¯_(ツ)_/¯
Léa Marchal
Production: By Europod, in co-production with Sphera Network.
EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Briefed” hosted by Léa Marchal. The podcast is available on all major platforms.
Find the full transcript below:
Iran and the United States signed an interim agreement two weeks ago. Yet hostilities between the two countries have not completely stopped.
Ships have started sailing through the Strait of Hormuz again, but an important share of the usual traffic is still on hold.
So starting the summer holidays, what should we expect for oil and gas prices?
Since Iran and the United States signed their interim agreement on 18 June —exactly two weeks ago — more than 200 ships are believed to have crossed the Strait of Hormuz. Traffic is increasing, but it remains well below pre-war levels, when around 130 ships passed through the strait every day.
Why?
First, because some areas are still mined. Second, because Iran is controlling and monitoring the routes used by commercial vessels. And more broadly, shipowners remain cautious — and understandably so — about how the situation could evolve.
The same applies to insurers. Although war-risk premiums have fallen since the agreement was signed, they remain high for ships operating in the region.
As a reminder, on 18 June, Iran and the United States signed an interim agreement to end the war and gave themselves 60 days to negotiate the terms of a lasting peace.
But reaching that goal is far from guaranteed.
Many issues still have to be resolved, starting with the rules governing navigation through the Strait of Hormuz.
The agreement states that all blockages must be lifted and that no transit fees may be imposed for at least 60 days.
After that, however, the two countries have very different visions.
The United States wants full freedom of navigation through the Strait of Hormuz. Iran, on the other hand, wants to retain control over shipping routes and, in the longer term, introduce transit fees for vessels using the strait.
So what does all this mean for the economy?
Markets run on expectations.
For example, since the announcement of the agreement between Iran and the United States, fuel prices have fallen.
Today, Brent crude is trading at around $72 [€63] a barrel. That’s a long way from the $138 reached in April.
Natural gas prices have also been falling since mid-June.
Yesterday, Europe’s benchmark natural gas price—the TTF—stood at €43 per megawatt-hour.
That’s still above the pre-war level of around €31, but significantly lower than during the recent spike.
These price movements reflect market expectations.
Economic actors know that a lasting resolution to the conflict between Iran and the United States is far from certain, and that fighting could resume at any moment.
That is why the International Transport Workers’ Federation, which represents around 16 million workers worldwide, still considers the Strait of Hormuz a war zone despite the ceasefire.
And those precautions are not unfounded.
A few days ago, Iranian forces opened fire on an American oil tanker.
According to Iran, the vessel was sailing along the southern route of the strait, through Omani waters. Tehran argues that this was contrary to the understanding reached under the ceasefire, insisting that commercial vessels should instead use the shipping lanes under its supervision.
In response, the United States carried out strikes last Friday against an Iranian drone storage facility.
Both sides have since accused each other of violating the ceasefire.
So far, however, the exchanges have not escalated any further.
If the truce holds, shipping traffic should gradually return to normal.
But it is highly likely that disagreements over transit fees and shipping routes will continue to complicate navigation through the Strait of Hormuz in one way or another.
