounding rally by crude prices." Why the Hormuz-reopening cheer is premature.
One-line take: The near-euphoria over an Iran peace treaty assumes the Strait of Hormuz snaps back to pre-war traffic — but that ignores the other side of the Arabian Peninsula. Transits through the Suez Canal and the Strait of Bab el-Mandeb remain ~50% below their pre-2023 (pre-Houthi-attack) levels, the Mideast cease-fire has been an on/off affair (re-escalation last July, truce in October, blockade resumed this March under Operation Epic Fury), and Iran is likely to stay belligerent. Combined with Ukraine's increasingly effective drone strikes on Russian oil & gas facilities, Haymaker expects "another resounding rally by crude prices" — and teases several energy-sector recovery plays in tomorrow's Picks of the Week (POW!).
1. Stocks & names mentioned
None — a pure macro note on Mideast oil-supply geography (Strait of Hormuz, Suez Canal, Bab el-Mandeb / the Red Sea) and the crude-oil price outlook. No individual securities, tickers or funds are named; the energy "recovery plays" are deferred to tomorrow's POW!. Crude oil is a commodity, not a ticker — it lives in the talking points below and the master macro table.
2. Talking points
The Hormuz-reopening cheer is misplaced
- The prevailing near-euphoria over the Iran peace treaty reads as: the Strait of Hormuz will soon return to pre-war traffic levels.
- That bullish interpretation "overlooks what has happened on the other side of the Arabian Peninsula" — the Red Sea corridor is still badly impaired.
Suez + Bab el-Mandeb transits remain ~50% below pre-2023
- Transits through the Suez Canal (to the north) and the Strait of Bab el-Mandeb (to the south) are still about 50% below where they were before the Houthis' widespread Red Sea shipping attacks in late 2023 (charts: GSA).
- The chokepoint that gets the headlines (Hormuz) isn't the only one that matters — the Red Sea route normalizing is the real test, and it hasn't.
The cease-fire is on/off, not durable
- The Mideast-theater cease-fire that began last May has been an on-and-off affair: a re-escalation last July, another truce in October — each producing only a "minor blip" pickup in transits.
- Then this March the Houthis resumed a blockade of U.S., Israeli and British ships in response to Operation Epic Fury.
Iran stays belligerent — and that lifts crude
- It's unlikely Iran behaves less adversarially; arguably more belligerent given the U.S./Israel objective of denying it uranium enrichment, and emboldened by its success disrupting global energy flows to keep harassing tanker traffic.
- That, plus Ukraine's increasingly effective drone attacks on Russian oil and gas facilities, is why Haymaker anticipates "another resounding rally by crude prices" — with several actionable energy-sector recovery plays promised in tomorrow's Picks of the Week (POW!).
Key points extracted from the Haymaker Substack post (in transcript.txt) for personal study. Not investment advice; this is a paid post and only the text captured for personal study is summarized here. © Haymaker / David Hay for source material.