Iran War Strains Energy Markets; Tankers Resume Hormuz Passage

The Iran war, now entering its second month, has created a sharp bifurcation in energy markets. While hostilities persist and shipping remains perilous, the passage of Qatar's Al Kharaitiyat LNG tanker through the Strait of Hormuz over the weekend marks the first successful transit since conflict erupted, offering a glimmer of relief after weeks of blocked shipping lanes. This symbolic reopening does not resolve the underlying crisis; rather, it reflects a precarious equilibrium where trade resumes in fits and starts amid existential supply chain risk.

Saudi Aramco reported a 26% jump in first-quarter profit, buoyed by war-driven oil price gains even as its eastern exports fell due to Hormuz congestion. The company noted that its East-West pipeline has reached capacity and is now the crucial bypass route for barrels. Aramco itself warned that normalisation will take months. Spot prices for crude and LNG have spiked globally; Malaysian Prime Minister Anwar Ibrahim is already drafting oil supply contingency plans. Panama Canal revenue, by contrast, is surging as shippers divert around Africa and South America, with the Canal authority reporting revenues up as much as 15% year-on-year.

This bifurcated outcome rewards energy exporters with spare capacity or alternative pipelines while punishing importers and logistics operators caught in the squeeze. Refiners in Europe and Asia face margin compression; shipping names benefit from elevated charter rates; defence allocations remain elevated on geopolitical risk premium. The question now is whether the resumption of trickle-flows through Hormuz will stabilise oil futures or if the mere possibility of further Iranian retaliation keeps risk premiums sticky. Fed policy is also at stake: Pimco's Dan Ivascyn warned the FT that an extended Iran crisis could actually force the Fed to hike rather than cut, reversing market expectations.

Sceptics note that a single tanker transit does not end the war or eliminate the blockade threat. Trump's rejection of Iran's peace proposal as "totally unacceptable" suggests hardline postures continue. Should hostilities reignite, tanker insurance and shipping costs could spike again, reversing modest supply relief.