As the U.S.-Iran war enters its 11th week with no clear end in sight, analysts warn that global markets will remain on high alert due to the ongoing closure of the Strait of Hormuz.
The lack of significant military action for over a month suggests a strong U.S. inclination towards a peaceful resolution, according to Jim Reid from Deutsche Bank. However, the continued Hormuz closure, a critical waterway for global oil shipments, keeps the markets in a state of high alert, reported Fortune.
“In simple terms though, as long as the Strait of Hormuz stays closed, markets remain on a knife-edge,” Reid said.
Last week’s optimism about a potential Middle East peace deal ahead of President Donald Trump‘s visit to China has also been shattered, as per Chris Turner at ING. He further added that unless China exerts substantial behind-the-scenes pressure to secure a deal, the market will continue to factor in a stalemate, leading to “higher oil prices and a wave of global inflation.”
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