More than three months after the US and Israel first began their war with Iran, the White House and the Iranian regime have agreed on a framework deal aimed at establishing a longer-term resolution to the conflict. This Middle East crisis has sent global oil prices skyrocketing, effectively closing one of the world’s crucial water transport routes for oil, liquefied natural gas, and other essential commodities, which in turn has curtailed global supplies. But hold on a second—experts are warning that it might take some time before shipping through the Strait of Hormuz returns to normal, and the fallout from the war is expected to impact the global economy for potentially months to come.
“Let the oil flow!” exclaims US President Donald Trump in a social media post celebrating the agreement, which he claims will include reopening the strait for commercial shipping. “Ships are starting to move,” Trump declared later on Monday, “loaded up with oil, out of the Strait of Hormuz,” which he described as “totally safe, secure, and pristine.” However, BBC Verify has been checking ship-tracking data, and it appears that traffic levels remain low in the Strait of Hormuz, despite the announcement. In fact, according to the ship tracking website MarineTraffic, only two vessels with active location trackers have exited the waterway since Sunday—a bulk carrier and a tanker.
Now, the Strait has been practically shut off to most shipping traffic since February 28, with only a handful of vessels friendly to Iran able to pass through. Hundreds of ships have been stranded in the Gulf, facing risks like sea mines or drone strikes, which have raised the stakes for crews and made safe passage a challenge. Neil Shearing, group chief economist for Capital Economics, said it remains to be seen whether this latest deal represents a fragile truce or a more durable settlement. He added that it would likely take some time for oil flows through the Strait to return to pre-war levels.
Even if ships now have safe passage, tankers are in the wrong place, oil production and refining facilities need to ramp up to full capacity, and there are still concerns about the cost and availability of insurance for ships traversing the Strait. Before the agreement was even reached, during the ongoing ceasefire, shipping companies were generally hesitant to move their vessels out of the strait. Getting those ships out will be their first priority. Take Denmark’s Maersk, the world’s second-largest shipping line, for instance—it has five ships stuck in the Gulf due to the conflict. They mentioned it’s too early to assess how the agreement will impact logistics, and for now, there’s nothing changing in their operations in the region.
On the other side of the aisle, German shipping giant Hapag-Lloyd has four ships trapped in the strait and is hoping to get them out over the weekend once the deal is signed and any remaining mines are cleared. Normally, about a fifth of the world’s oil and LNG supplies flow through the strait, and the effective standstill in traffic has pushed oil prices higher. This has had a cascading effect on petrol, diesel, and jet fuel costs. During the conflict, the price of Brent crude, the global oil benchmark, shot up to around $120 a barrel, while before the hostilities erupted, it hovered just below $70. After the news of the framework deal broke, Brent dropped to $83.55 a barrel.
Now, President Trump stated that the Strait of Hormuz would reopen once the “deal” is signed on Friday. Senior energy strategist at Rabobank, Florence Schmit, noted that there’s a “strong possibility that we’ll see a lot of volatility” leading up to the deal’s signing. “Some things are not confirmed on both sides—important things: we don’t know if the deal will be signed,” she told the BBC, adding, “What we’ve seen so far is a deal for 60 days for the opening of the Strait—but what happens after that? What if the Iranians want to re-insert a toll system?” A full-scale peace agreement could still be a long way off.
Despite this uncertainty, Schmit mentioned that normalcy in the system, including prices, “could return by the end of the year” if a full ceasefire is agreed upon. Normalcy would mean the return of pre-war levels of 26 daily crude oil tankers going through the strait. Given the current positive media headlines and what she described as a “sentiment-driven” sell-off, there’s a chance prices might dip below $80 a barrel, but they could average in the mid-$80s by year-end once “the geopolitics is stripped out” and the market assesses the reality of the situation.
As for global food prices, there could also be relief if fertilizer supplies get closer to normal levels again. Fertilizer—a by-product of oil—has skyrocketed in price, putting immense pressure on farmers. Yara, one of the world’s largest fertilizer and crop firms, said the situation remains uncertain, and farmers may “require targeted support to manage ongoing volatility” in the short term. Maurizio Carulli, a global energy analyst at Quilter Cheviot, suggested that the ceasefire “should help ease the immediate pressure on fertilizer markets,” but warned it won’t be instantaneous.
He pointed out that roughly one-third of traded fertilizer and significant volumes of natural gas used for nitrogen-based fertilizers flow through the Strait of Hormuz, and “lingering damage to energy infrastructure” will take time to mend. Plus, the crop season has already begun in several regions worldwide, so the resumption of nitrogen and phosphate fertilizer deliveries may come too late for agricultural crops, negatively impacting global produce.
Meanwhile, jet fuel—another oil by-product—traded in Northwest Europe (NWE) has already seen a slight decline in price. NWE jet fuel is now down to $1,033 per tonne, compared to $831 per tonne before the conflict and around $1,840 at its peak. The Iran war has affected economies worldwide, as the spike in energy costs has driven fuel prices up, leading to increased inflation. This has pressured central banks to raise interest rates to keep inflation in check.
In the UK, prior to the war’s onset, the Bank of England was widely expected to cut interest rates this year. But those predictions quickly shifted as energy costs surged, with the bank now anticipated to hold rates steady, if not increase them later in the year. Russ Mould, investment director at AJ Bell, mentioned that just last week, markets were pricing in two rate hikes by early 2027. The probabilities have since shifted to a single rate hike by December and potentially no changes for at least the first half of 2027. This could mean companies will have greater confidence to hire more people, consumers might be more inclined to spend, and the property market could start to warm up after going cold for sellers in recent months.
So, what’s the bottom line here? President Trump says the US and Iran have struck a deal to end the war, but it remains unclear what’s been decided regarding Iran’s nuclear program. When the conflict kicked off on February 28, fuel costs surged as the war disrupted energy production and transportation across the Middle East. As we keep our eyes on the developments, let’s see what unfolds next…
Kaynak: Orijinal Haber
