New Delhi, July 19 -- The West Asian Gulf is in an unstable disequilibrium. There has been no lasting deal to reopen the Strait of Hormuz because the US and Iran remain far apart in their demands, with the Iranians holding more leverage than US President Donald Trump ahead of America's mid-term elections this November.

In the absence of a full deal, renewed skirmishing was highly likely, reflected in the growing risk of a return to full-blown warfare.

Still, equity markets did climb higher on the hope that a temporary ceasefire would lead to a full deal, and market reactions to the latest re-escalation of tensions have been subdued. The overall economic impact-in terms of growth and inflation-has been relatively modest. Despite this bei...