- The pattern of negotiations…
- A battle of time…
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Dear Reader,
Here is the process underway, so far as I can discern:
A: The president issues demands upon Iran.
B: Iran fails to respond to the president’s demands.
C: The president issues harsher demands.
Reported The New York Times yesterday:
- President Trump has toughened the terms of a potential framework for a deal to end the war in Iran, and has sent those proposed changes back to the country for consideration, according to three officials…
- Mr. Trump has been concerned about parts of the potential deal that would include unfreezing funds for the Iranians, two officials said. He has been harshly critical of President Barack Obama for doing the same in the more than decade-old agreement that was signed to curtail Iran’s nuclear program.
- Mr. Trump has also been frustrated by how long it has taken for Iran to respond to U.S. proposals, one official said…
- The official added that Mr. Trump’s changes — a new, tougher proposal — were potentially intended to speed up the process by putting pressure on Iran to accept the framework already sent to Iran’s supreme leader, Mojtaba Khamenei, for approval.
Why Trump Doesn’t Want to Resume War
As I write, Mr. Khamenei has yet to address the president’s insistences. When he does respond, I hazard it will bear the defiant stamp of rejection.
The president will proceed to threaten additional bloodletting against Iran. Yet will he carry through with his threats?
I am far from convinced that he will.
Iran has vowed to assault Gulf states and their energy infrastructure should the United States renew assaults upon Iran.
My spies inform me that the sovereign rulers of these Gulf states are adamant against renewed conflict.
That is because previous Iranian assaults upon their energy installations have worked extensive damage. And they cannot absorb additional rounds of assaults.
Meantime, renewed Persian Gulf unpleasantness would likely send oil prices careening again. And the president is keen to keep oil prices bottled within a range — at least through the November elections.
Well do the Iranians know it. And they believe they hold the superior negotiating hand… and not the American president.
Iran’s Ace Card
You may believe in their superior hand, or you may disbelieve in their superior hand.
Yet it makes no nevermind. The Iranians believe in their superior hand.
And they believe that dominion over the Hormuz Strait is their ace card.
They believe it affords them superior negotiating leverage.
Thus when the president snarls that, “The Hormuz Strait must be immediately open, no tolls, for unrestricted shipping traffic, in both directions,” the Iranians will request to view his hand of playing cards.
That hand may lack the ranking cards the president would have Iran believe he wields.
Another 2.5 Years???!!!
Meantime, the drummers for Iranian regime change insist that the president maintain his resolve. His aging knees must not buckle under the strain of conflict.
Yet how long must he maintain his bellicosity? Must he maintain it for an additional two-and-one-half years?
The answers is evidently — at least in the telling of a certain Mark Dubowitz:
I do not believe that patience is an attribute the president commands. He is instead known largely for his impatience.
Can you expect him — reasonably expect him — to manifest the “strategic patience and staying power to finish the job over the next two and a half years?”
Sneers economics commentator Michael Shedlock:
I do not believe that patience is an attribute the president commands. He is instead known largely for his impatience.
Can you expect him — reasonably expect him — to manifest the “strategic patience and staying power to finish the job over the next two and a half years?”
Sneers economics commentator Michael Shedlock:
- Iran was supposed to fold in three days, then it was three weeks. Now, no one is sure what Iran’s storage capability even is.
- Now strangely enough we are discussing 2.5 years.
Can Iran withstand 2.5 years of applied economic pressure?
I do not know the answer. Nor do my spies. Nor, apparently, do officials of the United States intelligence agencies.
Yet it is the question worth $64,000.
Facing Outright Shortages
Here is another question: How long can the United States endure present energy disruptions?
- With the Strait largely closed, roughly 20% of global oil supply has been disrupted. For context, the 1973 oil embargo removed approximately 4.5 million barrels per day from the market. Today’s disruption is closer to 20 million barrels per day — three to four times larger in volume terms.
- Oil markets have begun pricing deficits — but not yet outright shortages. As seasonal demand increases, that distinction may become critical. Already… global inventories are drawing down at a record pace.
- Strategic reserves offer limited relief. After accounting for recent exchange agreements with major oil producers, by August U.S. SPR levels could be at their lowest level since the early 1980s.
More:
- The situation is dire. And the pinch is being felt all over the world. Global oil inventories are depleting at record pace. Our market strategist writes: “Sometime in early June operational stress will be very evident.” Heaven forbid this lasts until September…
- Even in a best-case scenario where the Strait reopens, normalization will take time. Infrastructure damage, delayed shipments, labor constraints, and elevated insurance costs all point to a prolonged recovery. As Saudi Aramco’s CEO recently noted, a full return to pre-conflict supply levels may not occur until well into 2027.
You Have the Watches, but We Have the Time
“Well into 2027” is many, many months distant. And recall, that timeframe represents the “best-case scenario” in which the Hormuz Strait opens anon.
“You Americans have the watches,” said Afghanistan’s Taliban during the years of American presence. “But we have the time,” they added with defiance.
And they did — have the time, that is. The United States presence in Afghanistan is several years ended.
Meantime, Iran is accustomed to economic privation. It has endured regardless.
It also enjoys material succor from such stalwarts as China and Russia.
Thus my fear… in this instance… is that Iran has the time.
Regards,
Brian Maher
for Freedom Financial News
