Goldman Sachs on Ceasefire - FJElite

Futures sharply higher this morning on headlines of a two week ceasefire deal. Objectively this is better than even my modal outcome, which was leaning toward another can kick/ short extension. The optimistic take is that this marks the beginning of the end, enough political framing from both sides to declare that they are the winner and are now formally at the table with a defined window to negotiate.

All about SOH: Pessimistic view is that the underlying positions remain far apart. Iran's position is for continued enrichment and some form of tolling/control mechanism in the Strait (potentially alongside Oman) I think very hard for US to agree. But there's two weeks to negotiate...so that might be the trade after the trade. For markets, none of that nuance really matters... it's all about the flow of vessels through the Strait and at what pace? The key line from Iran: "For a period of two weeks, safe passage through the Strait of Hormuz will be possible via coordination with Iran's Armed Forces and with due consideration of technical limitations." - Iranian Foreign Minister Abbas Araghchi posted on social media. To me that means tankers move only with approval via the Iranian "Toll Both" and subject to “technical limitations”... which likely means controlled throughput. Enough supply to avoid escalation, but not enough to lose leverage in negotiations. That’s consistent with crude holding in the 90s rather than collapsing back into the 80s imo but there is likely a lot of underwater hedges/cta longs that will need to sell here.