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39 mins ago - Economy
U.S.-Iran peace deal's supply chain effects may be slow-going
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Photo illustration: Sarah Grillo/Axios. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images
The prospectof a reopened Strait of Hormuz and a pending U.S.-Iran peace deal could help ease the big inflation risk hanging over Kevin Warsh's first Federal Reserve meeting as chairman.
- "Ships are starting to move, many loaded up with Oil, out of the Strait of Hormuz," President Trump said Monday morning in a post on Truth Social.
Friction point: Lingering disruptions to shipments of oil, fertilizer and other industrial inputs could keep inflation concerns alive at the Fed.
What they're saying: "Sailing through the strait will remain riskier and more costly than before the war," Oxford Economics' Ben May wrote in a note Monday morning.
- May noted that damage from underwater mines or a sudden re-escalation of the conflict will keep insurance coverage for the strait higher than pre-war levels.
- Reuters reported Monday morning that ensuring the strait is safe from mines could take weeks.
- "Physical flows are still likely to recover gradually rather than immediately, even if prices respond more quickly to signs that a credible reopening deal is in place," May wrote.
The bottom line: The peace deal might reduce geopolitical risk, though the effects on global supply chains might come more slowly.
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