US-Iran Deal Won't Quickly Fix Hormuz Supply Chains
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- President Trump posted on Truth Social Monday that "ships are starting to move, many loaded up with Oil, out of the Strait of Hormuz"
- Kevin Warsh faces a major inflation risk at his first Federal Reserve meeting as chairman, with a reopened Strait of Hormuz and pending U.S.-Iran peace deal positioned to ease that pressure
- Oxford Economics' Ben May warned that "sailing through the strait will remain riskier and more costly than before the war," with insurance coverage staying elevated due to potential mine damage and conflict re-escalation
- Reuters reported Monday that ensuring the strait is safe from mines could take weeks
- May noted that "physical flows are still likely to recover gradually rather than immediately, even if prices respond more quickly to signs that a credible reopening deal is in place"
- Lingering disruptions to shipments of oil, fertilizer, and other industrial inputs could keep inflation concerns alive at the Fed
Why it matters: Kevin Warsh's first Fed meeting arrives as the Strait of Hormuz reopens, but Reuters reports mine clearance takes weeks and Oxford Economics warns insurance costs stay above pre-war levels. The gap between fast-moving oil price signals and slow physical supply recovery gives the new Fed chair a difficult inflation picture to parse on day one.
