US President Donald Trump's renewed threats to strike Iran, combined with Iranian negotiators once again walking away from talks in Switzerland, have revived uncertainty surrounding the future of one of the world's most critical oil transit routes.

Although negotiations continue to make progress, uncertainty over global oil supply security remains elevated due to the risk environment surrounding the Strait of Hormuz—an issue that many market participants appear to be overlooking.

Some social media users have even begun referring to Hormuz as "Schrödinger's Strait," and for good reason. The issue is no longer simply whether ships can pass through unhindered by Iranian forces or a potential US blockade. It is also about whether shipping companies, insurers, banks, and other participants in the oil trade can reliably track cargo movements and verify the safety of shipping routes.

Energy analytics firm Kpler recently argued that the risks stemming from the conflict involving the United States, Israel, and Iran go well beyond the question of whether the strait is technically open or closed. The ability to monitor tanker traffic has become a critical component in assessing overall risk.

Most media coverage and market analysis surrounding the Strait of Hormuz focuses on a simplified narrative built around two outcomes: open or closed. However, Kpler trade-risk analyst Ana Subasic warned last week that this framework is misleading because many other factors influence the situation.

She noted that oil cargoes require reliable tracking throughout their journey for both insurance and sanctions-compliance purposes.

"A vessel may be able to transit the strait," Subasic said, "but if its movements cannot be reliably monitored due to degraded or manipulated positioning data, the voyage record becomes questionable. Port-entry verification fails, risk mapping breaks down, and reconstructing the vessel's route becomes subject to dispute."

Such information is essential for all parties involved in oil shipments. Yet the market has largely ignored these concerns while focusing on the simplistic "open versus closed" narrative that directly influences oil futures prices.

In the physical oil market, however, these details often matter far more than whether the strait is technically open. This reality has frequently been reflected in significant divergences between futures prices and physical crude delivery prices.

The situation may become even more complicated in the months ahead.

Lloyd's List reported last week that Iran has introduced a mandatory insurance system for all vessels passing through the Strait of Hormuz, to be administered by a newly established Persian Gulf Strait Authority.

According to the report, insurance coverage will initially be provided free of charge, though that arrangement is not expected to last indefinitely.

The publication cited an Iranian document stating:

"Insurance will initially be provided free of charge to vessel owners, with all costs covered by the Islamic Republic of Iran. The Persian Gulf Strait Authority reserves the right to impose insurance fees in the future, at which point vessel owners will be required to purchase and renew the necessary coverage."

The new authority will also be the sole body authorized to issue transit permits and determine the routes vessels must follow while navigating the strait.

Lloyd's List quoted one tanker owner as saying: "This is madness. The whole situation has become chaotic."

The development illustrates just how complex the reality has become and why focusing solely on whether the strait is open or closed fails to capture the full picture.

As Subasic explained, the more important questions are: "Who is transiting the strait? When are they transiting? Under what level of risk? And does that risk create exposure for voyage stakeholders such as shipowners, charterers, insurers, banks, and cargo receivers?"

Before the initial US and Israeli strikes on Iran, this information was generally available to all market participants. Today, significant gaps have emerged in the data.

Insurers and banks are particularly uncomfortable with such information gaps, especially amid an active military conflict, a complex sanctions regime, and heightened maritime security risks.

The result is higher insurance costs, as uncertainty and limited visibility increase the expense of transporting oil cargoes.

Malaysia's New Straits Times recently reported that insurance costs for a very large crude carrier (VLCC) sailing from the Persian Gulf previously ranged between $150,000 and $225,000 per voyage before the conflict.

Following the outbreak of hostilities, those costs surged to between $5 million and $7.5 million per voyage.

Yet these dramatic cost increases may not represent the biggest long-term challenge. The more significant issue lies in the persistent information gaps highlighted by Subasic.

Those gaps are likely to keep uncertainty surrounding oil transportation through the Strait of Hormuz elevated for some time, regardless of how much progress peace negotiations make or what outcomes emerge in the coming weeks.

The fact that these additional risks have not been fully reflected in oil futures markets also provides further evidence of the growing disconnect between the physical oil market and the paper-trading market.

The Nasdaq Composite and S&P 500 fell to their lowest levels in more than a week on Tuesday, weighed down by sharp losses in semiconductor stocks as investors braced for a more hawkish Federal Reserve and increased scrutiny of debt-funded spending on artificial intelligence infrastructure.

If the selloff continues, the Nasdaq 100 could lose more than $1 trillion in market value.

Nvidia shares fell 3%, while Alphabet declined 1.2%. Chipmakers were hit particularly hard, with Intel, Marvell Technology, and Advanced Micro Devices dropping between 6.2% and 8.7%.

Memory chip makers Micron Technology and SanDisk, two of the best-performing stocks in the S&P 500 this year, plunged 12% and 13%, respectively.

The Philadelphia Semiconductor Index tumbled 7.3%, while the S&P 500 Information Technology Index fell 3.2%.

AI stocks pressured by spending and debt concerns

The latest selloff followed a weak session for major technology stocks, driven by concerns over massive spending on artificial intelligence infrastructure by big technology companies, particularly as valuations remain elevated.

"The AI trade has become one of the most crowded positions in global markets, and when everyone owns the same stocks, the exit door becomes very narrow very quickly," said Nigel Green, Chief Executive Officer of deVere Group.

At 9:35 a.m. ET, the Dow Jones Industrial Average was down 395.32 points, or 0.76%, at 51,317.39.

The S&P 500 fell 114.96 points, or 1.54%, to 7,357.83, while the Nasdaq Composite dropped 533.73 points, or 2.04%, to 25,632.87.

The interest-rate-sensitive Russell 2000 Index declined 1.7%, while the CBOE Volatility Index (VIX), often referred to as Wall Street's fear gauge, rose to its highest level in more than a week, gaining 2.92 points to 20.13.

Investors rotate into defensive sectors as SpaceX declines

Only four of the eleven major S&P 500 sectors traded higher, with consumer staples leading gains, up 1.2%.

As richly valued technology stocks came under pressure, investors increasingly shifted toward other areas of the market.

Previously beaten-down software stocks posted gains, with ServiceNow and Atlassian each rising 2.5%, while Adobe gained 1.4% and Salesforce added 1.2%.

Meanwhile, Elon Musk's SpaceX fell 4.8%, extending a decline that has erased more than $600 billion in market value over the past three trading sessions.

SpaceX, which began trading earlier this month, recently joined the list of large companies turning to the bond market to raise capital.

"Although SpaceX is not yet part of the Nasdaq indexes, its move into the bond market to finance heavy spending on artificial intelligence and infrastructure has revived concerns about whether major technology companies are overspending in these areas and becoming increasingly dependent on debt," said Ipek Ozkardeskaya, Senior Market Analyst at Swissquote Bank.

Rate hike bets weigh on markets ahead of inflation data

Traders have increased bets that the Federal Reserve could deliver a second interest rate hike by December, according to LSEG data, compared with expectations for only one 25-basis-point increase two weeks ago.

Those expectations have strengthened as markets price in a more hawkish monetary policy approach under new Federal Reserve Chair Kevin Warsh.

Despite the recent pullback, the S&P 500 remains on track for its strongest quarterly gain in six years, supported by the Middle East ceasefire and stronger-than-expected corporate earnings. However, concerns about stretched valuations in AI-related stocks have resurfaced.

Investors are now awaiting Micron Technology's earnings report on Wednesday, which could provide important clues about the outlook for memory chips and the broader AI sector after this year's powerful rally.

Markets are also closely watching Thursday's release of the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge.

In market breadth, declining stocks outnumbered advancing stocks by 2.12-to-1 on the New York Stock Exchange and by 1.65-to-1 on the Nasdaq.

The S&P 500 recorded two new 52-week highs and three new lows, while the Nasdaq Composite registered 19 new highs and 95 new lows.

Most cryptocurrencies moved lower on Tuesday as investors continued to monitor developments in the Middle East while awaiting key US economic data that could influence Federal Reserve policy.

Bitcoin traded at $62,394 on Tuesday, June 23, 2026, down 2.54% on the day and remaining within a technical pattern known as a bearish flag on the daily chart.

Bitcoin price projections suggest that the pattern could eventually lead to a decline toward the $38,000 level, which roughly coincides with the lows recorded in 2024.

For now, Bitcoin continues to hold above the key support zone between $59,000 and $60,000, which represents its lowest levels of the year, as traders focus on two major events scheduled for this week.

Inflation data

The US Personal Consumption Expenditures (PCE) Price Index for May is due on Thursday, June 25, while quarterly futures and options contracts expire on Friday, June 26.

The broader trend continues to point toward further downside pressure, with all major moving averages being monitored by traders remaining above the current market price.

Bitcoin trading is being driven by interest rate expectations, not geopolitics

According to the report, Bitcoin is currently trading in line with interest rate expectations rather than geopolitical developments.

Although the ceasefire agreement between the United States and Iran, signed in Switzerland on June 19, contributed to lower oil prices and stronger equity markets, Bitcoin failed to benefit from the improved sentiment because the Federal Reserve's latest policy meeting adopted a more hawkish tone and brought the possibility of a rate hike in 2026 back into focus.

The report noted that the situation resembles the Strait of Hormuz shock earlier this year, when geopolitical developments initially triggered a repricing in oil markets before the effects gradually spread to cryptocurrencies.

Adam Hemes, Head of Asset Management at Tesseract Group, said: "Cryptocurrencies are trading on the interest rate path, not the geopolitical path."

He added that investors are currently focused on US monetary policy signals, particularly as risk assets remain under pressure amid expectations that interest rates could stay higher for longer.

Oil prices were largely steady on Tuesday as investors monitored crude flows through the Strait of Hormuz following progress in peace negotiations between the United States and Iran.

Brent crude futures fell by 26 cents, or about 0.3%, to $77.64 per barrel, while US West Texas Intermediate crude slipped 17 cents, or 0.2%, to $73.69 per barrel by 11:55 GMT.

Prices had fallen more than 3% on Monday after the United States granted Iran a 60-day sanctions waiver following the first round of peace talks, alongside reports of easing hostilities in Lebanon as part of a broader agreement.

Ole Hvalbye, commodities analyst at SEB Research, said that crude from Venezuela and Russia, and now Iran, is available to any buyer willing to purchase it. He added that countries may seek to rebuild oil inventories to replace barrels previously drawn down.

He noted that sanctions relief is unlikely to have a major short-term impact on prices because the memorandum of understanding between the United States and Iran remains new and fragile.

Limited traffic through Hormuz and challenges to restoring supplies

An Iranian military source told Fars News Agency on Tuesday that only a limited number of vessels are being allowed to pass through the Strait of Hormuz each day in coordination with the naval forces of Iran's Revolutionary Guard.

US President Donald Trump indicated that 19 million barrels of oil passed through the strait on Monday and also noted in a social media post on Tuesday that oil prices had declined.

The world lost millions of barrels of oil and natural gas supplies after the conflict led to the closure of the strait for more than three months. The waterway serves as a key transit route for roughly one-fifth of global oil and liquefied natural gas supplies.

Tamas Varga, an analyst at PVM Oil Associates, said: "Shipowners and operators will need assurances that threats posed by naval mines have been fully removed. Damaged ports, debris in the water, and congestion are additional obstacles to a full recovery in shipping activity."

He added that restoring oil flows will require resolving several operational challenges before supply returns to normal levels.

Iraq increases production as forecasts for oil prices are lowered

Two Iraqi oil officials told Reuters that Iraq has increased output from its southern oil fields to around 2.1 million barrels per day, with additional tankers lining up to load crude from export terminals in the Gulf.

On the outlook front, Rabobank lowered its oil price forecasts, citing reduced risks of supply disruptions in the Gulf region.

The bank expects Brent crude to average $79 per barrel in the third quarter and $78 per barrel in the fourth quarter.

Despite easing supply concerns, geopolitical risks remain present. Hezbollah said on Tuesday that Israeli forces opened fire on civilians in southern Lebanon, describing the incident as a violation of the ceasefire agreement between the two sides.