Hormuz Shipping Surge Masks Iran Oil Export Stall as WTI Tests Breakout

Shipping through the Strait of Hormuz has surged by nearly 400% in just two weeks, reaching almost 200 vessels last week compared to about 150 the prior week and roughly 40 two weeks earlier. However, despite this increase in traffic, Iran's crude exports to Asia have stalled ahead of the US's latest sanctions, with loaded tankers reportedly stuck inside the Gulf and empty ships struggling to enter.

Cargo costs are at their highest level in years, and Iran's central bank governor has stated that exports have 'virtually stopped', suggesting higher transit volumes do not equate to normalized oil supply. This volatility is reflected in the energy markets, with WTI crude remaining in a local uptrend after breaking a descending trendline.

WTI is retesting the 4H 50-EMA band as Stochastic RSI has returned to oversold territory, potentially forming an inverse head-and-shoulders pattern. A break above the neckline resistance between $85.95 and $87.84 could imply a measured move towards the $100 area if the 50-EMA holds.

Meanwhile, in equities, the VIX has stayed in extreme low-volatility territory for 17 days, with historical scope for up to eight weeks. This suggests that the S&P 500 may continue to slowly grind upward toward the 7,816 to 8,000 range, although traders should remain cautious and consider hedging existing equity portfolios against a sudden spike in market volatility.

The most critical catalyst to watch this week is Nvidia's earnings report on Wednesday, which frequently dictates the direction of the entire market. Option markets are currently pricing in an implied move of around 8% for Nvidia shares post-earnings, consistent with its historical average move over the last several quarters.