Dozens of oil tankers were seen crossing the Strait of Hormuz this morning following a reported deal between the United States and Iran. The move has brought a temporary calm to global oil markets, which had been bracing for disruption. For the City, this is a welcome reprieve from the volatility that has plagued crude futures since tensions escalated.
The Strait handles a fifth of the world's oil supply, and any blockage would send prices skyrocketing. But let us not get carried away. The details of the deal remain murky.
Was it a formal agreement or a gentlemen's understanding? The market is betting the latter. Brent crude slipped 2% in early trading, a sign of relief rather than exuberance.
Yet the structural risks remain. Iran's output has been hammered by sanctions, and the global oil market is still contending with Opec+ cuts. This is a bandage, not a cure.
The real test will be whether the deal holds. For now, the tankers sail, and the market breathes. But in this game of geopolitical chess, one move does not end the match.
