Faisal Islam: Iran war pause is welcome but the economic scars will last

Faisal Islam: Iran war pause is welcome but the economic scars will last8 minutes agoShareSaveAdd as preferred on GoogleGetty ImagesFor most of the past six weeks, we have brought you maps of a gummed-up Strait of Hormuz.Approximately 800 ships are believed to have been stuck in the Gulf, many transporting oil and gas, and have been unable and unwilling to exit onto the open seas.During that time, there has been a direct line from the world's biggest traffic jam to rising petrol and diesel prices, higher airfares and swelling mortgage rates around the globe.Many countries are also dependent on these waters for significant supplies of other petrochemical products, made at the refineries in the region. These include jet fuel, diesel, fertiliser ingredients and industrial products such as helium, essential for microchip manufacture.The good news is that the overnight ceasefire pauses any further escalation of the conflict, and provides a pathway for deescalation and peace.This is why the markets have responded positively with 15% falls in the market price of oil and gas and a rally in stock markets.However, there are many reasons for caution about the economic impact at this delicate moment.There are different accounts about the basis for negotiations from Iran, the US, and Israel.The test of this is whether face-to-face negotiations actually occur.Then there is the physical situation in the Strait.Will traffic flow freely as suggested by US President Donald Trump?Or will it flow "via coordination with Iran's Armed Forces and with due considerations to technical limitations", as suggested by Iran's Foreign Minister?This is vital, not just for oil and gas, but also jet fuel, sulphur, urea and diesel.The longer the ceasefire, the more likely that any spike in inflation ebbs away in the coming months.It also raises a fundamental question about any peace. Iran has now created a new reality in the Gulf.It has established that it can control the key...