One seafarer killed, eight injured in attacks on two UAE tankers in Strait of Hormuz

Hostilities continue in the Gulf region with one seafarer reported killed and eight injured in Iranian attacks on two UAE tankers in the Strait of Hormuz. The UAE denounced the attacks as “brazen”, while  the US carried out its third night of strikes on Iranian facilities in the region aimed at degrading “Iran’s ability to attack commercial shipping”. 

President Trump has said the US will reinstate its naval blockade on Iranian ports, although it is uncertain whether this would prevent all traffic transiting the Strait of Hormuz. 

The President also raised the prospect of vessels might being allowed to effect transits upon payment of a service fee equal to 20% of a vessel’s cargo value for US naval protection in doing so, although it remains to be seen if there is any substance behind the idea.

Market analyst David Cooney of MahiMarkets comments: “A fresh blockade, and wave of US strikes will fuel rising oil prices, reminding investors that volatility has become the new normal. The bond markets will be on red alert for rising inflation as crumbling peace negotiations underline the fragile nature of any future ceasefire. 

“The market reaction to these flare-ups has been, by comparison, slightly more measured than previous escalations of the conflict. We’ve seen equities move back, oil prices rise and government bond yields increase but not spike as before. Such reaction represents how markets now view such escalations as part of a much longer dispute that could take months or years to resolve.”