Six weeks ago, the US and Iran signed off on a ceasefire deal or memorandum of understanding as they would frame it. The agreement was meant to pave the way for nuclear talks but after three weeks of nothingness, it all came crashing down again.
That brings us to today and we’re once again talking about the same thing again. That being trying to agree to a new ceasefire deal in allowing for nuclear talks to take place once again.
Markets are buying into the headlines with a more optimistic mood so far. That is reflected in the drop in oil prices and bond yields, with US stocks nudging higher as well. However, the main question remains in that is this all just another illusion? Let’s take a step back and look at the facts once again.
Trump talks up a deal on the Strait of Hormuz
In his words: “There’s a deal on Hormuz and there will be a deal on denuclearisation.”
Adding that nuclear talks with Iran would begin “tomorrow afternoon”. And now, we’re hearing from the AP that Trump’s proposal for “reopening” the Strait of Hormuz is going to be accompanied by the US lifting its naval blockade on Iran. Does this all sound familiar?
That’s because we have been here before. This is exactly the same situation we were in two months ago and we’re now circling back to the same issues and the same compromises that need to be made.
So far though, the AP source maintains that no agreement has been made yet but mediation efforts are ongoing. So, we’ll see.
But as mentioned before, any “reopening” of the strait will not be as what it was before. At most, we might see some pick up in numbers but it is not going to go anywhere to near pre-war levels.
The latest shiptracking data shows that there has been some improvement in activity at least but overall, things are still subdued. On 29 July, at least there was a resumption of LNG carrier transits after a two-week pause. But even so, the number of vessels crossing in the past few days is just averaging around 10-15 vessels per day.
And even on any deal between the two sides, we’re just going to circle back to the original playbook. We stopped at Stage 4/5 in the first instance, so expect there to be a repeat performance if things play out accordingly.
Nuclear talks will still go nowhere
Just because both sides agree to a ceasefire and resumption of talks, the end of the war is by no means a given. Both sides still have their own key red lines on nuclear/uranium discussions and I still cannot imagine how they are going to strike a compromise on that.
From before: Iran outlines that nuclear talks will include enrichment, stockpile, and its nuclear needs
These are issues that both sides have not seen eye to eye for more than a decade already. Yet, we’re supposed to expect that suddenly things will change in less than 60 days all of a sudden?
The US wants to believe that they can pressure Iran enough to concede and accept a deal. But as we have come to find out in the last five months, it is anything but that. And so, this will just continue to drag on with no semblance of a deal surely.
As mentioned then:
Iran will surely look to delay things by kicking the can down the road with empty baseline promises. That in exchange for further sanctions relief and more unfreezing of its assets. The only question now is, will Trump be willing to accept that or will we see the war return at some point after Iran takes him for a joy ride over the coming months?
The fact of the matter remains that Iran’s main strategy is to keep playing for time by kicking the can down the road.
They will be more than happy if this whole situation in the last six to eight weeks keeps repeating itself over and over again. And that is only because they continue to hold a strong leverage with control over the Strait of Hormuz. So, don’t expect that to change any time soon.
This article was written by Justin Low at investinglive.com.
