Over the course of just over a week, Donald Trump changed his approach to Iran, moving from statements about an inevitable peace agreement to a “restrained” attitude toward negotiations. The U.S. president this weekend made it clear that he is ready to allow increased economic pressure on Iran instead of launching new military strikes.
This turn creates uncertainty about flows through the Strait of Hormuz. Millions of barrels of oil are still transported from the Persian Gulf through this critically important transit point, largely thanks to a hidden network of shuttle tankers trying to pass unnoticed through the waterway.
Vulnerability of the region’s infrastructure
However, the weekend brought new evidence of how vulnerable the region’s shipping and energy infrastructure remains amid the unresolved conflict. The United Arab Emirates, through which more crude oil has passed through the Strait of Hormuz in the past two months than from any other producer, reported early Saturday that one of their vessels had been attacked by a rocket. This came after three ships were hit last week.
The next day, Saudi Arabia extinguished a fire at its oil refinery in Jazan on the Red Sea, which, according to a statement by the Yemeni Houthi group, was attacked by them. Trump made it clear that he believes time is on his side and that he can use the economic pressure caused by the U.S. naval blockade against Iran to force Tehran to agree to a deal.
Source: Bloomberg
