Iran has not actually formally closed the Strait. They have de facto been closed voluntarily as insurance costs soar, and sailors fear for their safety.
The net result is a wave of inflationary pressures emanating from the conflict zone, and upsetting global markets for energy, fuel, food, industrial chemicals, and credit.
On Monday night I gently suggested that forecasts from the Office for Budget Responsibility, the UK government’s independent forecaster, could prove rather out of date even before publication on Tuesday.
The extent of that mismatch has surprised me, four days on from the Spring Statement and a week into this conflict.
On Tuesday the price of a barrel of crude oil was assumed to be $63. It closed at $94 on Friday.
A therm of gas delivered to the UK was assumed to cost 74 pence. It is £1.35, and got as high as £1.70 this week.
The gilt rate, the effective interest rate on 10-year government borrowing was assumed to be 4.4%, it ended the week at 4.6%, having nearly hit 4.7%, a significant difference.
The UK’s bonds have been hit more than other countries as traders recall the UK’s sensitivity to energy price inflation during the Russia-Ukraine crisis.
The essential bet is that the Bank of England (BoE) will rein in interest rate cuts as inflation stays sticky.
All this came just at the moment when the markets had started to give credit to the government for the speed of its planned fall in borrowing.