With mutual strikes continuing and both the US and Iran having declared the unceremonious binning of their June memo on an interim truce, it’s effectively inconsequential whether the peace it promised gets a timeline extension after the 60-day period’s expiry on Monday.
Yet, how the situation unfolds is being watched closely for what comes next.
With or without the memo’s renewal, the world must reckon with a muddle of claims on what matters to global markets: the status of the Gulf’s chokepoint, the Strait of Hormuz.
The US-Iran deadlock arises from here. Both countries claim control of it. Both have asserted or hinted of permanent rights over it, signalling a world in which shipping lanes can be held hostage by military force. Ship traffic through the strait remains a trickle regardless of who actually controls it.
What’s clear is that this mutually assured obstruction must end before the oil reserves released by China and others run thin and lose their cooling effect on crude prices.
To reduce the likelihood of an oil after-shock, the US may need to accept that its campaign has not yielded the results it sought. It is time to cut losses, put this war in the past and relieve markets.