Messy waters

The Iran conflict is again reminding markets that a ceasefire is not the same as a solution. Renewed hostilities have pushed Brent back to around USD 78, up 11.6% over the week.

The key market channel remains oil. Tanker traffic through the Strait of Hormuz has improved, which is positive, but it is still far from normal. As long as flows remain disrupted, oil prices are likely to carry a geopolitical premium.

For now, the market reaction remains relatively contained. Investors are not pricing a full escalation or lasting damage to regional oil infrastructure. The more likely scenario is a messy one: no major disaster, but higher volatility and oil prices staying above pre-crisis levels.

This matters for inflation, central banks and oil-importing emerging markets. But unless the Strait of Hormuz is effectively closed again, broader equity markets may continue to focus more on earnings, rates and AI than on geopolitics.