The IMF just warned of a potential world recession ahead if Hormuz stays shut. Its latest three global growth scenarios are 'weaker', 'worse' and 'severe' - "because markets", and politics, the Fund chose the most benign as its base case, even as "downside risks are clearly very elevated." That's as Spain, for example, just released 4 of their 90 days of strategic oil reserves, with another 8 to follow. While that leaves 78, even if Hormuz reopened tomorrow, it would take at least 60 and possibly as many as 150 days before normal oil flows could be restored, according to IEA. Imagine driving home in a convoy through a blazing desert in an air-conditioned car knowing you all have 50 miles of fuel in the tank, and the next station is 30 miles away… and then hearing on the radio that it could be shut, and the following one is at least 60 miles away. That's where much of the world economy stands now – and markets are opting to pump up the radio and aircon and say, 'The next station will be open and I want a slushy.'

Most governments are doing the kind of pumping oil wells aren't: 

Brussels is pitching a "state subsidy bonanza" to combat the energy shock which "goes much further than the current state aid rules."

Canada's PM Carney, who ran two central banks, has suspended federal taxes on gasoline and diesel.

Australian Treasurer Chalmers has introduced a 20-year retrospective capital gains tax on mining, energy and infrastructure.

Malaysia is to increase its biofuel mandate.

Provided the war ends soon, those kinds of policies could cushion the economy: but across all schools of economic thought, textbooks are clear about what demand-side boosts into structural supply-side shocks do – leave you stuffed.

So, to the war. CENTCOM says no ships passed the Iran blockade in the first 24 hours. Moreover, the US Treasury says is not renewing its temporary easing of Iran oil sanctions and has sent notices to China and Hong Kong asking for help in enforcement. The US is clearly escalating hard vs Iran despite messages pinging yesterday that a sanctioned Chinese vessel, Starry Rich, had transited Hormuz, ignoring IF an interception was to be made, it would be in the Gulf of Oman or Arabian Sea; then clarified the vessel was carrying methanol from the UAE, not fuel from Iran, so wasn't in scope; then the ship turned round anyway. Some press today claims the Saudis, who've been pushing the US to finish the job vs. Iran, are now pressuring it to ease the blockade in fear of a Red Sea counter-blockade that hasn't taken place yet: more fog?

Yes, there will be more US-Iran talks in Pakistan, possibly tomorrow, which is the lodestar market bulls are guided by. As the Telegraph notes, this seems to be the one place that Iran's battered leadership can physically meet without being killed: but what will they say that's different from the last rejection of US demands on uranium, nuclear weapons, missiles, proxies, and Hormuz? Vice President Vance has reiterated Trump wants a "grand bargain" with Iran, not "a small deal," and one that sees it abandon its nuclear ambitions. Trump has added that he wasn't happy with the proposed 20-year moratorium on uranium enrichment offered in Pakistan and wants a permanent end to the matter. Israel is also stating that the removal of Iran's enriched uranium is a "threshold condition" for it ending its Iran campaign – though the head of Mossad chief has additionally declared, "Our mission isn't over until regime falls."