Iran allows ships through Strait of Hormuz

What happened: Iran, after temporarily blocking the Strait of Hormuz, allowed ships to pass following a U.S.-Iran ceasefire on January 8. Three supertankers carrying Iraqi and Saudi crude sailed through on January 11, marking the first significant transit since the standoff began. However, traffic remains low, with only Iran-friendly ships and a limited number allowed daily. Iran has not reopened the strait fully as per the ceasefire agreement, and the U.S. has advised tankers not to pay Iran for passage.

Market impact: The partial reopening of the Strait of Hormuz has eased immediate concerns about global oil supply disruptions, driving a 1.4% increase in Brent crude prices on January 14. Energy companies with significant exposure to Middle East crude exports, such as oil majors and refiners, have seen reduced uncertainty. However, the lingering threat of renewed tensions keeps oil prices elevated.

What to watch next: On January 22, the U.S.-Iran ceasefire expires, potentially reigniting tensions and impacting oil prices. Additionally, the International Energy Agency's (IEA) monthly oil market report on January 23 will provide insights into global oil supply and demand dynamics, further shaping market sentiment. Lastly, any updates on Iran's compliance with the ceasefire agreement, particularly regarding the full reopening of the Strait of Hormuz, will be crucial to monitor.