Hello Power Up readers,
When it comes to the Iran conflict, words are proving louder than actions. Oil prices retreated sharply on Wednesday to $105 a barrel after President Donald Trump suggested once again that talks with Iran to end the conflict were making progress, saying he was prepared to wait for a few days to get a deal done. Tehran submitted its latest offer to the U.S. this week and on Thursday said it was reviewing Washington's latest position on ending the war.
Yet six weeks since a fragile ceasefire came into force, the talks have shown little progress. Vital oil and gas transit through the Strait of Hormuz remains severely constrained while soaring oil prices have raised concern over rising inflation and the impact on the global economy.
On Wednesday, Iran released a map showing a "controlled maritime zone" in the strait, stating that transit would require authorisation from an authority set up to control the area. Tehran says it aims to reopen the strait to friendly countries that abide by its terms. That could potentially include fees for access, which Washington says would be unacceptable.
So for now, a precarious new reality is emerging in the Gulf. Sultan Al Jaber, the CEO of Abu Dhabi’s National Oil Company (Adnoc) said on Wednesday that no nation should accept “that a single country can hold the world's most important waterway hostage.” But Iran is unlikely to loosen its grip on Hormuz any time soon. This increases the chances that a new round of conflict could break out.
While the Iran conflict continues to simmer, the clock is ticking on the oil market, which is likely weeks away from the point when tightening supplies begin to bite in earnest. More on this below.
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