seized ship, vessel attacks push U.S.-Iran ceasefire toward brink
File photo: Cargo ship Touska disabled by gunfire by the US Navy before being sized up by the Navy. Trump said Sunday that the USS Spruance intercepted the Iranian ship Touska and “gave them fair warning to stop.”
South China Morning Post | South China Morning Post | Getty Images
Fifty days into the US-Israeli war with Iran, tensions have risen again after fighting in the Gulf extended shipping disruptions, casting doubt on a fragile ceasefire due to expire this week.
On Friday, Iran declared the Strait of Hormuz fully open to commercial traffic, causing crude oil prices to fall more than 10%. Hopes of the artery being fully opened were quickly dashed on Saturday when Tehran decided to close the passage again after President Donald Trump refused to end the US naval blockade of Iranian ports.
After a brief recovery in transit attempts on Saturday, shipping traffic in the Gulf stopped once again due to the impact of ships. comes under fire mid-transition and having to retreat.
On Sunday, the US Navy fired on and captured an Iranian container ship in the Gulf of Oman. Trump called Iran’s actions over the weekend a “total violation” of the ceasefire and renewed threats to strike Iran’s power plants and bridges if Tehran rejects a deal.
For markets, it was a reminder of the fragility of the two-week ceasefire, and a deal that could bring a permanent end to the war appeared to be still far from complete.
US stock futures fell while crude oil prices rose as the US and Iran teetered on the brink of a new conflict. West Texas Intermediate Futures It rose more than 6% to $89 a barrel shortly after midnight Monday, and the international benchmark Brent It rose 5.6% to $95.50 per barrel.
“On Saturday we had the most severe day since the beginning of the strait crisis and things don’t look like they’re getting any better,” said Rory Johnston, founder of Commodity Context.
“As we continue to get these sales and it looks like we’re finally going to get this, football — Lucy is pulling it — and we’re back to where we started,” Johnston told CNBC’s “Squawk Box Asia” on Monday.
“The Strait is still not flowing and 13 million barrels per day of production remains shut down. We’re losing that every day this goes on,” said Johnston, who is also a lecturer at the University of Toronto’s Munk School of Global Affairs and Public Policy.
The most realistic result
As the ceasefire expires, much will depend on whether the United States and Iran meet in Pakistan this week for a second round of peace talks. It will end on Tuesday.
Trump said American and Iranian negotiators will continue talks in Islamabad on Monday. However, Iran refused to attend the meeting, calling Washington’s “excessive demands, unrealistic expectations, constant changes of stance” and ongoing blockade a violation of the ceasefire.
No agreement was reached in the first round of talks between Vice President JD Vance and Iranian Foreign Minister Abbas Araghchi on April 12. Washington reportedly proposed 20-year pause on Iranian uranium Enrichment, a demand that Iranian leaders persistently rejected for 5 years.
Unless the U.S. negotiating team gets rid of the misconception that military victory equals strategic dominance, we will not reach a solution.
Alan Eyre
Middle East Institute Distinguished Diplomatic Fellow
Alan Eyre, a distinguished diplomatic fellow at the Middle East Institute and a former member of the U.S. team that negotiated the 2015 Iran nuclear deal, said fundamental differences between Washington and Tehran run deeper than the current stalemate.
“The US side was not actually focused on the negotiation. What they expected was Iran’s surrender,” Eyre said. “Unless the U.S. negotiating team gets rid of the misconception that military victory equals strategic dominance, we will not reach a solution.”
Eyre warns that the latest flashpoints risk escalating the conflict in the near term. “There is an escalatory tendency here where both sides can escalate tensions and return to an armed war that no one wants.”
Eyre added that the possibility of a productive round of talks in Islamabad remained, but “unfortunately, there is a greater chance of going the other way, of a resumption of hostilities.”
high stakes gambling
The economic cost of the conflict is rising as the Strait of Hormuz, which normally carries roughly a fifth of global oil supply, has been effectively closed for almost two months.
“The crisis is a waste of time and a loss of production,” Johnston said, estimating that there would be a supply disruption of approximately 13 million barrels of crude oil, condensate and natural gas liquids per day.
“This cumulative impact has already reached over half a billion barrels,” he said, warning that even an imminent deal announcement could not immediately eliminate the damage.
Experts warn this could happen even if a deal is reached It will take months to regain the supply lost due to the shutdowns in recent weeks, keeping oil prices high for longer.
“If we really open the throat, we would probably see another rout of $10 to $20 a barrel because of speculative hot money. But at the end of the day, we would be down on day one and then pull ourselves back up, probably towards $80 to $90. [oil] The famine continues.”
Crude oil prices have risen more than 30 percent since the start of the war; Brent rose above $110 a barrel for the first time in nearly four years, according to LSEG data, and hopes for a breakthrough subsequently faded.
More than 500 million barrels of crude oil and condensate have been eliminated from the global market, according to Kpler data, in the largest energy supply disruption in modern history.
Despite the severity of the power outage, U.S. stock markets remained largely resilient as investors dismissed the dispute as a problem that would be resolved relatively quickly.
But Vishnu Varathan, head of macro research at Mizuho Bank, cautioned that optimism might be premature. “We cannot prematurely rejoice in any agreement signed, because the ongoing negative impacts mean we cannot exit this situation immediately.”
The International Monetary Fund warned on Tuesday: Global growth will inevitably take a hit Even if the ceasefire holds, he argues, uncertainty around the Strait of Hormuz is a permanent hurdle that increases energy costs and inflation.
“It’s clear we’re not going back to the Goldilocks scenario,” said Brian Arcese, portfolio manager at Foord Asset Management, referring to the scenario of steady growth and low inflation. He said the longer the strait remains closed, the greater the risk to the global economy would be, but the actual extent of damage could change “on a daily and weekly basis”.
