As the world awaits any sign that the vital Strait of Hormuz could be reopened for maritime traffic, one leading investment manager warned that the markets will continue to be volatile until there is a degree of certainty either way.

The weekend saw Iran re affirm its control over the Strait warning that foreign commercial and military vessels will be targeted, if they do not comply with regulations governing passage through the strategic waterway.

The announcement came at a time  when US president Donald Trump said he was close to a decision on a potential deal with Iran, but Tehran denied an agreement had been reached.

It was a blow to the market after there had been a big uptick on Friday following news the strait may reopen with a deal close.

Javier de Berenguer, Investment manager and fund selector at Spanish insurance and financial group MAPFRE, said: “Is the market experiencing a period of euphoria? It depends on the lens you look through. From a very short-term perspective, conflicts such as the one in the Middle East can certainly trigger corrections. But from a longer-term perspective, what we are seeing is a full-fledged technological revolution. We risk becoming overly cautious.

“We have seen the market consistently lag behind Nvidia, a company whose earnings have, quarter after quarter, outstripped its prior market valuation. We risk seeing the same thing happen with other companies if we view the market through a cyclical lens or rely on sentiment indicators that may work in normal economic contexts, but can leave us behind in the midst of a technological revolution,” De Berenguer warns.

“For now, the market is not pricing in a scenario in which the conflict involving Iran and the Strait of Hormuz drags on much longer. The risk investors are factoring in is being left out of AI, and that is the one they are prioritising. If this extends beyond July or August, we would no longer be looking at oil-price risk, but at scarcity risk, which would trigger an economic recession. It will all depend on how long the conflict lasts.

“As for inflation, the United States is expected to see some rebound, although it is not expected to be especially large. But because the U.S. is the country with the greatest exposure to AI and its productivity gains, the impact on growth is not expected to be as significant. Any potential rate hike will depend on what happens in Hormuz and how long the conflict lasts. There could be a rate hike at the end of the year, not so much because the Fed believes it would be effective, but as a way to shore up its credibility.

“The ECB’s credibility is also at stake in Europe. The Eurozone is more exposed to the impact of oil prices, meaning rate hikes would come sooner. They would not bring inflation down either, but the measure would serve other purposes: shoring up credibility and supporting the euro.

“As a general recommendation, we warn against overly cautious positioning. We need to be invested in equities over the medium and long term. In the short term, much depends on Hormuz.”

Broker Howden Re’s has warned that while the global reinsurance market remains resilient, mounting losses across marine, energy and political violence lines are beginning to reshape underwriting conditions, pricing dynamics and risk appetite.

It added since the escalation began, vessel traffic through the Strait has collapsed, Brent oil prices have surged above $100 per barrel, and insurers have expanded high-risk zones while significantly increasing war-risk premiums. The analysis from Howden Re Business Intelligence shows that global oil trade flows have dropped by more than 60% post-conflict, while rerouting and security measures continue to disrupt supply chains and inflate operating costs.

The broker warned of “extreme” stress levels for marine hull war, marine cargo war and political violence business, driven by vessel attacks, energy facility and property attacks, premium spikes and growing uncertainty around claims development.

Richard Miller, Managing Director, Marine, Energy & Political Violence, Howden Re, said: “The Strait of Hormuz remains one of the most strategically significant maritime chokepoints in the world. Its positioning means disruption can quickly create rerouting pressures, timing lags and compressed supply-chain resilience. The market reaction reflects a reassessment of geopolitical accumulation risk across marine, energy and political violence portfolios.”

He added: “War-risk pricing has reacted sharply, but the more important story is around sustained volatility, uncertainty of claims development and the pressure this places on specialty insurers already managing large recent losses which includes the Baltimore Bridge loss.”