Analysts expect an agreement between the United States and Iran that would allow shipping to resume through the Strait of Hormuz, but broader issues, such as Iran’s nuclear program, are unlikely to be resolved within an initial 60-day negotiating period.
Ben Cahill, director of energy markets and policy at the University of Texas at Austin, said in an interview that Iran has demonstrated its ability to disrupt shipping through the Strait, which has greatly increased its influence in negotiations and regional affairs. He said the threat of disruption will continue to underpin the rationale for bypass pipelines and alternative infrastructure.
“Iran’s influence is much greater than people thought 100 days ago,” Cahill said. “They made it clear to everyone that they have the ability to disrupt shipping.”
Major uncertainties remain over the exact terms of the deal, especially for shippers awaiting logistical details. Key questions include whether there will be transit fees for the Strait of Hormuz, the timing and amount of frozen funds to be released, and specific conditions for resuming shipping.
Critical issues for ship operators include clearing mines in the strait, which transit authorities tankers must report to, guarantees of safe passage, and specific shipping routes. In recent days, US President Donald Trump described the deal to reopen the Strait as “free”, contrary to some reports in Iranian media.
“I think, in principle, all the Gulf Arab states are strongly opposed to the idea of Iran having this capability,” Cahill said. “But we’ll have to see.”
Continuing risks
Rystad Energy said in a June 16 note that the most likely outcome from the agreement is a narrow deal that avoids renewed fighting and recaptures a significant share of Hormuz traffic. Under this scenario, sanctions on Iran would be gradually eased and cross-strait flows would recover to about 10 million barrels per day by January, the memo said.
“However, the remaining geopolitical risk premium is expected to remain between $5 and $10 per barrel, as the agreement does not fully depoliticize the Strait or eliminate the risk of future disruption,” the note said.
Rachel Ziemba, senior adviser at Horizon Engage, said it was important for any permanent agreement to have predictability around the strait and a final agreement on nuclear and ballistic missiles, mines and regional infrastructure, but that would be more difficult than the current ceasefire.
Ziemba said the near-term agreement would likely include exceptions to sanctions to allow the sale of some quantities of Iranian supplies. She added that these temporary measures will limit the people who will be willing to buy, and ongoing sanctions and export controls may limit Iran’s ability to spend its revenues.
Ziemba said that long-term sanctions relief would be linked to a broader agreement and may leave some sanctions in place.
“This is an environment in which trade with Iran will remain difficult, and where players who avoid sanctions and those who are concerned about illicit financing may be less able/willing to participate,” she said.
Financial relief
Cahill said the immediate release of the frozen funds would be a major economic win for Iran, providing liquidity and the ability to sell oil legally. While Iran has gained new strategic influence over global shipping and commodity flows, the conflict has also been financially devastating, conditions that could make the agreement more sustainable.
“The Iranian economy is in very bad shape,” Cahill said. “People portray this as a victory for Iran, which is true to some extent, but there is also a tremendous amount of economic pressure and rebuilding that they have to do.”
He added that the return of the frozen funds and the ability to generate more oil revenues would be a “huge win.” While larger negotiations over further sanctions and the status of Iran’s nuclear program could continue, both sides have an incentive to return shipping traffic to pre-war levels.
“I’m pretty confident we’ll get there” when traffic resumes, Cahill said.
source: Platts
