Rabobank’s Senior Macro Strategist Teeuwe Mevissen notes that Brent crude has edged higher as markets reassess prospects for a peace deal in the Iran war and the risk of disruptions in the Strait of Hormuz. Mevissen highlights Iran’s plans for a new maritime authority and toll system, and links Oil moves to elevated US Treasury yields and broader stagflation concerns.

Geopolitics and Hormuz risks underpin prices

"Since the start of the Iran war the market has had a tendency to view the likelihood of a peace agreement with a ‘glass half full’ attitude. Once again, markets have found some comfort in encouraging remarks from both the US and Iran, even though both sides are making it clear that there are still major sticking points on critical issues."

"This statement comes on the heels of this week’s news that Iran is looking to set up a new “Persian Gulf Strait Authority” to exert control over a maritime zone in the area and that the country’s authorities are also discussing with Oman how to set up a permanent toll system."

"Amid the confusion over the degree of progress towards peace, Brent crude prices have ticked higher this morning, though they remain in the lower part of this week’s range."

"While asset prices continue to take their cue from speculation regarding the length of time that the Strait of Hormuz may be closed, economic data are increasingly reflecting the impact that the supply shock is already having."

"In view of the stagflationary impact of the war, this will be an issue facing many governments around the world."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)