Petri Redelinghuys of Herenya Capital Advisors on the Iran War’s current and future impact on the market and global economy.
Recent developments
Last night’s speech by President Trump, and the ongoing concentration of U.S. ground troops in the area signals an escalation in the war. This development contradicts the talks of de-escalation from earlier, and creates uncertainty in the market. The mixed signals also further complicate things, as military conflicts have historically been unpredictable. And as both sides escalate hostilities, it only makes it less likely to see an end to the war and resumption of trade any time soon.
Uncertain Future
It is difficult to predict how current and future events will impact the market, but we believe that the catastrophic impacts of the war on the global economy will be felt a few months down the line when the strait’s continued closure causes further resource scarcity disruptions. We’ve already seen the rise in fuel prices in our day to day, but that’s only the tip of the iceberg. Fuel shortage could dramatically disrupt local and international supply chains, and the mounting costs could spiral into large-scale food and energy insecurity, which is an issue that would take a long time to resolve.
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