A fragile Hormuz deal is no reason for global investors to relax yet

A tentative deal between Iran and Oman on shipping through the Strait of Hormuz is being treated in some quarters as the moment the year’s biggest energy risk finally eases.

I believe that investors would be wise to treat it with considerably more caution than that.

The scale of what is at stake in this waterway is hard to overstate. In a normal year, roughly 20 million barrels of oil and petroleum products pass through the Strait daily, equal to about one-fifth of global petroleum liquids consumption and around 25% of all seaborne oil trade worldwide. China and India together absorbed 44% of Hormuz crude in 2025, and Japan sources 70% to 74% of its total crude imports through the passage.

This is not a regional story. It’s a structural pressure point for the entire global energy system.

The events of the past several months have shown exactly how fragile that system is. Flows through the Strait fell to 14.6 million barrels a day in the first quarter of 2026, down almost 30% from 20.4 million a year earlier, as conflict disrupted shipping.

At the peak of the crisis, tanker traffic through the passage reportedly dropped by as much as 95%, and oil prices surged above $100 a barrel.

Bypass options are limited, as has become all-too clear.

Saudi Arabia and the UAE together have pipeline capacity of only 3.5 million to 5.5 million barrels a day, covering barely a quarter of what normally transits the Strait, while producers including Iraq, Kuwait, Qatar, Bahrain, and Iran have no meaningful bypass infrastructure at all.

Against that backdrop, a temporary agreement removing fees and tolls on shipping is genuinely useful news.

It builds on the memorandum of understanding signed between the US and Iran in mid-June, under which Tehran agreed to allow commercial vessel transit without charge for 60 days in exchange for Washington lifting its naval blockade of Iranian ships.

The latest arrangement, reportedly endorsed by the Gulf Cooperation Council (GCC) and involving both the International Maritime Organization and US officials, extends that framework and could meaningfully reduce the risk premium currently embedded in oil prices.

Investors should welcome that, while being clear-eyed about what it is and it’s not.

To be clear, this is not a permanent resolution. It’s another 60-day arrangement layered onto an already fragile ceasefire process, one where the US president has publicly accused Iranian leadership of being duplicitous about the state of talks, even as Iranian officials insist no direct negotiations with Washington are underway. On the same day this latest deal was said to be nearing finalization, the UK’s Maritime Trade Organisation reported explosions near tankers off Yemen and Oman.

As such, it’s not the backdrop of a resolved conflict, rather a pause that could unravel quickly. Again.

The practical implications for portfolios run in several directions at once. Lower oil prices, if the de-escalation holds, would ease inflation readings globally and reduce pressure on central banks currently weighing further tightening, including the Federal Reserve heading into September.

Oil-importing economies across Asia, and their currencies, stand to benefit disproportionately given how concentrated their exposure to Hormuz crude already is. Shipping and insurance costs on Gulf routes could also ease meaningfully if war-risk premiums come down alongside the reduced threat picture.

None of that should translate into positioning as though the risk has passed.

The underlying vulnerability has not changed. A four-mile-wide shipping channel with almost no viable alternative route still carries a fifth of the world’s oil supply, and the structural dependence of major Asian economies on that single passage has not been altered by a 60-day fee waiver.

What has changed, though, is sentiment, and sentiment can reverse as quickly as it improves, particularly given how many parties would need this fragile understanding to hold simultaneously.

Investors with meaningful exposure to energy prices, shipping, or emerging-market currencies tied to oil imports should treat this development as a genuine reduction in near-term risk, not a resolution of the underlying one.

Hedges built around continued disruption should not be unwound entirely on the strength of a temporary agreement between two of several parties whose cooperation this deal actually requires.

The right response to good news of this kind is measured optimism, not premature relief.

Sixty days is a long enough window for genuine de-escalation to take hold and short enough that markets should keep watching closely rather than assuming the hardest part is already behind us.