Hormuz waterway stalled
The most important route for oil and gas supply across the world, the Strait of Hormuz, has again come to a standstill. Iran has not only opened fire on commercial ships passing through this area, but has also warned to block this entire route indefinitely. This deepening tension between America and Iran is now likely to have a direct impact on crude oil prices and the stock market, which were recently breathing a sigh of relief as the fears of war had subsided.
The sound of bullets echoed in the sea, tension at its peak
This step of Iran has created a stir in international trade. The navy of Iran’s powerful military unit, the Islamic Revolutionary Guard Corps (IRGC), has issued a strict order that ships parked in the Persian Gulf and Oman Sea should not move from their places. A warning has been given that if any ship dares to move towards Hormuz, it will be considered an ally of the enemy and will be directly targeted.
The seriousness of the situation can be gauged from the fact that the British Navy has also confirmed that IRGC gunboats have fired very close to a tanker. It was fortunate that the ship and its crew survived safely. But the attack by an unknown weapon on a container ship near the coast of Oman has increased the concerns of the shipping companies manifold. According to Mehr news agency, all the cargo ships are stranded in the middle of the sea waiting for the next order of the Iranian Army.
Break on the world’s ‘oil artery’
Actually, the Strait of Hormuz is not a common sea route. This is the main lifeline of global energy supply. About 20 percent of the world’s crude oil and liquefied natural gas (LNG) passes through this narrow route. Last Friday, due to expectations of peace in the international market, Brent crude fell by about 9 percent to the level of $ 90 per barrel. This had raised hopes that petrol and diesel would become cheaper and the stock market was also rising in this positive sentiment. But this latest blockade of Iran has eclipsed this happiness of the market. If this path remains disrupted for a long time, oil prices may rise again in the international market. This will have a direct impact on transportation costs, everyday inflation and your investment portfolio.
war across America
This entire maritime dispute is actually the result of the ongoing geopolitical tension between America and Iran. America is continuously trying to blockade Iranian ports. Giving an aggressive reply to this, Iranian Parliament Speaker Mohammad Bagher Ghalibaf has bluntly said that when Iran itself cannot do its business from Hormuz, then no one else will be allowed to do so.
According to a report in the Wall Street Journal, America is making major preparations to seize Iranian oil tankers in international waters in the coming days. However, amidst this tension, the doors of diplomacy have not been completely closed. Axios reports that a proposal is being discussed behind the scenes, under which the US would release $20 billion of stuck Iranian funds and in return Iran would give up its enriched uranium reserves.
But, US President Donald Trump has rejected this proposal. Trump says that talks are going on, but if the ceasefire does not move forward, the attacks may start again. At the same time, Iran has also taken a tough stand and made it clear that its enriched uranium is part of its sovereignty and it will not be sent out at any cost.
smoldering fire in lebanon
The strings of this geopolitical tension are not limited to the sea only. The situation in Lebanon is also getting out of control. The Israeli army has intensified attacks in southern Lebanon citing ceasefire violations. So far, more than 2,000 lives have been lost in this entire conflict and more than 10 lakh people have been rendered homeless. French President Emmanuel Macron has said that a French soldier deployed in the UN peacekeeping mission has also lost his life, which has been directly blamed on Hezbollah.
According to a Bloomberg report, even if an agreement is reached between America and Iran, it will be very limited and temporary. At present, it is too early to expect permanent peace and investors should be mentally prepared for huge fluctuations in the market in the coming few days.
Read this also- India’s money will no longer sink in the sea, this is how the fortunes of businessmen will shine with the Bharat Marine Insurance Pool of Rs 12,980 crore!
