Hormuz Shipping Surge and Oil Market Volatility as Nvidia Earnings Loom

Shipping through the Strait of Hormuz has surged nearly 400% over two weeks, reaching almost 200 vessels last week versus about 150 the prior week and roughly 40 two weeks earlier. However, Iran's crude flows to Asia have virtually stopped ahead of new US sanctions, with loaded tankers reportedly stuck inside the Gulf and empty ships struggling to enter.

Cargo costs are at their highest level in years, according to reports, while Iran's central bank governor stated that exports have 'virtually stopped', suggesting higher transit volumes do not equate to normalized oil supply.

WTI crude remains in a local uptrend after breaking a descending trendline and is retesting the 4H 50-EMA band as Stochastic RSI has returned to oversold territory. A potential inverse head-and-shoulders pattern is forming, with the neckline at $85.95-87.84.

The VIX volatility index has stayed in extreme low-volatility territory for 17 days, and it has spent about four weeks below 17.00, with historical scope for 7-8 weeks. This could suggest that the S&P 500 is grinding upward toward the 7,816 to 8,000 range.

Nvidia's earnings report on Wednesday will be a key catalyst to watch this week, as option markets are currently pricing in an implied move of around 8% for Nvidia shares post-earnings, which is highly consistent with its historical average move over the last several quarters.