Faisal Islam: Iran war pause is welcome but the economic ...

What’s Happening

Let’s talk about Allowing all ships through the Strait of Hormuz will calm markets but the war has created new problems.

Faisal Islam: Iran war pause is welcome but the economic scars will last 14 minutes ago Save Add as preferred on Google For most of the past six weeks, we have brought you maps of a gummed-up Strait of Hormuz. Approximately 800 ships are believed to have been stuck in the Gulf, many transporting oil and gas, and have been unable and unwilling to exit onto the open seas. (yes, really)

During that time, there has been a direct line from the worlds biggest traffic jam to rising petrol and diesel prices, higher airfares and swelling mortgage rates around the globe.

The Details

Many countries are also dependent on these waters for significant supplies of other petrochemical products, made at the refineries in the region. These include jet fuel, diesel, fertiliser ingredients and industrial products such as helium, essential for microchip manufacture.

The good news is that the overnight ceasefire pauses any further escalation of the conflict, and provides a pathway for deescalation and peace. This is why the markets have responded positively with 15% falls in the market price of oil and gas and a rally in stock markets.

Why This Matters

But, there are many reasons for caution about the economic impact at this delicate moment. There are different accounts about the basis for negotiations from Iran, the US, and Israel. The test of this is whether face-to-face negotiations actually occur.

This reflects broader trends we’re seeing in the business world right now.

Key Takeaways

• Will traffic flow freely as suggested Donald Trump?
• This is vital, not just for oil and gas, but also jet fuel, sulphur, urea and diesel.

The Bottom Line

This is vital, not just for oil and gas, but also jet fuel, sulphur, urea and diesel. The longer the ceasefire, the more likely that any spike in inflation ebbs away in the coming months.

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