Oil Supply Through Strait of Hormuz Remains at One-Third of Pre-War Levels

Oil supply through the Strait of Hormuz is still running at about a third of pre-war levels. The market is pricing in a surplus even with the constrained shipments. Macro analyst Jeffrey Snider attributes the price drop to deeper demand destruction than anticipated.

Manufacturers front-loaded months of activity when the war started, building inventory fast before shortages hit. That rush has now ended, leaving an air pocket in demand.

Snider described conditions in China as "Terrible." A banking crisis, real estate bust, and collapsing consumer spending have pushed Chinese government bond yields near record lows. He stated that China quietly agreed with the U.S. after their May summit to hold off on refilling strategic reserves, helping suppress the oil price. What China received in return remains unknown.

Snider noted that the stock market indicates a booming economy while the median age of a first-time homebuyer in the United States has reached 40. He linked this gap to a rising wave of socialism and warned that the political breaking point is approaching faster than many expect.

The economy has been in the downswing of a long cycle since August 2007, with the 2030s potentially marking a turn. Whether politics fracture before that point is the open question.