The agreement reached overnight on Wednesday on a ceasefire and the reopening of the Strait of Hormuz initially triggered strong euphoria in the markets. One possible reason is that only limited concrete details were available at first, leaving room for interpretation among market participants.
Hopes for a potential lasting peace in the Persian Gulf likely played a key role. As developments progressed, however, it became clear that while a first step toward de-escalation had been taken, the path to a sustainable solution remains difficult and fraught with uncertainty.
An agreement on shaky ground
The foundation on which many market expectations currently rest is the announced reopening of the Strait of Hormuz. On closer inspection, however, this foundation appears highly fragile.
Shipping companies remain cautious about passing through the strait, partly due to missing or insufficient insurance coverage for the route.
Strait of Hormuz only open on paper
In addition, Iran has reportedly raised the idea of imposing a toll of around 2 million US dollars per passage. Alongside legal questions regarding international waterways, this further increases uncertainty among shipping companies.
Many market participants may view passage without payment as a potential risk and fear attacks on vessels that attempt it.
There are also reports suggesting that parts of the route may have been mined. This assessment is supported by observations that ships from countries allied with Iran are apparently using alternative routes closer to the Iranian coast and nearby islands.
Ceasefire remains fragile
Despite the agreed ceasefire, reports indicate that isolated drone attacks have continued. Targets in Gulf states are said to have been affected.
One attack reportedly caused damage to energy infrastructure in Kuwait, while Saudi Arabia stated it intercepted several drones before they reached their targets.
Oil prices rise again, stocks weaken
Oil prices are reacting to the growing uncertainty with a slight increase. US crude WTI has moved back above the 90 US dollar per barrel mark, while Brent crude is currently trading at around 95 US dollars.
Equity markets, on the other hand, are showing a more subdued reaction. In Asia, major indices are slightly lower. Japan’s Nikkei 225 closed down around 0.53% at 56,010 points, while the Shanghai Composite fell about 0.69% to 3,967 points.