Yesterday was filled with global headlines and choppy trading, with losses at the index level contained. As the Closing Bell rang the S&P 500 finished down only slightly, the equal weight fell 0.3% and the Russell down 0.2%. The big news story centered on the IEA coordinating the release of 400M barrels of global strategic reserves. Japan also announced their own release, as did the US (172m barrels). The IEA added this was the greatest disruption of oil supply in history. The release news didn’t do much to stop oil’s rise. Rounding up other related news, additional tankers were struck and mines laid in the Strait of Hormuz, the FBI released a drone warning for the West Coast and Oman evacuated its energy infrastructure. Credit concerns had been pushed aside by the Iranian situation but yesterday they came back to the forefront after JP Morgan marked down the value of loans to private credit groups and reports of more redemptions. And in more disruption news, Oracle and Altassian were reported to be planning layoffs, with AI at least mentioned as a contributing factor.

At a high level the story remains the same today with Iran and private credit headlines weighing on sentiment again. ICE Brent is hovering ~$100 but is off the highs of the day. Energy Secretary Wright reiterated that the U.S Navy is not ready to escort tankers through the Strait of Hormuz, Iran’s Supreme Leader Khamenei said it will remain closed. However, around noon there were headlines that some ships are being allowed to pass which has helped oil back off and there are also reports that the administration is considering waiving the Jones Act for 30-days. President Trump played down rising oil prices saying on social media, “The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money” and reiterated the need to finish the job in the Middle East. The upward move in oil prices is one thing but it’s also notable that the backwardation is flattening out. Futures in Q4 are moving into the 80’s suggesting that the market expects this conflict to drag on.

Futures were down over 1% at the lows overnight, had improved during the European session but turned lower after Wright’s comments this morning again. The S&P 500 cash index opened just below yesterday’s low, traded down to ~6,700 in the first half hour of trade and has been trading in a 40pt range on either side of that level since.