What a U.S.-Iran peace deal could mean for energy, inflation

The prospect of a reopened Strait of Hormuz and a pending U.S.-Iran peace deal could help ease the big inflation risk hanging over Kevin Warsh's first Federal Reserve meeting as chairman.

• "Ships are starting to move, many loaded up with Oil, out of the Strait of Hormuz," President Trump said Monday morning in a post on Truth Social.

Friction point: Lingering disruptions to shipments of oil, fertilizer and other industrial inputs could keep inflation concerns alive at the Fed.

What they're saying: "Sailing through the strait will remain riskier and more costly than before the war," Oxford Economics' Ben May wrote in a note Monday morning.

• May noted that damage from underwater mines or a sudden re-escalation of the conflict will keep insurance coverage for the strait higher than pre-war levels.
• Reuters reported Monday morning that ensuring the strait is safe from mines could take weeks.
• "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," May wrote.

The bottom line: The peace deal might reduce geopolitical risk, though the effects on global supply chains might come more slowly.