Market wants to believe Iran won’t block Strait of Hormuz

ABC NEWS (Australia)

While the oil price almost returned to record highs, it flattened out in later trade, with the market wanting to believe Iran won't block the Strait of Hormuz.

Transcript

00:00Having jumped 2% this morning, the oil price is once again approaching the 2025 highs of

00:07January when the US imposed new sanctions on Russia in President Biden's final days.

00:13But the fact that the oil price only went up 2% and then eased back this afternoon to

00:18be just 1% higher tonight suggests that the market wants to believe that Iran will not

00:23block the Straits of Hormuz, the 33km-wide passage through which 20% of the world's oil

00:29passes.

00:30Now, if that happens, the oil price would be expected to rise a lot more than it has.

00:35And according to a prediction betting market called Polymarket, the probability that Iran

00:39will do it has gone above 50%.

00:43But perhaps the main impact for markets of yesterday's events is that the taco trade is dead.

00:48It stands for Trump always chickens out, and for share traders it's been working quite

00:51well.

00:52They made money when he paused the tariffs on Canada and Mexico and then paused most of

00:56the ones he announced on April 2, lowered the tariffs on China and then paused those

01:00on the EU.

01:01But that was all about tariffs.

01:03Turns out that when it comes to bombs, he doesn't always chicken out.

01:07So most Asian markets fell today, apart from China, but not very much.

01:11And the local market fell too, also not much, less than 1%.

01:16So no sign of panic yet.

01:18The biggest falls today were mining companies and trans-urban because people tend to drive

01:22less when the price of fuel goes up.

01:24And the Aussie dollar is down a bit tonight at around 64 US cents.

01:28And that's finance.

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