As the U.S.-Iran war enters its 11th week with no clear end in sight, analysts warn that global markets will remain on high alert due to the ongoing closure of the Strait of Hormuz.
The lack of significant military action for over a month suggests a strong U.S. inclination towards a peaceful resolution, according to Jim Reid from Deutsche Bank. However, the continued Hormuz closure, a critical waterway for global oil shipments, keeps the markets in a state of high alert, reported Fortune.
“In simple terms though, as long as the Strait of Hormuz stays closed, markets remain on a knife-edge,” Reid said.
Last week’s optimism about a potential Middle East peace deal ahead of President Donald Trump‘s visit to China has also been shattered, as per Chris Turner at ING. He further added that unless China exerts substantial behind-the-scenes pressure to secure a deal, the market will continue to factor in a stalemate, leading to “higher oil prices and a wave of global inflation.”
Trump Rejects Iran Peace Reply
On Sunday, Trump rejected Iran’s response to a U.S.-backed peace proposal as ‘totally unacceptable,” causing crude prices to spike. At the same time, Israeli Prime Minister Benjamin Netanyahu said the conflict with Iran is “not over,” despite significant military gains amid unresolved issues like Iran’s enriched uranium stockpiles and nuclear infrastructure.
On the other hand, Iran said that it would “never bow our heads before the enemy.”
Oil Markets Warned On Hormuz Risk
Echoing Deutsche Bank‘s stance, Saudi Aramco‘s CEO, Amin Nasser, warned that global energy markets will only rebalance in a few months if crude and LNG shipments through the Strait of Hormuz resume immediately. According to Nasser, the global oil market lost about 1 billion barrels over the past two months due to shipping disruptions through the strait.
The Strait’s closure has already led to the largest-ever monthly gain in oil prices in March, according to the IEA’s April report. At the time of writing, Brent crude oil was trading 1.93% higher at $103.24 per barrel.
According to economist Peter Schiff, oil prices are unlikely to return to pre-Iran war levels soon amid continued tensions between Washington and Tehran
Meanwhile, the UK is deploying HMS Dragon to the Middle East as part of a UK–France-led coalition preparing naval escorts through the Strait of Hormuz once conditions stabilize. The UK Ministry of Defence described the move as “prudent planning,” with operations expected under a multinational framework.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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