Markets do not wait for a ceasefire to be announced. They price the probability of one. That is why risk assets have historically turned before military conflicts formally end rather than after, and it is why waiting for the headline usually means paying up for it. The direction of that mechanism is the easy part to understand.
The timing is the hard part. A lot of people think this never ends. Plenty of people think it ends any day now. The honest answer is somewhere in between, and I do not have a date for you. Nobody selling you a date has one either. What you can do is size positions to a range of outcomes instead of to a single one.
What we do know is the mechanism that decides it. Oil has to flow freely out through the Strait of Hormuz to the global economy. Until it does, prices go up, economic activity goes down, and stock markets look vulnerable. Every positioning question in front of investors right now runs back through that one variable. So the question worth thinking about is what gets oil moving freely through the Gulf without putting more people in harm’s way.
