There is an uneasy peace in the Middle East at present. The latest round of scheduled talks between US and Iranian diplomats failed to materialise, while Israel has threatened to resume attacks on Hezbollah forces in Lebanon over the weekend. Oil prices are moving higher at the start of the new week as a consequence.

Barclays’ Christian Keller said the latest extension of the ceasefire keeps hopes of a US-Iran deal alive. However, with the Strait of Hormuz remaining closed for an eighth week, the global energy supply shock continues to intensify.

A number of key interest rate decisions are due this week, headlined by the FOMC policy announcement on Wednesday. The ongoing crisis in the Gulf, and its spillover effects, are expected to keep policymakers sidelined until there is greater clarity on the outlook for the region and energy prices.

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The Ripple Effects Of The Iran War Come At An Unfortunate Moment For Developing Nations. Before The US And Israel Began Attacks On Tehran In Late February, Optimism Was Growing About The Emerging World’s Resilience, Albeit With A Few Exceptions. Despite Rising American Tariffs, And The Scars Of The Covid-19 Pandemic And Ukraine Conflict, Economic Growth And Stock Markets Across The Broad Group Of Nations Had Been Surprisingly Sturdy. Timely Reforms And Prudent Fiscal And Monetary Policies Had Helped. The Ongoing Closure Of The Strait Of Hormuz Now Threatens That Hard-Fought Progress.

The Crisis In The Middle East Is A Triple Whammy For Poorer Nations. First, It Is Harder For The Net Energy Importers Among Them To Compete On Global Markets For Tightening Supplies Of Oil And Gas. Many Also Lack Renewable Alternatives. From Ethiopia To Tuvalu, Fuel Shortages Are Spreading. Next, Disruption To Food Supplies And Fertiliser — Of Which A Third Of The World’s Seaborne Trade Passes Through The Strait — Increases The Risk Of Malnourishment In Countries Where Agricultural Yields Have Already Been Hit By Climate Shocks. If The Conflict Persists Until June, 45mn More People Could Be Pushed Into Acute Hunger, The UN Estimates.

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DELPHI, Greece, April 27 (Reuters Breakingviews) - Europe Can No Longer Rely On The United States To Protect It. Those Who Now Want To Fully Integrate The Region’s Defences Will Have To Dream On. But If European Nations Act With Determination And Creativity, A Patchwork Of Different Coalitions Can Still Meet The Threat From Russia.

Defending Europe In The Age Of Donald Trump Is Challenging. The U.S. President Keeps Sowing Doubt Over NATO’s Solidity. Even Though He Cannot Pull The United States Out Of The Transatlantic Defence Alliance Without Approval From Congress, He May Not Come To Europe’s Aid If Russia Attacks.

An Obvious Answer Would Be For The Region’s Nations To Merge Their Fragmented Defences. But A Moment’s Thought Reveals A Host Of Problems With Such A Neat Solution.

Some Countries Think The Threat From Moscow Is More Serious Than Others. For Example, Poland, Which Is Near To Russia, Is More Worried Than Spain, Which Is Far Away. Warsaw Spent 4.5%, Opens New Tab Of Its Economic Output On Defence Last Year While Madrid Spent Just 2.0%. Different Countries Also Have Different Capabilities: Britain And France Have Nuclear Weapons, While The Others Do Not.

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