Asia welcomes a Strait of Hormuz reopening as Trump announces a US-Iran ceasefire deal, but experts warn the economic recovery will take months

Ceasefire agreement announced

President Trump said in a social media post on Sunday that an interim cease-fire agreement between Washington and Tehran would reopen the Strait of Hormuz. He stated that he had authorized "the immediate removal of the United States Naval blockade" on Iranian ports. The deal is scheduled to be signed on Friday.

Ships of the World, start your engines. Let the oil flow!

Asia's immediate relief

For Asia, the region outside of the Middle East which has borne the brunt of the economic fallout, the reopening offers an immediate reprieve. More than four-fifths of the petroleum and liquefied natural gas transiting the waterway is typically bound for Asian markets, according to the New York Times. On Monday, country leaders celebrated the deal, and markets across the region rallied, with benchmark stock indexes jumping.

Economic scars will linger

Industry experts and economists caution that global markets will need considerable time to normalize because trade flows have been disrupted for so long. Over the past three-and-a-half months, Asian currencies have plummeted, inflation has surged, and supply-chain bottlenecks have begun to choke industrial production. Joshua Ngu, vice chairman of Asia Pacific at the energy consultancy Wood Mackenzie, noted that disruptions "have grown exponentially and bled further down the supply chain" and "won't be solved in a short period of time."

Every day the strait has remained closed, the economic disruptions have grown exponentially and bled further down the supply chain.

Commodity market reactions

The announcement also moved commodity markets. Copper climbed as much as 1.4% as the deal eased fears over global economic growth and stoked optimism for metals demand, Bloomberg reported. Bitcoin rallied nearly 3% to a two-week high around $65,400. A liquefied natural gas tanker named Disha, trapped in the Persian Gulf for over three months, appeared to be heading toward the strait.

Oil stockpile concerns remain

The Wall Street Journal reported that oil executives are sounding the alarm over critically low global stockpiles. How quickly the reopening of the strait can arrest the steep decline in oil reserves will determine the trajectory of fuel prices and broader economic stability in the coming months.