A TRUCE TOO FAR

Several commercial tankers reportedly turned back before entering the Gulf, security risks for shipping have increased once again, and markets have been reminded that uncertainty itself carries a price.

Oil prices rose sharply, equities weakened and investors once again moved toward safer assets. Yet one important difference separates this escalation from the first Hormuz crisis. Prices moved, but they did not spiral out of control. The reason is equally important. Markets had already priced in a considerable degree of geopolitical uncertainty. Investors have learned that the Gulf can return to crisis with very little warning. This was not the beginning of a new crisis, but the return of one that never fully disappeared.

Another development deserves attention. Only days before the renewed escalation, the United Arab Emirates raised crude oil production to its highest level in years following its departure from OPEC production quotas. The contrast is striking. Politics continues to generate uncertainty, while producers have become increasingly capable of restoring physical supply. The oil market is adapting faster than geopolitics.

That may be the most important lesson of the latest escalation. Today's energy system has become far more resilient than it was only a few years ago. Supply disruptions can often be managed. Political uncertainty cannot.

The Strait of Hormuz does not need to be formally closed to become expensive. It only needs to become unreliable. For now, oil continues to flow. But the latest events remind us that restoring logistics is far easier than restoring confidence. And in energy markets, confidence is often just as valuable as supply itself.