Oil prices tumbled, shares surged, and the dollar fell following the announcement of the US-Iran ceasefire and the push to reopen the Strait of Hormuz.
That led to hope that the global energy crisis could be short-lived and UK consumers could avoid the worst of the feared fuel price inflation that has sent prices at the pumps soaring.
Oil fell 14 per cent to $93.93 a barrel after Iran agreed to open the Strait of Hormuz as part of a two-week ceasefire deal, after soaring well past $100 while the war raged.
Capital Economics said in a note to clients: “There’s still a lot of uncertainty: the pause [in the conflict] is contingent on Iran re-opening the Strait of Hormuz, but what form this takes (eg, whether it will levy tolls) is unclear.
“That, in turn, will affect how much further energy prices fall (if at all). And it remains to be seen whether this is a genuine step towards lasting peace. But, the announcement is the clearest sign yet that the end of the conflict, and of the associated economic disruptions, is in sight.”
Traders hailed another TACO (Trump Always Chickens Out) moment. Michael Brown, an analyst at financial services company Pepperstone, said: “Yes, President Trump kicked the can down the road once more so far as his ‘deadline’ for strikes on Iranian power plants and bridges was concerned, with this in fact being the 4th time that said deadline has been extended. This time does look different, though, with the President noting that the 2-week period is a ‘double-sided ceasefire’, during which the Strait of Hormuz will be reopened by the Iranians, a pivotal step in the normalisation of global commodity flows.”
Link: https://uk.finance.yahoo.com/news/iran-ceasefire-means-fuel-prices-083714926.html