By Bas van Geffen, senior macro strategist at Rabobank
Phil Connors has woken up to another instance of the same day. The US, Iran and Oman are said to be close to a new deal to reopen the Strait of Hormuz. Axios reports that the US aims for an announcement today. So, Brent futures dropped to $79/barrel and equity markets rallied further, for the S&P 500 to set a fresh record high.
The reported deal could just as well have been written a couple of weeks ago. Axios prints that the deal includes an inbound shipping route through Iranian waters and outbound shipping via the Oman side, while parties work to clear mines from the middle of the strait. No tolls or fees would be charged for the 60-day period covered by this deal. That all looks very similar to the previous deal – that was torpedoed by renewed attacks on ships.
That wasn’t the only “agreement” in recent weeks that proved untenable (or completely non-existent). Will the groundhog see its shadow again today, or will the deal really hold this time?
Even if this deal isn’t immediately sunk by a drone or missile strike, there is a long and risky road ahead. Negotiations are currently clearly focused on preventing new escalation, and the temporary deal does not offer permanent solutions for the key sticking points.
For example, Reuters sources report that disagreement over transit fees after these 60 days persists. But that’s not the surprising part. Regional outlets suggest that the disagreement is over the amount charged. They claim that Iran demands a 7% fee, with exemptions for Chinese and Russian ships, whereas the US proposed 5%.
If this is even remotely true,
