The ceasefire agreed by the US and Iran was greeted with relief by markets and oil traders. Whether it results in a lasting peace is unclear, especially given continuing attacks on vital infrastructure. But even if it does, this oil shock will take a long time to unwind.
In the very short term, logistics remain a constraint. There are over 800 vessels stuck in the Gulf, reports Bloomberg citing Kpler data, of which 70 per cent are carrying oil, fuels and oil products. Prewar, about 140 ships crossed the Strait of Hormuz every day. With Iran set to monitor ships for weapons and demand they pay tolls in cryptocurrency, flow rates are likely to be lower than usual and the backlog will take time to clear.
The two-week ceasefire, meanwhile, poses a dilemma for incoming vessels. The round trip in and out of the Strait, including loading, takes up to 9 days, Wood Mackenzie estimates. So those huddling outside the Gulf need to either start their engines quickly or wait until they have reasonable certainty that the ceasefire will be extended.