Strait Of Hormuz Reopening Still Looks Distant

The market is underpricing the persistence of the Strait of Hormuz disruption; U.S. headlines implying the Iran operation may be ending have not resolved core transit, insurance, and security constraints. Expect sustained upside pressure on energy prices, higher shipping insurance premia and regional trade risk premia, supporting a defensive/underweight positioning in exposed sectors.

Analysis

The market is underpricing the persistence of the Strait of Hormuz disruption; U.S. headlines implying the Iran operation may be ending have not resolved core transit, insurance, and security constraints. Expect sustained upside pressure on energy prices, higher shipping insurance premia and regional trade risk premia, supporting a defensive/underweight positioning in exposed sectors.