Oil prices have fallen sharply, with Brent crude dropping 15.5% to $92.28 a barrel, after the US, Israel and Iran agreed a two-week ceasefire. The deal includes the reopening of the Strait of Hormuz, where around 1,000 ships have been trapped. UK gas prices also tumbled 18%.
Stock markets rallied worldwide: the FTSE 100 rose 2.66%, Japan's Nikkei surged 5.4%, and Wall Street hit one-month highs. The dollar weakened, while sterling gained 1.2% against the dollar. Government bond yields fell sharply as rate hike expectations receded.
However, shipping analysts warned against expectations of a mass exodus of vessels through the Strait. Richard Meade of Lloyd's List Intelligence said the ceasefire 'doesn't change the situation in the sense that Iran is still in control' and ships must still seek permission to transit.
The International Monetary Fund cautioned that the economic scars of war could take over a decade to heal. Its research, based on conflicts since 1946, found that economic recovery after conflict is possible but neither automatic nor rapid, with output typically remaining modest relative to wartime losses.
