“Not Until May” The Real Timeline for Controlling the Strait of Hormuz | Nadia Martin Wiggen Svelland Capital
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Today's episode is brought to you by the Tucrium Corn Fund, ticker c o r n. Let's get into it. Welcome to this special edition of Other People's Money. I am joined today by Nadia Martin Wiggen, director at Svellan Capital. I've had Svellen Capital on before on the program, and they're a hedge fund specializing in commodities and shipping markets. So when the crisis in The Middle East kicked off, I thought if there's one manager that I should bring back onto the program, it had to be somebody from Svellen Capital. So, Nadia, thank you so much for joining me today.
Thank you. It's our pleasure.
As I said, you you specialize in commodities and shipping. That's that's really the crux of the crisis that is really driving pretty much every market in the world right now. As we record the morning of Monday, March 23, we just got a major announcement out of, The US in president Trump claiming that that that he has had productive talks with Iran. We immediately got denial from from Iranian authorities, and markets are are generally taking it in stride with Brent prices down, not as much as they were down on the original announcement, And generally, equity markets up, bond markets around the
Well, we have to contextualize where the announcements came from over the course of the weekend. Going into the weekend, we had an announcement from Trump suggesting that he may be pulling back in Iran. We saw the oil price sell off on Friday evening. It came up a little bit by the time the market closed, but really it had sold off quite a bit. Then, over the weekend, we saw continued attacks. And then we received an ultimatum announcement from Trump stating that if Iran does not open the Strait Of Hormuz within forty eight hours, and attacks continue, then energy infrastructure could be under
So when you think about the risks caused by escalation versus the risk that the the straight remaining closed, which one seems to have the market more spooked? Because you you hear from people who say, look. If the straight is closed, prices have to go higher. But at the same time, clearly, the market cares about potential further damage to to energy infrastructure. So how are you thinking about those two sides of the coin?
So regardless of the announcements right now, while the strait is closed, we are losing 13,000,000 barrels per day of production out of the region. Right? That's what's been shut in in our estimate. And right before this started, we had peak flows of 23,000,000 barrels per day. Right? We've since then had some more flowing out on the Iranian side. So, they've reached around 2,000,000 barrels per day of exports. So, that part continues to flow. And we've had the opening up of the East West pipeline and expansion. It's always been running a little bit in Saudi Arabia because there are two refine
What is that demand destruction number in your mind?
It depends for how long it continues. It is really tough. We've seen that jet fuel prices first they hit $130 then $230 We've seen thousands of flights cancelled. It started in Asia. We're seeing some of it in Europe. So, I think that is starting to hit some of that. But then, it also depends on where the rest of markets are, right? So, if stock markets are still doing well, if businesses are still doing well and people are employed, then they can handle a bit of a blip up. I mean, even two weeks into this, the gasoline price in The US was still cheaper than it was under the Biden administrati
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