April 21 is CLK26 expiration. It also marks 53 days since Iran shut the Strait of Hormuz on Feb 28. Let me walk you through what the market is apparently ignoring.

The physical reality nobody wants to talk about

Pre-war Hormuz flows: ~20 mb/d. Current flows: near zero. Per IEA's March OMR, net disruption is running ~18 mb/d.

18 mb/d × 53 days = ~954 million barrels of oil flows disrupted.

That's larger than the entire US Strategic Petroleum Reserve (currently ~395 mb). It's more than China's entire strategic + commercial reserve. This is the largest supply disruption in the history of the oil market, per the IEA. Not 1973. Not the Iranian Revolution. Not 1990 Gulf War. This one.

June crude (CLM26) settled Friday at $88.18.

I built a regression model to price June. The market is wrong.

59 front-month expiry settles from 2021 through 2025 (dropped Covid), regressed on global supply-demand balance and OECD days of forward cover:

WTI = 240.26 - 3.77 × (supply-demand) - 5.88 × days_cover

R² = 0.27 (low because geopolitical premium is un-modelable). Coefficients are economically correct: each 1 mb/d of tightening adds ~$3.80, each 1-day drop in forward cover adds ~$5.90.

Probability-weighted scenarios for CLM26 at May 20 expiry

Scenario	Prob	Fair Value
Status quo closure (9 mb/d shut-in)	30%	$97
Partial reopening (5 mb/d)	30%	$92
Full reopening by mid-May	20%	$89
Escalation (Saudi/UAE infra hit)	10%	$104
Rapid resolution (Hormuz open by Apr 30)	10%	$78

EV: $92.54. P50: $92. IQR: $81-$103. 80% range: $72-$114.

At $88.18, June sits at the 41st percentile. P(profit at entry) = 59%. Expected +$4.38/bbl.

The market keeps getting head-faked. This is the edge.

The two biggest single-day WTI moves in the last 4 YEARS both happened in the last 3 weeks:

• April 2: +11.0% (Trump escalation, oil touched $119 intraday)
• April 8: -13.4% (ceasefire announcement, biggest one-day crash since 2022)

Friday (4/17) Iran tweeted Hormuz was "fully open." Oil crashed 10%. Second largest single-day drop in 4 years. By Saturday IRGC was firing on Indian-flagged tankers and re-closed it. UNCTAD statement today: "the Strait of Hormuz remains practically closed."

This is headline ping-pong. The market is pricing a resolution that keeps not arriving. Every false-dovish tweet = buying opportunity. Every re-escalation = take profit. The vol is the opportunity.

The curve has already capitulated to the bear case

May $91.62. June $88.18. Dec $76.20. $15+ of backwardation.

Translation: the market has already decided this ends in 6 months. The back half of the curve is pricing full resolution and OPEC+ backfill. If you think that probability is too high (it has to be north of 40% to justify $88 in June), CLM is duration exposure at a discount.

TL;DR for the ADHD crowd

• 1 billion barrels of oil flows disrupted in 53 days
• Model says June fair value = $92 median, IQR $81-$103
• June trading at $88 = 41st percentile, ~59% P(profit)
• 60% of probability mass says fair value > current price
• Market is pricing crisis resolution that keeps failing to materialize
• Apr 2 was +11%, Apr 8 was -13%, Apr 17 was -10%. This is where money is made.

Positions

Not financial advice, you know the drill. Tail risk is real: rapid diplomatic resolution + Hormuz fully reopened by April 30 = model says $78. That's a $10 haircut. Size accordingly.

But with 60% probability mass above $92 and the market trading at $87? That's a trade.

🛢️🚀