80 million barrels of crude oil, ready to pass through the Strait of Hormuz.

With the temporary agreement between the United States and Iran opening up the Strait of Hormuz, a backlog of up to 80 million barrels of Persian Gulf crude oil is ready to be unleashed. However, the physical risks and data blind spots make this long-awaited supply chain repair uncertain, and simultaneously trigger a profound reassessment of global macro liquidity. Currently, 40 Very Large Crude Carriers (VLCC) loaded with non-sanctioned crude oil are waiting in the Persian Gulf, ready to rush towards Asian markets at any moment. This massive supply is expected to alleviate the previous supply interruption crisis of over 1 million barrels per day and become a key increment to stabilize oil prices and restore downstream refinery operating rates. However, the presence of unexploded mines in the Strait and the issue of "dark sailing" of vessels make the actual delivery pace unpredictable. Against the backdrop of obstacles in the physical supply chain, the expectation of passage and the progress of the US-Iran peace agreement are prompting funds to "move from virtual to real," leading to fluctuations in cross-asset prices such as the decline of gold and the rise of the US dollar. For investors, this means that the risk premium in the oil market may not be completely eliminated in the short term, and the pricing logic of macro assets is shifting from geopolitical risk aversion to economic recovery, testing the nerves of global energy and financial markets in the vulnerability of the supply chain and the structural changes in liquidity. 80 million barrels of crude oil on standby, Asia awaits supply recovery With the expectation of shipping resuming in the Strait of Hormuz, the backlog of crude oil in the Persian Gulf is finally emerging. According to data compiled by Vortexa, 40 VLCCs are currently loading nearly 80 million barrels of non-sanctioned crude oil from oil-producing countries in the Gulf (excluding Iran), and are in a state of readiness. If smaller tankers are taken into account, the actual backlog may be even larger. The destination of this batch of crude oil is already clear, with the Asian market being the largest recipient. Currently, about 21 VLCCs are indicating their destination as Asia, with 5 heading to China, and another 5 heading to the transhipment hubs of Malaysia and Singapore. As of Friday morning last week, at least 3 vessels were moving towards the east at normal speed. This supply increment is crucial for the Asian market. Last year, the region received about 15 million barrels of Middle Eastern crude oil daily. During the three-month blockade period, the number of merchant ships passing through the strait plummeted from nearly 100 ships per day to 2 to 3 ships, cutting off over 1 million barrels per day of Middle Eastern crude oil supply. Asian refineries were forced to reduce operating rates, and several countries had to use strategic reserves to cope with sudden supply shortages. The release of this backlog of crude oil will effectively alleviate the raw material anxiety of Asian buyers. Unexploded mines and "dark sailing" intertwine, actual navigation risks remain Although the US and Iran have signed a temporary agreement to restore traffic in the Strait of Hormuz, and 3 Saudi VLCCs reappeared in the Gulf of Oman on Thursday, indicating that vessels are starting to move, the physical risks of navigation have not been completely eliminated. The shipping trade organization BIMCO explicitly warned that unexploded mines in the Strait of Hormuz have not been cleared, and there are still significant risks for major vessels passing through. This means that shipowners and insurance companies are still cautious about dispatching high-value crude oil carriers through the strait until precise security guarantees are obtained. During the previous blockade period, over half of insurance companies canceled war risk policies, and premiums soared to as much as 500%, indicating that this risk-averse sentiment is unlikely to be completely reversed in the short term. Even more challenging is that the transparency of the supply chain is facing challenges from technological disruptions. For security reasons or due to electronic interference, some vessels choose to turn off their Automatic Identification System (AIS) signals. This "dark sailing" status results in a blind spot in tracking actual passage data, making it difficult for the market to accurately verify how many vessels have actually completed the strait passage. Oil traders who heavily rely on real-time data are also unable to accurately assess actual arrival volumes in the short term. Reassessment of macro liquidity: "moving from virtual to real" funds triggering cross-asset fluctuations While the physical supply chain is difficult to repair, the reality of shipping in the Strait of Hormuz is triggering a reassessment of global macro liquidity. With Trump signing the US-Iran peace agreement on June 17, the passage of ships through the strait is promoting the restoration of both supply and demand for global oil, until the circulation of oil elements gradually returns to normal. In a normal state, a strong supply-demand balance in oil will prompt the real economy to use more cash. As supply shocks ease, the real economy emerges from recession, and a large amount of funds begin to flow back from the virtual economy to the real economy, known as "moving from virtual to real." The reduction of surplus liquidity is directly reflected in fluctuations in cross-asset prices: the decline in gold prices due to liquidity withdrawal and the rise of the US dollar. In addition, the drastic fluctuations in the short-term US bond market also need to be reassessed. The recent breakout of the 2-year US bond rate above 4.20% was caused by liquidity shocks triggered by the redemption of money market funds, rather than concerns about a rate hike from the Fed in June. The drop in the 30-year US bond rate further confirms that the market is not worried about a rate hike this year, coupled with the more hawkish tone from Powell in his first meeting, the trend of long-term rates indicates that macro pricing has not deviated from the fundamentals. When evaluating geopolitical risk premiums, investors need to be wary of the asset revaluation risks brought about by changes in liquidity structure. This article is reproduced from the "Wall Street News" app, author: Zhang Yaqi; GMTEight editor: Song Zhiying.