CANNES, France ¨C The Gulf ceasefire lasted barely three weeks. After Iranian attacks on three commercial ships in the Strait of Hormuz, the United States struck more than 80 targets, revoked Iran¡¯s oil-sanctions waiver and declared the memorandum of understanding ¡°over.¡±
Yet the market response was telling: Brent crude rose to around $79 per barrel shortly after ¡ª a meaningful jump, but far below April¡¯s $120 peak, when the strait was closed outright. That gap between renewed war and restrained prices confronts policymakers with a key question: Is this the road back to a continued blockade or a violent renegotiation of the terms of passage?
Nearly half a year into the war, the severity of the underlying shock is not in doubt. This is not 2022, when Russia¡¯s invasion of Ukraine rerouted supply and the world absorbed a costly but manageable adjustment. Today¡¯s shock is destroying supply rather than rerouting it, with lost oil output already exceeding that of the 1973¨C1974 OPEC embargo. Once liquefied natural gas, fertilizer inputs and freight are included, the global energy bill is at least twice the crude price quoted on trading screens.
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