The Gulf Ceasefire, Relief Rally, and Invisible Blockade

The Ceasefire

• Pakistan brokered a two-week US-Iran ceasefire on April 7, less than two hours before Trump’s 8pm Washington deadline, with Islamabad talks scheduled for Saturday April 10.
• The US and Iran disagreed on the terms of the ceasefire, with Washington excludes Lebanon and Tehran insisting it is inseparable from any agreement.
• Iran’s delegation had not departed Tehran by Friday morning, citing Israel’s continued strikes on Lebanon as a violation of ceasefire terms.
• China and Russia vetoed a UN Security Council resolution the day before the ceasefire that would have created multilateral enforcement for Hormuz shipping. Whatever Iran agrees in Islamabad, the only guarantee is Iran’s own willingness to honour it.

Market Reaction

• Brent fell 13% to $94.75 on Wednesday, its largest single-day decline since April 2020, before retracing to $98 by Thursday, now 35% above pre-war levels.
• S&P 500 +2.51%, DAX +5.4%, Kospi +7.52% on ceasefire day; by Thursday the rally was already partially reversing.
• Government bond yields rose as equities fell throughout the conflict, with the inflation shock stripping bonds of their traditional safe-haven role.
• War-risk premiums surged from 0.15-0.25% of hull value pre-war to 5-10% at peak.
• Urea FOB Middle East closed at $795/ton on ceasefire day, a 52-week high up 64% from pre-war.

What Has Not Changed

• Hormuz is running at 3-7 transits per day against a pre-war baseline of 135, with 800+ vessels trapped and a backlog of 53-270 days to clear it.
• Saudi Arabia confirmed 600,000 bpd of oil production capacity lost, with the six-week cumulative shortfall across the GCC taking nearly two years to recover.
• Qatar’s Ras Laffan is offline for 3-5 years regardless of diplomacy, removing 17% of LNG capacity and one-third of global helium supply
• Marine insurance normalisation historically takes considerably longer than the diplomatic timeline, such that a ceasefire signed in Pakistan does not reopen the corridor commercially.

Cordoba View

• The relief rally reflected six weeks of compressed positioning unwinding. However, this does not show a changed fundamental outlook, as the underlying conditions remain largely unchanged.
• Duration in fixed income remains exposed until Hormuz throughput meaningfully normalises; Brent stays structurally elevated but the ceasefire removes the acute upside tail.
• The semiconductor helium issue remains an underpriced risk in equity markets; the defence stocks structural bid is independent of the ceasefire outcome.
• The insurance markets closed Hormuz before the IRGC navy did, geopolitical risk premiums established at this scale are unlikely to reverse on the back of a two-week diplomatic pause.
• Goldman Sachs’ two scenarios bracket the range: ceasefire holds and Hormuz gradually reopens — Q4 Brent at $80; ceasefire fails and closure extends — Q4 at $115. However, given current throughput and backlog, the base case may be too optimistic.