No Sign of Tension Easing and Markets Worsening

Conflict update:As the war enters its fourth week, infrastructure brinkmanship has sharply intensified following a 48-hour US ultimatum to strike Iranian power plants unless the Strait of Hormuz is reopened. Tehran has rejected the deadline, with the IRGC countering with threats to expand strikes targeting regional energy assets, and even US technology nodes globally. Meanwhile, with Hezbollah formally opening a new military front, multi-theatre disruption to global energy markets and critical supply chains is continuing.​Oil:The benchmark spot price for Oman crude, most of which flows to Asia, surged over 123% to $159/bbl since Feb 27, whilst Europe sources mainly from the North Sea (Brent). Given that marine transit times from the Middle East to Asia are shorter (10–15 days) compared to the 25–39+ days required to reach Europe, Asian fuel oil prices are taking the initial brunt of the Strait's closure. CDS:CDS market paints a divergent picture: spreads for smaller nations like Qatar and Bahrain spiked notably, widening 47.1% and 47.4%, respectively between February 27 and March 20, while Saudi Arabia registered a stable movement. Stock/other Market:Markets reacted differently to the shock, with Oman being an obvious hedge given its geographic advantage outside the Strait of Hormuz. Regarding government bonds, yields have moved up gradually since the war began.Real economy:     Shipping traffic through the Strait of Hormuz has not recovered. Saudi Arabia has managed a partial improvement by leveraging its Red Sea ports to reroute oil deliveries. Regional air traffic remains broadly disrupted, with Qatar carrying the biggest burden for airspace closures.