Barely weeks after the announcement of a fragile US-Iran ceasefire, the Middle East is once again reminding markets that geopolitical agreements and lasting peace are two very different things. President Donald Trump has openly declared that further US strikes against Iran are likely. Washington has already launched one of its largest military operations since the conflict began, deploying nearly forty fighter aircraft and drones against more than eighty Iranian military targets. At the same time, the United States has revoked the sanctions waiver that had temporarily allowed Tehran to resume oil exports, effectively dismantling one of the key pillars of the interim peace agreement. The ceasefire, it appears, is becoming little more than a diplomatic fiction.

For financial markets, the consequences extend well beyond military headlines. The real battlefield remains the Strait of Hormuz, through which almost one-fifth of global oil trade normally passes. Following renewed attacks against commercial vessels—including a Qatari LNG carrier and a Saudi oil tanker—shipping traffic has almost ground to a halt. Navigation has become concentrated along Iranian-approved corridors, while the US-protected Omani route has been largely deserted. Electronic interference, damaged vessels and increasing military activity have transformed one of the world’s most strategic maritime corridors into an area where commercial shipping is once again becoming exceptionally risky. The numbers illustrate the deterioration. Since the signing of the interim agreement, merchant vessel traffic has gradually recovered to an average of around 34 daily transits, compared with fewer than 20 during the height of the conflict. This week, however, barely fifteen vessels crossed the Strait before activity virtually stopped altogether. Several LNG carriers remain anchored outside the Gulf awaiting security guarantees, while others have turned back entirely.

India, one of the world’s largest energy importers, is now actively seeking diplomatic channels with Tehran to secure the safe passage of at least nine fully loaded tankers carrying crude oil and liquefied petroleum gas. Hundreds of Indian seafarers remain stranded in the region, highlighting that this is no longer simply an energy issue but also a major logistical and humanitarian challenge. Oil markets have reacted accordingly. Brent crude has climbed back above USD 76 per barrel, while European natural gas prices have surged once again. Yet the market response remains remarkably measured compared with previous Middle Eastern crises. Investors increasingly believe that neither Washington nor Tehran seeks a prolonged regional war. Instead, markets are beginning to price a new reality characterised by repeated military escalation followed by temporary de-escalation. In other words, a permanent state of controlled instability. This may prove to be the defining feature of the new geopolitical environment.

Neither side appears willing to abandon negotiations completely, yet neither seems prepared to fully respect the ceasefire. Trump himself encapsulated this contradiction perfectly, declaring within hours that the ceasefire was effectively over while simultaneously insisting that peace talks should continue. This ambiguity is becoming policy. Washington is attempting to maximise pressure through military strikes and economic sanctions while avoiding a full-scale regional conflict. Tehran, meanwhile, continues to demonstrate its capacity to disrupt global energy supplies whenever it chooses.

The consequence is a structural geopolitical risk premium that is unlikely to disappear quickly. For central banks, this is an uncomfortable development. Although energy prices remain below the wartime peaks reached earlier this year, renewed supply disruptions could once again delay the decline in inflation. This reinforces the dilemma already facing the Federal Reserve and other major central banks: inflation remains too high to justify aggressive monetary easing, while economic growth is gradually slowing. The result is likely to be a prolonged period of relatively high nominal interest rates but only modestly positive real rates.

For investors, this environment requires a different approach than the one that dominated the decade following the Global Financial Crisis. Markets can no longer assume that geopolitical shocks will quickly fade or that central banks will automatically offset every episode of market volatility with easier monetary policy. Energy markets are becoming structurally more volatile, shipping costs are likely to remain elevated, and geopolitical risk premiums are increasingly becoming a permanent rather than temporary feature of asset pricing. The Strait of Hormuz has once again become the world’s most important economic chokepoint. The lesson for investors is straightforward. The question is no longer whether another incident will occur, but how frequently markets will be forced to price them. The illusion that the ceasefire had restored stability has already disappeared. The new regime is one of recurring geopolitical shocks, intermittent diplomacy and permanently higher uncertainty. Investors should prepare accordingly.