Donald Trump has said 37 times that a deal with Iran is very close, starting on March 23, by the count of The Washington Post.
After almost three months of false starts, a framework agreement has now emerged. Iranian and US officials have outlined plans to reopen the Strait of Hormuz, ease sanctions, and begin negotiations on Tehran’s nuclear programme.
The markets have responded enthusiastically. Oil prices have fallen to their lowest in two months on expectations that the agreement will hold and that energy flows through Hormuz will continue to recover.
But the question is whether the agreement can survive contact with the realities of the region.
Iranian media have released details of a 14-point memorandum, while US and Iranian officials have indicated that the accord is awaiting formal signature. The reported terms include the reopening of the strait and a phased easing of restrictions on Iranian oil exports, though precise details remain contested.
A 60-day negotiating period will follow signature to resolve the dispute over Tehran’s nuclear activities and lift all remaining US and UN sanctions. During this time, the US will release $24 billion of blocked Iranian funds.
This text represents an Iranian view, and the US’s version is likely to be substantially different. Donald Trump has subsequently disputed elements of the Iranian account, while some of the reported provisions are clearly unacceptable to Washington.
The Iranian negotiating team is a master of dragging things out, seizing on details and exploiting loopholes
For comparison, the Joint Comprehensive Plan of Action of 2015 took 20 months to negotiate. It is hard to imagine issues such as Iran’s highly enriched uranium, future nuclear capabilities and verification mechanisms being resolved in two months.
So the current memorandum comes down to brinkmanship. Who benefits more from a pause? How will each side try to shape matters to its advantage?
Assassinating one’s negotiating partners makes it difficult to build trust. Extremists close to the centre of power will argue in bad faith against any deal and demand impossible political hurdles.
In Iran as well, there are hardliners who think they are winning. Beyond Orientalist clichés about carpet-sellers, the Iranian negotiating team is a master of dragging things out, seizing on details and exploiting loopholes.
Any peace accord is also vulnerable to spoilers, including one regional player whose idea of a ceasefire is that the other side ceases firing.
Fears over oil supplies have already eased on indications of growing flows from the Gulf. The UAE, and in some cases Kuwait and Iraq, appear to have used their own “dark” tankers to hug the Musandam coast, escorted by US helicopters, then transferred the oil to third-party vessels waiting in the Gulf of Oman for transport to Asian customers.
This may have been moving about 2–2.9 million barrels per day (bpd). US energy secretary Chris Wright said on Friday that 7 million bpd are now flowing through the Strait of Hormuz, a number that is hard to substantiate.
Even the higher figure, plus the amounts moving through the Saudi and UAE bypass pipelines, and trucks from Iraq through Syria, imply that at least 7 million bpd remains stuck. This includes Iran’s own volumes, blockaded by the US. Allowing for the pre-war market surplus, and for some demand destruction from higher prices, global stocks are likely to keep falling, though not as quickly as in April and May.
So, during the implementation period, Iran will want to establish the principle of its mastery over the strait, while selling its stored oil.
Conversely, the US and its Gulf allies will use a pause to move as much oil as possible and establish methods to keep tankers sailing even if hostilities restart.
A promise of non-aggression, or a lifting of sanctions that can easily be reimposed, are useless to Tehran. To guarantee security, it needs something more permanent.
Iran can be granted control over passage through the strait – but the usefulness of that is likely to erode over time as neighbours construct bypasses and the world increases strategic petroleum stocks. The US may eventually revisit the bargain.
It can boost its stocks of missiles, drones and other means to menace its neighbours and hold global energy markets hostage. No doubt it will do so anyway, particularly with sanctions relief and the release of frozen funds. But actually using those weapons, for example in response to the US’s reimposing sanctions, puts the onus on Iran to escalate.
The regime may do what deceased Supreme Leader Ali Khamenei never resolved to do, and hurry for nuclear weapons. That is the lesson several of the new leadership draw from the fates of Muammar Gaddafi, Saddam Hussein, and Ukraine on the one hand, and the survival of Israel, Pakistan and Kim Jong Un on the other.
French Marshal Ferdinand Foch is supposed to have said at the end of the First World War, “Let the armies stand at rest. The war is postponed for 20 years.”
The reopening of Hormuz may prove to be a genuine peace. Equally, it may simply be a pause. Energy markets should not assume the danger has passed.
