Markets cheer US-Iran Deal

LIVINGSTONE MARUFU

 

Markets have welcomed the deal between the United States and Iran, which paves the way for the reopening of the strategically important Strait of Hormuz, although economists say the breakthrough is unlikely to trigger an immediate decline in fuel prices due to lingering logistical and market complexities.

 

A formal signing ceremony is expected on Friday in Switzerland, followed by negotiations aimed at securing a broader peace agreement.

 

The reopening of the Strait of Hormuz, one of the world’s most critical energy corridors, is expected to restore the flow of global oil and gas shipments, easing pressure on international energy markets and reducing fears of wider economic disruption.

 

Zimbabwe National Chamber of Commerce (ZNCC) president Tapiwa Karoro said a durable ceasefire would help remove part of the geopolitical risk premium that had driven oil prices higher and would improve overall market confidence.

 

“However, markets will remain cautious until the ceasefire proves durable. Energy traders will be watching closely for any renewed tensions or disruptions. The decline may not be immediate or proportionate,” Karoro said.

 

The Strait of Hormuz handles roughly 20% of global oil trade, making it one of the most strategically important shipping routes in the world. Any threat to its operation typically pushes oil prices higher because of fears of supply shortages.

 

With the waterway now reopened and tensions easing, Karoro said oil prices could gradually return to pre-conflict levels.

 

“This should eventually translate into lower fuel import costs for countries such as Zimbabwe,” he said.

 

On fertilisers, Karoro said the impact would likely be more moderate.

 

“Fertiliser prices are heavily influenced by natural gas and ammonia costs. Lower energy prices generally reduce production costs across the fertiliser value chain, while lower oil prices also reduce transport and logistics costs,” he said.

 

However, he noted that local fuel prices are influenced by taxes, levies, procurement arrangements, exchange-rate considerations and existing inventories.

 

“Therefore, a fall in global oil prices does not automatically translate into an equivalent reduction at the pump, but over time we expect to return to pre-war fuel prices because these are administered prices.

 

“If it was a fully liberalised market, prices would remain relatively elevated since they are generally sticky downwards,” Karoro said.

 

He added that the ceasefire was positive for the global economy because it reduced uncertainty in energy markets and lowered the risk of a prolonged regional conflict.

 

For Zimbabwe, the immediate benefit would be the easing of upward pressure on international oil prices.

 

“The conflict introduced a geopolitical risk premium into oil markets, pushing fuel prices above normal levels.

 

“Overall, the ceasefire is positive for Zimbabwe and the rest of the world because it reduces the risk of imported inflation. Lower fuel costs would ease pressure on transport, logistics and production costs, helping contain inflation and improve business profitability.

 

“The net effect for Zimbabwe is likely to be positive. As a net importer of fuel, gas and fertiliser, the country stands to benefit significantly from lower energy costs. The ceasefire therefore improves the outlook for business costs, inflation management and overall macroeconomic stability,” he said.

 

Confederation of Zimbabwe Industries (CZI) chief executive officer Sekai Kuvarika said the focus should now shift towards strengthening business resilience.

 

“What is critical is not simply the ceasefire itself, but how supply chain disruptions are resolved and how businesses prepare for future shocks.

 

“We need measures that strengthen resilience against future cost pressures, including improving energy efficiency and diversifying input source markets. The impact is likely to be gradual rather than immediate,” Kuvarika said.

 

Economist Tony Hawkins warned that considerable uncertainty remained.

 

“It’s easy to say oil prices will fall and share prices will rise. On the surface, all economies will benefit, but there will be time lags and varying effects across countries and regions.

 

“No one can predict with certainty how each individual country will ultimately be affected,” Hawkins said.

 

Zimbabwe Economics Society vice president Misheck Ugaro said petroleum prices had already begun easing following the deal, with crude oil prices falling to around US$84 per barrel from peaks of about US$110 three months ago and roughly US$95 for most of last month.

 

He said the decline should eventually be transmitted to Zimbabwe through lower fuel prices.

 

“However, since prices here are regulated by ZERA, we have to wait and see how the authorities respond. The ceasefire is positive and, if it holds, it will benefit Zimbabwe’s economy through stable supplies of fuel and fertilisers,” Ugaro said.

 

Economist Vincent Musewe said the closure of the Strait of Hormuz had created a logistical nightmare and triggered a spike in oil prices.

 

“If these prices stabilise, it means less volatility, which is beneficial for fuel imports. It also normalises general trade logistics and lowers the cost of doing business,” Musewe said.

 

Economist Enock Rukarwa described the ceasefire as a welcome development.

 

“The Zimbabwean economy is largely fuel-driven, so the reopening of the Strait of Hormuz will help cushion shocks within the local fuel sector. Once international fuel prices decline, we expect regulators and authorities to respond accordingly in a manner that incentivises industries to operate in a more enabling environment, mirroring developments in the international market.

 

“Indeed, the ceasefire is a major positive for the Zimbabwean economy. Beyond fuel and fertiliser, labour mobility is another area affected. Many Zimbabweans are employed in shipping, transport and other sectors across the Gulf region. Peace in the area is therefore an encouraging development both for the economy and for Zimbabweans working in those jurisdictions,” Rukarwa said.

 

He added that several export-oriented sectors also depend heavily on stability in the Gulf region.

 

“You would note that a significant proportion of Zimbabwe’s gold exports pass through Gulf markets, particularly Dubai. Peace in the region is therefore a key enabler for the smooth functioning of various sectors of the Zimbabwean economy,” Rukarwa said.