A week later and not much has changed with the Strait of Hormuz situation

From the end of last month: There's still mud in the waters on how things are playing out with the Strait of Hormuz

Last week, the average traffic saw around 30 to 40 vessels transit the Strait of Hormuz per day. And despite that, crude oil tankers were still limited to less than double digits for the most part. Fast forward to today, and not much has changed with traffic over the past few days also continuing to keep thereabouts.

Based on the different ship tracking sources, the numbers are as per the following:

• 3 July: ~29-34 vessels (~7 crude oil tankers)
• 4 July: ~18-24 vessels (~4 crude oil tankers)
• 5 July: ~12-26 vessels (~6 crude oil tankers)

Of course, these do not include the "shadow fleet" which likely should see another 10-20 vessels on top of what the above numbers are showing. Still, that's not all too encouraging especially after two weeks of the supposed "reopening" of the strait.

The number of oil tankers, especially VLCCs, passing through is still leaving a lot to be desired. And it surely is nowhere near the 15 million barrels of oil per day that used to transit through the waterway before the war.

And even on pure ship numbers themselves, this is still just between 20% to 30% of what traffic used to be before the conflict began.

The US and Iran have called for an extended truce this week as negotiations hit pause. That as US president Trump says both sides are taking a "break" until funeral ceremonies conclude. Call it what you will, it's just another way of phrasing the can being kicked down the road.

In the meantime, the status quo continues while Iran is also looking to impose fees on ships passing through the Strait of Hormuz at some point in the near future. Indirectly, that's a toll being put in place no matter how you want to frame it.

But whatever the case is, both sides are still just trying to sell the narrative that things are going swimmingly well. Reminder, we are at Stage 4 and 5 of the expected playbook on this matter:

While oil prices are still looking relatively calm since the recent falloff, let's be honest that the reality of the situation remains far from what the numbers on the screen are saying.

With this kind of traffic along the Strait of Hormuz, it feels like a question of when and not if reality is going to slap hard when it all comes down.

The current calm relies a lot on depleting inventories to keep the show going. Think of it as running down your savings just to keep up appearances that you are living a rich and lavish lifestyle. At some point, reality will catch up and that is when the whole fugayzi is going to unravel.

For Trump and traders betting on lower oil prices, the hope is that Iran will finally break on the strait and the future narrative shifts back in their favour. But so far after two weeks, it doesn't seem like that is happening just yet. Tick tock, tick tock.

This article was written by Justin Low at investinglive.com.