WS #2105

The Strait of Hormuz crisis remains the dominant market signal, with escalating geopolitical and energy disruptions. The IEA warns this is the 'largest supply disruption in the history of the oil market,' with recovery potentially taking over six months, corroborated by FT and multiple social media sources. Oil prices have surged 60% since the war began, with Saudi officials warning of $180 oil if disruptions persist into late April. A key stress indicator is the WTI-Brent gap widening to $12.05, the biggest in 11 years, signaling severe regional dislocation beyond headline spikes. Federal Reserve commentary adds monetary policy pressure, with Governor Christopher Waller stating the Fed cannot 'look through' a large and persistent oil shock, directly linking energy prices to inflation. Waller warns that high oil prices could bleed into core inflation and damage consumer outlook, though he sees no need for rate hikes currently. This reinforces a higher-for-longer rate environment amid stagflation risks. Specific corporate developments include Tesla facing an intensifying NHTSA probe of its Full Self-Driving system, covering about 2.4 million vehicles, which could pressure TSLA stock given its already fragile sentiment. Meanwhile, Microsoft is seeing dip-buying interest as shares trade near $389-390, approximately 29% below all-time highs, with bulls citing attractive valuations. These individual stock moves are overshadowed by the broader macro turmoil.