Tuesday, 02 January 2024 12:17 GMT

Trump's Ship Rescue Won't Prevent Global Latency Shock


Date:

(MENAFN- Investor Ideas) (Investorideas Newswire) a go-to platform for big investing ideas, including gold and silver stocks issues market commentary from deVere Group.

Even if Donald Trump 'frees' ships in the Strait of Hormuz, global supply chains face a growing“latency shock” that will weigh on the global economy.

This is the warning from Nigel Green, CEO of deVere Group, one of the world's largest independent financial advisory organisations, as oil prices fell in volatile trade following the announcement of“Project Freedom,” the US-led effort, announced late on Sunday, to guide stranded vessels out of the critical waterway.

Brent crude dipped while US benchmark prices also edged lower as markets responded to the prospect of vessels beginning to move again after weeks of disruption.

Around 1,000 commercial ships and tens of thousands of seafarers have been caught up in the blockage, with flows through one of the world's most critical energy arteries grinding close to a halt.

The Strait has historically handled roughly a fifth of global energy supply, making any sustained disruption a significant stress point for global markets.

“The introduction of escorted shipping corridors may ease immediate congestion, but it also introduces new layers of operational complexity.”

Shipping firms now face tighter scheduling constraints, increased security procedures, and extended turnaround times. Insurance premiums are rising, and logistical planning is becoming more uncertain as companies adjust to a slower, more fragmented operating environment.

The backlog of vessels is expected to take time to unwind, even with coordinated efforts to guide ships out of the restricted waterway. Supply chains built on precision and efficiency are now being tested by delays that are difficult to predict and harder to manage.

Markets have so far taken a relatively measured view, with oil prices easing on the assumption that movement will resume.

However, the underlying disruption remains significant, particularly as geopolitical tensions continue to shape access to key trade routes.

As diplomatic discussions continue and military support underpins efforts to restore shipping flows, the outlook remains uncertain. The immediate release of vessels may ease some pressure, but the structural impact of disruption is unlikely to fade quickly.

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