More than three months after the US and Israel kicked off their military engagement with Iran, a tentative framework deal has emerged from the White House and Tehran. This agreement aims to pave the way for a more sustainable cessation of hostilities in the Middle East, a region that has seen global oil prices spiral upwards as conflict effectively choked one of the world’s most crucial maritime routes for oil and gas. The Strait of Hormuz, a key artery for global energy, has faced significant disruptions, and experts are warning that it will take time for shipping to return to normal. The repercussions of this war will likely linger on the global economy for months to come.
“Let the oil flow!” That’s the rallying cry from US President Donald Trump, who celebrated the agreement on social media. He boasted that commercial shipping in the strait would soon resume. “Ships are starting to move,” he declared, confidently asserting that vessels laden with oil were now navigating the Strait of Hormuz, which he assured was “totally safe, secure, and pristine.” However, ship-tracking data from BBC Verify suggests that despite these optimistic statements, traffic in the Strait of Hormuz remains alarmingly low. Only two vessels, a bulk carrier and a tanker, have left the waterway since the announcement, highlighting the ongoing risks in the region. The strait has faced a near-complete shutdown for shipping since February 28, allowing only a handful of vessels friendly to Iran to pass through.
With hundreds of ships stuck in the Gulf, the danger from sea mines and potential drone strikes has heightened the peril for crews, complicating any efforts to resume normal operations. Neil Shearing, the chief economist at Capital Economics, emphasized that it remains unclear whether this latest deal signifies a temporary ceasefire or a more permanent resolution. He noted that it might take considerable time for oil shipments through the Strait of Hormuz to bounce back to pre-war levels. Even if ships are granted safe passage, logistical challenges abound: tankers are out of position, oil production and refining facilities need to ramp up, and questions regarding insurance costs for traversing the strait will continue to loom large.
Even before this agreement, shipping companies were hesitant to push their vessels out of the strait during the ceasefire. Denmark’s Maersk, the world’s second-largest shipping line, has five ships stuck in the Gulf due to the ongoing conflict. The company stated that it’s premature to gauge how this agreement will impact logistics, and for now, operations in the region remain unchanged. Meanwhile, German shipping giant Hapag-Lloyd is hoping to get its four stuck vessels out over the weekend, contingent on the deal being signed and any remaining mines being cleared.
Normally, about a fifth of the world’s oil and LNG supplies flow through the Strait of Hormuz, and the effective shutdown of this route has driven oil prices up. This increase has had a cascading effect, pushing petrol, diesel, and jet fuel costs higher. At the height of the conflict, Brent crude, the global oil benchmark, surged to around $120 a barrel, compared to just below $70 before fighting broke out. Following news of the framework deal, Brent prices dipped to $83.55 a barrel. Trump assured that the Strait of Hormuz would be reopened once the deal is finalized on Friday.
Florence Schmit, a senior energy strategist at Rabobank, warned of potential volatility leading up to the signing of the deal. She expressed uncertainty about whether the agreement would be confirmed, pointing out that it’s only a 60-day deal for opening the Strait. “What happens after that? Will Iran want to impose tolls again?” she questioned. Despite this, Schmit noted that if a full ceasefire is achieved, normalcy—including pre-war levels of 26 daily crude oil tankers passing through the strait—could return by the end of the year.
If supplies of fertilizer return to normal levels, global food prices might also stabilize. Fertilizer, a derivative of oil, has seen prices skyrocket, exerting pressure on farmers. Maurizio Carulli, a global energy analyst at Quilter Cheviot, indicated that the ceasefire “should help ease immediate pressure on fertilizer markets” but warned that it won’t be instantaneous. Approximately a third of traded fertilizer and significant volumes of natural gas, essential for nitrogen-based fertilizers, move through the Strait of Hormuz, and the lingering damage to energy infrastructure will take time to repair.
What’s more, the agricultural cycle has already begun in various regions worldwide, meaning that the resumption of nitrogen and phosphate fertilizer deliveries will likely come too late for some crops, negatively impacting global produce. Jet fuel prices in Northwest Europe have already seen a slight decline, with NWE jet fuel dropping to $1,033 per tonne, down from $1,840 at its peak, but still higher than the $831 per tonne prior to the conflict.
The Iran war has reverberated through economies globally, with soaring energy costs leading to increased fuel prices and rising inflation. This inflation has pressured central banks, including the Bank of England, which had initially been expected to cut interest rates this year but has now shifted its stance in light of rising energy costs. Russ Mould, the investment director at AJ Bell, noted that just last week, markets anticipated two rate hikes by early 2027, but those probabilities have now shifted to just one rate hike by December, with potentially no further changes in the first half of 2027. This could instill greater confidence in companies to hire and encourage consumer spending, possibly reviving a property market that has cooled for sellers in recent months.
As the conflict began on February 28, fuel costs surged as the war disrupted energy production and transportation throughout the Middle East. With reports emerging that the deal includes Lebanon, there are concerns about ceasefires in that region holding firm. Israel has reportedly targeted Hezbollah, an Iran-backed group, with Iran warning that such actions could derail the US-Iran deal aimed at ending the fighting.
Kaynak: Orijinal Haber
