Welcome to another fog of war week. The current situation has taken a tilt for the worse after the optimism of late last week. Weekend:
Iran has re-tightened control over the Strait of Hormuz over the past 24–48 hours, effectively reversing a brief reopening seen during the recent ceasefire window and pushing the US-Iran standoff back into escalation territory.
According to regional shipping reports and security sources, Iranian forces have re-imposed transit restrictions and warned vessels against unauthorised passage, with Tehran stating the waterway will remain constrained until the United States lifts its naval blockade on Iranian ports. The move underscores a hardening stance from Iran despite ongoing diplomatic channels.
Tensions have been reinforced by direct incidents at sea, with multiple reports that Iranian Revolutionary Guard units fired warning shots toward at least two commercial vessels attempting to transit the strait without coordination. Reports indicate that one incident involved an oil tanker, while another report referenced a container ship, both of which subsequently altered course. There have been no confirmed reports of vessels being struck, but the encounters have been sufficient to deter traffic.
As a result, shipping flows through Hormuz have dropped sharply, with several tanker operators either delaying entry or rerouting where possible. War-risk insurance premiums have also risen materially, further discouraging transit through the chokepoint.
Washington’s position remains unchanged, with the US maintaining its maritime blockade targeting Iranian oil exports, arguing it will stay in place until a broader agreement is reached. That leaves both sides locked in a feedback loop: US pressure constraining Iranian exports, and Iran responding by threatening or restricting one of the world’s most critical energy corridors.
Its an extremely volatile situation, we’ll be continuing to watch the war of tweets and the war on the sea.
Indications, the USD is up and as ‘risk’ markets open in the hours ahaead, they’ll be down:
Iran appeared to expect that signalling a reopening of the Strait would prompt the US to ease its blockade, but that didn’t materialise as the move came with conditions attached. The back-and-forth is likely to continue. This is essentially negotiation playing out in real time.
The flows into USD, as you can see, are not excessive, reflecting this “negotiation playing out in real time” rather than back to full shooting war.