Crude oil prices spiked, stocks slipped, and oil-exposed consumer and travel stocks took a hit yesterday as President Trump, at a NATO summit in Ankara, delivered remarks following strikes against Iran that certainly didn’t lower the temperature.
A fragile ceasefire that has endured any number of tit-for-tat exchanges of fire over the past several weeks may have finally broken.
The United States struck Iran on Tuesday in retaliation for Iranian strikes against three commercial vessels traversing the Strait.
“I think it’s over. I don’t want to deal with them anymore. They’re scum,” the president said.
President Trump said that the ceasefire was “over” early Wednesday.
Iran’s ability to block the Strait of Hormuz, and also its ability to inflict direct pain on oil and gas infrastructure of regional partners of the United States, give it a disproportionate amount of sway over the global economy.
The initial closure of the Strait of Hormuz had massive ramifications for global supply chains, and it was only thanks to significant efforts from some of the largest global consumers of oil that things didn’t get completely out of hand. Those efforts were temporary measures; the United States has only so much left in the Strategic Petroleum Reserve, and China’s efforts to stabilize global oil markets by drawing on its inventories can’t continue forever. If the pain was bearable in the spring, it’s not entirely clear it’ll be the same by the autumn. #Topic of War
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