- The global community must have finally heaved a big sigh of relief with the announcement that the US and Iran have reached an understanding to end the war, which was not only illogical to begin with but also carried absolutely nothing else but destructive elements for the whole world. The consequences of the war brought out such debilitating hardship for the entire world economically, singeing everyone with the severe short supply of crucial energy requirements. While the inflationary trends kept the respective governments on fire-fighting mode vis-à-vis surging petroleum and other commodities and products, the hopes of eventually finding ways and means to usher in a much-needed truce between the warring protagonists were always desired.
PC: The New York Times
- That hope finally appears to have fructified with the two leaderships, duly aided by the amenable countries to both sides, agreeing on a ceasefire. Of course, it’s not a deal till it’s signed, and there will be risks even after, so let’s not commence counting our barrels yet. As it panned out recently, Trump gave himself a birthday gift, but unpacking the same will take some time, you see. The moot point to ponder over here is whether the war with Iran is really behind us. That’s the second question on everyone’s mind. The first is, will oil go back to $73, where it was before Feb 28? The answers are maybe and probably not, respectively. Why so? Let’s dwelve. As for peace, neither the US nor Iran has appeared keen on fighting since April, never mind Trump’s wild rhetoric.
PC: Outlook Money
- We know that tensions and the Hormuz blockade have persisted because of Israel’s actions. So, Trump’s ability to rein in Netanyahu is the biggest if. But there are others, too, like Iran’s stand on nuclear enrichment. The nuclear question isn’t part of the agreement that both sides will sign. For that, they’ve given themselves 60 days. Much can go wrong in two months, or between now and the signing day. Hence, permanent peace remains a maybe, even though markets have strongly signalled faith. Stocks are up, dollar’s down, and so is oil. But markets are fickle. They have swung many times already in the past three months, commensurate with the evolving situation. What’s notable, though, is oil’s gradual slide towards $80, from a high of around $120.
PC: The Indian Express
- Further, if traders are willing to book long-term contracts at a lower rate, there’s reason to hope the worst of the crisis is over. That said, the dip from $80 to $70 won’t happen overnight. Nor can captains of stranded vessels heed Trump’s call: “Ships of the World, start your engines. Let the oil Flow”. Even if the US and Iran lift their respective blockades, the 500-odd ships stuck in the Persian Gulf can’t exit immediately. Given that the Strait is mined, their passage will have to be carefully controlled. Removing all mines might take months. Good news is that those vessels are laden with over 100mn barrels of oil, and Gulf countries – unable to ship oil and gas since Feb – are sitting on inventories. But recovery of the damaged energy production places would take years. Peace will ease pressure on the global economy. Quick return to Feb’s oil prices is unlikely, though.
