|
On Shaky Ground
- With a tenuous ceasefire agreed by both sides in the Middle East conflict, markets experienced a massive relief rally on Wednesday.
- The question is how durable this accord will be, and whether the shift in power in the Strait of Hormuz might permanently dent trade flows through the key channel, as happened to oil and gas flows from Russia to Europe, post the invasion of Ukraine in 2022.
- With Gulf nations already pivoting towards more expensive overland trade routes to global markets, the outcome of the conflict could be a structurally higher cost of oil, gas and other key industrial inputs, while remaining susceptible to geopolitical flashpoints.
- This scenario implies the risk of a longer lasting inflationary shock, as global supply chains reorganise.
|
|
