Tehran’s nuclear ambitions, geopolitical tensions and the strategic issue of the Sea of Hormuz are delaying a a US-Iran agreement and affect energy markets.
In a period of heightened geopolitical instability in Middle East, the negotiations between the United States and Iran remain locked in a complex web of strategic disputes and regional tensions, with Tehran’s nuclear program and control of critical sea lanes such as the Strait of Hormuz as a key point of friction. Despite de-escalation efforts through temporary ceasefires and diplomatic contacts, conditions for a viable agreement are still far away, as security, energy supply and subsidies issues are involved that directly affect international markets. The result is a prolonged diplomatic stalemate that keeps tensions high and adds to uncertainty about the course of the global energy balance.
The estimate that the United States and Iran may take about six months to reach a peace deal, some Gulf and European leaders conclude, arguing that the involved sides should extend the existing ceasefire to cover that period, according to officials from the specific regions familiar with the negotiations.
To restore normal energy flow
The same sources – cited by Bloomberg – say the leaders want the immediate opening of the Strait of Hormuz in order to restore normal energy flow, privately warning that a global food crisis could ensue if that doesn’t happen by next month. The officials asked to remain anonymous as they gave details of non-public conversations.
They said energy prices are likely to rise further if the conflict is prolonged beyond that timeframe. Following the release of the information, the Brent recorded a fresh rise, gaining around 4.5% intraday and topping $99 per barrel.
Iran still wants to develop a nuclear weapon
Gulf states believe Iran is still pursuing a nuclear weapon, an assessment that has not changed since the US-Israeli bombing of the country. Therefore, they believe that a possible peace agreement should prohibit Iran from enriching uranium, as well as from possessing long-range ballistic missiles.
Meanwhile, Gulf leaders appear opposed to a return to hostilities, calling on the United States to emphasize diplomacy over military escalation.
Representatives for the governments of Saudi Arabia, Qatar, Kuwait, Oman and Bahrain did not immediately respond to requests for comment. The United Arab Emirates’ foreign ministry referred to an April 8 statement that stressed the need for “unconditional reopening of the Strait of Hormuz.”
The UAE statement also stresses the need for “a comprehensive and sustained approach that addresses the full range of Iran’s threats, including its nuclear capabilities, ballistic missiles, drones, military capabilities and affiliated armed groups and terrorist organizations.”
The United States and Israel began bombing Iran in late February, with the ensuing conflict causing serious destabilization in the Middle East. Iran responded by launching attacks against Israel, as well as against neighbouring countries such as Saudi Arabia, the United Arab Emirates and Qatar, firing missiles and drones against cities, ports and energy facilities.
Oil prices have fallen slightly since the ceasefire began on 8 April, but remain up more than 35% compared to the period before the conflict began.
No immediate agreement expected, estimates British diplomat
British former ambassador to Iran and Chatham House fellow Rob Maker has estimated that no immediate agreement between the United States and Iran is expected. He told Bloomberg, “President Donald Trump’s optimism is related to his awareness of the impact the conflict would have on markets.”
“The question is not just whether the negotiations will succeed, but whether they can prevent a return to military conflict in the near term,” he said, adding that “it’s a difficult balance, as there are voices inside Iran who want to see a resumption of missile attacks.”
The Strait of Hormuz, which has been effectively closed since the conflict began, has played a crucial role, hurting the economies of the Gulf countries as exports of oil, LNG, aluminium and products such as fertilisers are severely curtailed.
Washington and Tehran are considering extending the ceasefire by two weeks, which expires Tuesday night U.S. time, to allow more time for negotiations.
Nevertheless, there is no assurance that the two sides will agree to an extension of the ceasefire, let alone a formal peace deal. Beyond the Strait of Hormuz, key points of disagreement include Iran’s nuclear and missile programs, the lifting of sanctions against the Islamic Republic and the ongoing conflict in Lebanon between Israel and the Tehran-backed Hezbollah.
Maker assessed that there is room for agreement on the nuclear issue, with a possible commitment by Iran to accept inspectors and suspend uranium enrichment for a specified period of time. Economic relief might include the release of Iranian assets from the United States and easing restrictions on oil trade. However, agreement on the Strait of Hormuz and Iran’s demands for security guarantees is seen as more complicated.
On Thursday, Donald Trump announced a 10-day ceasefire between Israel and Lebanon, with officials suggesting that this development could ease talks with Iran.
