Although traffic through the Strait of Hormuz came to a virtual standstill yesterday following the latest flare-up in hostilities between Iran and the US, oil investors remained admirably relaxed, or even nonchalant, about the situation. On the other hand, they are clearly worried, though not about supply disruptions but about demand destruction.
The problems of the Strait of Hormuz are not cured. So says the Iranians when they launched attacks on commercial shipping for not adhering to requests to navigate in the shipping lanes nearer to the Iranian coast rather than that of Oman. And so says the US President.
It was never going to be a straight path to peace, and there was a reason why the extended truce between the US and Iran, which is due to expire in the middle of August, has been characterised as tentative, ostensible, or fragile. Although the Strait reopened and trade flows resumed, there has been no progress in negotiations aimed at denuclearising Iran in return for, among other concessions, the unfreezing of Iranian funds held abroad.
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