A fragile ceasefire between the United States and Iran is holding — but only barely — as Donald Trump extended the truce at Pakistan's request while refusing to lift the US Navy's blockade of Iranian ports, the central sticking point preventing a return to negotiations. The move came hours before a two-week truce was due to expire, with both sides having warned they were prepared to resume fighting. Iran has said it will not return to talks in Islamabad unless the blockade ends, while Trump and Treasury Secretary Scott Bessent have insisted it will continue, with Bessent warning that Iranian oil storage at Kharg Island — the country's main crude export terminal — could be full within days, forcing a shutdown of its fragile oil wells. In the meantime, an Iranian Revolutionary Guard gunboat attacked a container ship roughly 15 nautical miles north-east of Oman, causing heavy damage to its bridge, though all crew members were reported safe.

The conflict has triggered the largest oil supply disruption on record, removing more than 12 million barrels per day from global markets — equivalent to roughly 11.5 percent of global demand. That daily loss exceeds the peak disruptions of the 1973–74 Arab oil embargo and the 1978–79 Iranian Revolution combined, according to the International Energy Agency, which has responded by releasing a record 400 million barrels from strategic stockpiles. Unlike earlier energy shocks, the current crisis has simultaneously disrupted crude oil, natural gas, refined fuel and fertiliser supplies. The closure of the Strait of Hormuz — the narrow waterway between the Persian Gulf and the Gulf of Oman through which roughly a fifth of the world's oil trade passes — has also shut down approximately a fifth of global liquefied natural gas production in Qatar. Gulf refineries that supply jet fuel and diesel to Europe, Asia and Africa have been severely affected, with jet fuel shortages already being flagged by airlines across Europe.

Senior commodity traders gathering at the Financial Times Commodities Global Summit in Lausanne have expressed alarm that financial markets are badly underestimating the severity of the disruption. Brent crude futures have hovered below $100 a barrel, wavering between $95 and $100 on Tuesday before settling at around $98.50 — a figure many traders consider dangerously misleading. The spot price for immediate delivery is reportedly closer to $150 a barrel, while diesel in Singapore has been trading above $300 a barrel. Russell Hardy, chief executive of Vitol, the world's largest independent oil trader, said the current supply interruption was bigger than the one that followed Iraq's invasion of Kuwait in 1990. Analysts warn that Trump's repeated social media posts promising a swift resolution have suppressed futures prices, creating a false sense of security. "The tweets are fighting reality, and the tweets are winning," said Amrita Sen of the consultancy Energy Aspects.

The economic pressure is spreading well beyond the Middle East. India's Defence Minister Rajnath Singh, speaking to a German parliamentary committee in Berlin, said disruptions in the Strait of Hormuz "are not distant events" but carry direct consequences for India's security and economic stability — a pointed reminder of how dependent Asia's major economies are on Gulf energy exports. Europe is also preparing contingency measures: the European Commission plans to ease electricity tax rules and coordinate summer gas storage refills, stopping short for now of price caps or windfall taxes. Europe's benchmark gas price is roughly a third higher than before the war began in late February. Meanwhile, the US has halted dollar shipments to Iraq and frozen security cooperation programmes as it pressures Baghdad to dismantle Iranian-backed militias.

Traders and analysts warn that the only durable mechanism for rebalancing the market is demand destruction — and that without a resolution within roughly three months, a global recession becomes increasingly likely. Iran's Revolutionary Guards have further raised the stakes by threatening to target oil facilities across the broader region if neighbouring Gulf states allow their territory to be used for attacks on Iran. Britain is hosting military planners from more than 30 countries for talks on a multinational mission to protect navigation through the Strait of Hormuz, while the Pentagon is seeking a $1.5 trillion defence budget for 2027 — including more than $30 billion to replenish depleted missile stockpiles — drawing directly on lessons from the conflict. Since fighting began, at least 3,375 people have been killed in Iran, more than 2,290 in Lebanon, 23 in Israel and more than a dozen in Gulf Arab states.