Geopolitics
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The first market reaction was easier to understand than the situation that followed. If the Strait of Hormuz were closed for months, many analysts expected crude oil to reach 150 USD a barrel or more. That did not happen. Strategic petroleum reserves were drawn down, China reduced its crude imports and used some of its own reserves, and more oil continued to move through the Strait than the competing public claims suggested. Those factors softened the initial shock. They did not resolve the underlying problem.
When Theresa Terzer and Bastian Dürr last discussed the conflict in March 2027, the expectation was that it might follow a familiar pattern: a sharp price increase, followed by a gradual return to normal as the fighting eased. Instead, the conflict has become entrenched. Neither side appears to have found an easy way out, and the economic pressure has not produced a clear settlement.
The situation around the Strait is difficult to assess because reliable vessel-tracking data is limited. There are claims that substantial volumes of oil are still passing through. There are also claims that the Strait is effectively closed. The available information does not offer a simple answer, but it does show that the market is dealing with an unusual combination of physical disruption and uncertainty about the scale of that disruption.
That uncertainty has helped keep the immediate price shock below some of the more extreme forecasts. It has also made planning harder for companies that depend on predictable flows of energy and raw materials.
In August 2027 Washington announced a new campaign of economic pressure against Iran. The measures add entities, vessels and individuals to existing sanctions programmes and extend restrictions into areas such as shipping, aviation, technology, digital assets and gold.
So far, the campaign has appeared stronger in its political messaging than in the scale of the measures themselves. The reason is partly strategic. The United States could apply far greater pressure by targeting Chinese banks that continue to facilitate Iran-related trade. But doing so would risk retaliation from Beijing and could trigger a much broader confrontation between the two countries.
The timing makes that decision even more difficult. US-China trade arrangements are under pressure, the trade truce is approaching a new deadline, and the U.S. political calendar limits Washington's room for another major economic conflict. A sanctions decision aimed at Iran could therefore have consequences well beyond Iran if it also destabilized the financial and trade relationship with China.
For companies, this is a reminder that sanctions risk rarely stays confined to the country being targeted. Banks, insurers, shippers, traders and manufacturers can all be affected by changes in enforcement, even when they have no direct relationship with the Iranian state.
The disruption around Hormuz would be serious enough on its own. The situation becomes more difficult because another important route is under pressure at the same time.
The Red Sea and the Bab el-Mandeb Strait were central to Saudi Arabia's efforts to keep its oil exports moving when the route through Hormuz was disrupted. Crude could be transported across the kingdom through the East-West pipeline to Yanbu on the Red Sea coast, then shipped north through the Red Sea and the Suez Canal or south through the Bab el-Mandeb Strait.
That alternative has also become vulnerable. Houthi forces have increased attacks on shipping and taken control of positions near the Bab el-Mandeb. Pipeline infrastructure has been attacked as well, forcing a precautionary shutdown and reducing the capacity of a route that had become a critical outlet for Saudi oil. Shipments to Europe have already been cancelled, according to the analysis discussed in the episode.
The significance is larger than the loss of one pipeline or one shipping route. A supply chain is only as resilient as its alternatives. If the main route is disrupted and the bypass depends on infrastructure or waters that are also exposed to attack, the alternative may exist on a map without being usable in practice.
The clearest signal that markets have changed their expectations may be found in diesel futures rather than in the spot price of crude oil.
Bastian Dürr points to the June 2027 diesel contract. In the first weeks of the conflict, it rose by around 10 percent. In the months that followed, it climbed by 20 to 30 percent before falling back around the memorandum of understanding reached in June. At its peaks, it has since traded around 50 to 60 percent above its pre-conflict level.
The exact price will continue to move, but the pattern says something important about market expectations. Traders are no longer pricing only a temporary shock that will disappear once the immediate crisis passes. They are allowing for the possibility that supply remains tight well into 2027 and that the conflict could escalate again after the U.S. midterm elections.
That matters far beyond fuel markets. Diesel is an input into freight, agriculture, mining, construction and industrial production. Higher diesel prices raise the cost of moving goods and extracting raw materials. Those costs then pass through to commodities, manufactured products and, eventually, consumer prices.
Energy-intensive industries and companies that depend heavily on shipping will feel the pressure first. But the wider effects are harder to contain because energy is built into so many parts of the global economy.
Mining provides a straightforward example. Extracting minerals requires fuel, and transporting them requires more fuel. The same applies to agriculture, where diesel affects planting, harvesting and the movement of crops. Petrochemicals and manufacturing face higher energy and transport costs, while companies with thin margins may struggle to pass those costs on to customers.
The current shock is also interacting with other disruptions. Wheat prices are affected by developments in the Black Sea. Strikes on Russian refineries have tightened refined-product markets. Sulfuric acid prices have risen sharply, adding to the cost of mineral extraction. These developments do not have a single cause, but together they reinforce the same pressure on companies: energy and logistics are becoming more expensive and less predictable.
That can feed into inflation and interest costs. A company may not buy oil directly, but it may still pay more for the fuel used by its suppliers, the transport used to deliver its products, and the financing required to hold larger inventories or absorb longer shipping times.
The episode's main lesson is that companies cannot assess this crisis by watching the price of crude alone. They need to follow the routes that move energy, the infrastructure that supports those routes, the sanctions decisions that shape financial access, and the market prices that reveal how long traders expect the disruption to last.
The conflict has moved from one shipping chokepoint to a wider test of supply-chain resilience. The United States and Iran remain locked in a confrontation that has not produced a clear political settlement. The Red Sea is under pressure. Saudi Arabia's bypass infrastructure is vulnerable. And futures markets are pricing conditions that may persist well beyond the immediate fighting.
Bastian Dürr’s conclusion is blunt: 'It's all interlinked. There's really no escaping this one."
Watch the full episode of the Geopolitics and Business Briefing with Theresa Terzer and Bastian Dürr on YouTube.
