Only 14 vessels transited the Strait of Hormuz on Tuesday, versus a pre-war pace of about 120 a day, leaving throughput at roughly 12% of normal even after the waterway was declared open. Brent has eased back to $87 and WTI to $81, both lower again on Wednesday, while daily Stoch RSI has fallen from the mid-nineties in late July to 24.82 on Brent and 22.76 on WTI. Brent still trades about $17 above the $70 area, having revisited a July low near $69, and WTI shows a smaller premium, even as traffic remains thin and concentrated on a constrained routing regime.
Routing data shows 11 of Tuesday’s 14 crossings used an Iranian-approved corridor and none used the traditional central passage, a structure that keeps commercial risk elevated for shipowners, underwriters and charterers. Freight markets have been less relaxed: the Baltic Dirty Tanker Index was 2,663 on August 11, up from about 1,988 in early July, yet still around 29% below the March record near 3,730. On the tape, Brent ranged from $87.81 to $88.70 and was near $87.35, down roughly 0.5%, sitting about 6% above its 200-day EMA near $82.50 and about 2% above the 50-day near $85.29; the $114.33 high is more than 23% away. WTI was near $81.65, down about 0.7%, roughly 4.5% above its 200-day near $78 and barely 1% above its 50-day near $80.75, with the spread at about $5.70.
Disconnect Between Oil Futures And Physical Flows
We are looking at a massive disconnect in the oil markets right now that derivative traders can exploit in the coming weeks. While Brent has drifted down to $87 and WTI to $81 on news of the Strait of Hormuz reopening, physical ship counts tell a completely different story. Only 14 vessels transited the waterway on Tuesday compared to the pre-disruption average of nearly 120 per day.
This represents a staggering 88% reduction in traffic, meaning millions of barrels of daily global supply remain effectively blocked. Historically, energy data shows that the Strait of Hormuz is the world’s most vital transit chokepoint, usually carrying about 20% of global petroleum liquids. We cannot expect global oil inventories to withstand a physical deficit of this size for very long before prices are forced upward.
Risks, Freight Markets, And Trading Opportunities
Furthermore, almost all of Tuesday’s transits used a restricted, state-approved route rather than the traditional deep-water central passage. Because this corridor operates strictly at the discretion of a single political actor, insurers cannot safely underwrite these voyages. We believe this structural risk is why shipping charterers are refusing to send very large crude carriers back into the area.
The shipping market’s fear is highly visible in the Baltic Dirty Tanker Index, which jumped to 2,663 on August 11, up more than 30% from its July low. While paper crude traders are selling off on optimistic headlines, physical shipping rates are signaling that the crisis is far from over. We should favor the shipping market’s realistic pricing over the optimistic expectations of the oil futures market.
For our trading strategy in the weeks ahead, we are watching key pivot levels at $85 on Brent and $80 on WTI. If prices hold above these averages, the technical path of least resistance is a sharp move back toward the July highs. We should treat any further dips toward the 200-day moving averages as prime buying opportunities for call options.
The current pricing offers an incredibly asymmetric risk-to-reward ratio for long positions. If traffic actually normalizes, Brent might slide back to $70, but if the current restricted route is closed, prices could easily spike past the March highs of $114. We recommend building long exposure now before the physical shortage finally registers in global inventory data.
