Situation still volatile as Tehran and Washington issue conflicting messages about opening of Hormuz channel
A plunge in the oil price, stock market rally and renewed hopes for the global economic outlook. After the announcement of a two-week ceasefire in the Iran war, the relief in financial markets was palpable. But it is far from absolute.
For the past six weeks, the economic damage had been steadily mounting, as the effective closure of the strait of Hormuz by Tehran triggered the worst energy crisis of the modern era.
Steps towards peace should limit further costs. Any progress towards reinstating shipments through the critical waterway for a fifth of global oil and gas supplies – in a world where fossil fuels still drive economic activity – will ease fears over an apocalyptic supply crunch.
However, the situation remains highly volatile as Tehran and Washington issue conflicting messages about whether the Hormuz channel is open or not, and as Israel continues to strike Lebanon. With uncertainty over a durable peace in the Middle East, economic risks still remain.
