Chart of the Week

With over a 130 days since the US/Iran war started, the Strait of Hormuz has been a key geopolitical asset that affected the global population, through protracted oil outflows through the strait driving up fuel prices, higher shipping costs, and chip production impacted via chemical costs – among other key resources.

The Strait has also been a revolving door, where negotiations lead to its opening and airstrikes lead to its closing. This has all been happening over the past few months alternating between the binary options.

With the initial close, the Brent crude oil price, that hovered in the range of $60 to $70/bbl, increased rapidly, reaching a peak of 144 $/bbl on 7 April 2026.

Even with tensions high and ships stranded, several key factors lead to Brent and other commodities easing off their fresh upward momentum, somewhat returning to near pre-war prices.

Peace negotiations gave the markets hope that the strait would quickly open. Market sentiment turned optimistic as the situation de-escalated and the worst-case scenarios became less of a likely outcome. Global inventories began to slowly rebuild as supply fears slowed and ,throughout the months, traffic through the Strait gradually recovered – as more ease of travel was permitted.

Another commodity that did not have as much spotlight, was fertiliser. Urea, used in fertiliser and animal feed, also saw a shock in price as these ingredients travel via ship, and with shipping services distorted, commodities all around felt this.

This all leads to an interesting conclusion. Flows through the Strait (inbound and outbound) have not fully recovered, yet the gradual return of traffic, increased oil flows and country oil management (recovered SPR releases), and then easing of geopolitical risk premiums, have mitigated much of the fear, which has mostly dissipated on most of the affected securities.