Spyridon Kokas
Research Analyst, The Officials
De-escalation Reactions, OIS Pricing 33bps, Iran Disruption as Structural Rewrite
Markets cheer “ceasefire” but miss reality: Hormuz becomes priced chokepoint, structural energy shift, Iran holds leverage.
De-escalation coming? The market reacted wildly: Brent down nearly 15% (Chart 1, Flux), TTF gas -18%, while German power -5% and is below pre-war levels.
In other markets, the US OIS posted wild swings too, 17bps of cuts priced for the next 12 months, down from 9bps of cuts yesterday, while the 2-year Treasury yields are down 7bps to 3.73%.
In UK rates, the OIS for the next year is pricing 33bps of hikes vs +63bps yesterday, while the 2y gilt yields are down 25 bps to 4.17%. Yet the GBP/USD rate is trading over 1% higher on the day, near 1.3425 (Chart 2, Bloomberg).
The market is treating this Iran situation like a temporary disruption. It isn’t. It’s a structural rewrite of global energy plumbing happening in real time. Overnight, the focus stayed on another big TACO from Trump, but the so-called “ceasefire” is being misread. This is not de-escalation. It is a formalised restriction.
During the two-week window, passage through the Strait of Hormuz will be tightly rationed – only 10 to 15 ships, approved case-by-case, coordinated with the Islamic Revolutionary Guard Corps Navy, and crucially, monetised via tolls. That is not a reopening. That is the creation of an official state-controlled chokepoint with a price tag.
Even more important: this structure is not temporary in spirit. The Strait is not expected to return to its prior “open” status, even under a final agreement. In parallel, the US is reportedly committed to releasing frozen Iranian assets.
And everything hinges on Iran’s 10-point proposal. This is where the market is still asleep. For reference, the list of the 10-point plan is as follows. Iran demands that the US commit to ensuring no further acts of aggression. Continued Iranian control of the Strait of Hormuz. Acceptance of Iran’s nuclear enrichment rights. Removal of all primary US sanctions on Iran. Removal of all secondary sanctions on Iran. Termination of UN Security Council sanctions and resolutions related to Iran. End to IAEA pressure over Iran’s nuclear program. Compensation to Iran for war damage and losses. Withdrawal of US forces from the region. A ceasefire across all fronts, including regional theatres linked to the conflict.
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