DATA & FIGURES
Commodity-vessel transits averaged 34 a day over the past three weeks, but have now slowed to near wartime levels, with only 14 crossings on Wednesday. The slowdown has led to a rebound in oil prices, with Brent crude futures trading around $79 a barrel and WTI hovering near $74. The US military has struck Iranian targets for a second straight day, while Tehran has responded with ballistic missile and drone attacks targeting Kuwait, Qatar, Bahrain, and Jordan.
THE SCENARIO
The US-Iran conflict is escalating, with the US military striking Iranian targets and Tehran responding with ballistic missile and drone attacks. The conflict is complicating the normalization process of reopening the Hormuz, with the Islamic Revolutionary Guard Corps Navy Command taking control of managing security and vessel routing through the Hormuz chokepoint.
DIRECT QUOTE
"Hormuz recovery stalls. Oil has rebounded as renewed fighting around the Strait of Hormuz has interrupted the post-reopening recovery in Persian Gulf flows, while refined products markets remain even tighter than crude." — Chris Hussey, Goldman analyst
BBN INSIGHT
The Positive Side: The slowdown in vessel traffic through the Strait of Hormuz may lead to increased oil prices, benefiting oil-producing countries. The Negative Side: The conflict is complicating the normalization process of reopening the Hormuz, leading to increased uncertainty and risk for oil markets and global trade. The slowdown in vessel traffic may also lead to increased costs for shipping companies and consumers, as well as potential shortages of oil and refined products.
MARKET REACTION
Brent crude futures were trading around $79 a barrel and WTI hovered near $74, signaling that traders were pricing in renewed geopolitical war risk premium as Hormuz vessel traffic slowed and the US-Iran conflict flared up.