Ships of the world, start your engines. Let the oil flow!
- Donald Trump
Trump sought to break Iran's regime and for the present has to settle for reopening the Strait.
As of the publication of this post at 2:30 PM, Monday nobody has seen the text of "The Deal" opening the Strait of Hormuz. Perhaps this emerging agreement ends a costly war but it leaves Iran's leadership intact and its nuclear future unclear. Nevertheless, this is good news. I'll join the president in celebrating a resumption of the way the world was on February 27, the day before the United States and Israel attacked Iran. Ending one of the biggest global supply disruptions in decades is hardly a victory; but it is good news.
Some immediate thoughts.
The market for oil and other critical products (fertilizer components come to mind) will remain tight for weeks and months while ships are repositioned, damaged infrastructure is assessed and repaired, depleted inventories are rebuilt, mines are removed, crew changes are made and navies, insurers and shipowners are convinced the channel is safe. Even after traffic picks-up, another 50+ days are needed for oil to arrive in Asia and begin to be refined. Supply chain relief won't materialize until late August and any meaningful normalization would only happen in September at the earliest.
Before this deal crude oil flows have recovered only slightly this month with roughly 10 ships transiting the strait per day according the commodities and shipping data provider Kpler; a far cry from the normal prewar ship transits of 100+ daily.
Remember this; under Obama's JCPOA no soldiers or civilians were killed, no US bases attacked, no aircraft or ships were lost, no treasure was expended on a war and Iran's enriched uranium was turned over to the custody of the Russians.
Donald Trump unilaterally walked-away from that agreement and in the absence of a replacement Iran embarked on a frenzy of nuclear enrichment. In 2025 Donald Trump claimed to have obliterated Iran's nuclear program. And earlier this year unilaterally decided to go to war with Iran. Consequently, American service members and Iranians were killed and wounded, US bases in the Middle East were targeted and attacked and $34 billion of our treasure expended. Iran still possesses its enriched uranium, the regime is intact and their nuclear ambitions unresolved.
Happy Birthday Mr. Trump. Stay-tuned...