The path to peace: The United States and Iran have agreed on the terms of a cease-fire
The United States and Iran have agreed on a cease-fire. One of the conditions should be free navigation through the Strait of Hormuz, in addition, Washington is not planning new attacks on Iran yet. Amid reports of a possible deal, Brent has already dropped below $86 per barrel. What is known about a possible truce and how stable the next agreement will be is in the Izvestia article.
Shipping without peace
The United States and Iran were able to agree on a truce. "It includes free navigation in the Strait of Hormuz," sources close to Tehran and Pakistan said.
Before the war, about 20% of the world's oil and LNG supplies passed through the strait. Currently, traffic is still severely restricted: five cargo ships passed through it on Tuesday. Only the reports about the possible opening of the route turned out to be enough for oil prices to go down. On August 26, Brent fell in price by about 3%, to $85.85 per barrel.
A week ago, it seemed that the Iranian-American negotiations were at a complete standstill. US President Donald Trump has stated that there are no contacts with Tehran and no new meetings are planned. "It's not easy to make a deal. No one knows who is in charge now," he said.
However, negotiations continued through intermediaries. On August 24, Pakistan's Army Commander Asim Munir and Interior Minister Mohsin Naqvi arrived in Iran. The day before, they also held telephone talks with Trump. After meeting with the Iranian leadership, Naqvi reported "significant progress."
The Israeli media also reported that the United States is not giving up trying to negotiate with the Middle Eastern republic "in an amicable way." Washington, through Pakistani intermediaries, allegedly offered Tehran to ease sanctions pressure in exchange for restoring free navigation through Hormuz and stopping attacks by Iran-backed regional groups.
One of the elements of future agreements on the strait may be the decisions that Iran and Oman reached on August 25. The parties agreed on the creation of a temporary maritime corridor through the Strait of Hormuz and joint mine clearance of the water area. Oman's Foreign Minister Badr Al-Busaidi said practical measures to restore safe navigation could be announced in the near future. However, the parties intend to agree on a permanent route later, which takes from 30 to 60 days.
"I hope that we will announce a temporary corridor in the Strait of Hormuz soon," Al—Busaidi wrote on social media, adding that the countries will seek to work out an agreement on who will manage the strait.
At the same time, there are signals from Washington that they are not going to return to a major military operation there yet. According to Axios, US Secretary of State Marco Rubio has informed allies that the US is "not currently" planning new strikes on Iran. Instead, the White House intends to increase sanctions pressure and maintain the naval blockade. One of the American officials told the publication that such a course is supposed to be carried out at least before the midterm elections, while the possibility of a new military campaign after them is not excluded.
The pre-peace process
For the United States, war is becoming more expensive. Back on July 21, Pentagon Chief Pete Hegseth estimated the cost of the conflict at $37.5 billion. The conflict has significantly devastated the arsenals of the United States. Reuters reported that the US military has used up almost the entire available stock of long-range ATACMS and PrSM, about 65% of Patriot interceptors and at least 38% of THAAD.
U.S. Secretary of Defense Pete Hegseth
But most importantly, midterm congressional elections are approaching in the United States, and the situation is not going well for Republicans. According to a recent Reuters/Ipsos poll, 36% of Americans trust Democrats more on the issue of combating price increases, and only 28% trust Republicans. Trump's own rating has been at a minimum for both terms of his presidency — 33%.
Earlier, The Washington Post noted that the American president had failed to get Tehran to capitulate and present a convincing campaign result to the voters. Under these conditions, the restoration of navigation through the Strait of Hormuz can in itself be presented by the White House as an achievement, even if the more complex issue of the Iranian nuclear program is postponed for the time being.
But the continuation of the war is also becoming increasingly difficult for Tehran. The Iranian economy was in crisis even before the outbreak of hostilities: Rising prices and a falling national currency have already caused mass protests. The war has worsened the situation. In July, inflation reached 66%, food prices rose by 128% year-on-year, and in August, the exchange rate in the free market exceeded 2 million rials per dollar for the first time.
At the same time, in political terms, Tehran has achieved at least one important result — the system of government has stood up, despite the American strikes and the difficult economic situation.
Moreover, against the background of the war, the positions of the power bloc and representatives of the Islamic Revolutionary Guard Corps in the decision-making system have noticeably strengthened. The appointment of former IRGC commander Mohsen Rezai as Secretary of the Supreme National Security Council was significant. He replaced Mohammad Bagher Zolgadr, another IRGC native who moved to the position of political adviser to Supreme leader Mojtaba Khamenei. So Tehran is not approaching new negotiations empty-handed.
What the experts say
If the agreement is eventually adopted, the oil market will be the first to react to it. The main effect will not even be the truce itself, but the restoration of normal navigation through Hormuz, said Igor Rastorguev, a leading analyst at Amarkets, in a conversation with Izvestia. According to him, the disappearance of the threat of new disruptions should gradually remove the geopolitical premium from quotes.
Olga Veretennikova, vice president of the Borsell analytical company, admits that with a steady opening of the Hormuz, Brent may fall into the range of $75-82 per barrel within a few weeks. A deeper decline, to $70-75, is possible if at the same time Iranian exports recover and weak global demand persists. Experts, however, do not expect a quick return to pre-war prices. Insurers, carriers, and shipowners will need time to verify the sustainability of the arrangements.
— In the first few weeks, the market is likely to maintain a certain risk premium. If the agreement falls apart again, Brent will very quickly be able to return to $95-100 per barrel, and with new attacks on shipping, it will rise even higher," says the source.
The refusal to launch new strikes does not mean that the pressure on Tehran will stop. Washington still has sanctions at its disposal against oil exports, tankers, traders, banks and financial intermediaries. Secondary restrictions against companies and countries that continue to purchase its oil or help make payments may become the most sensitive for Iran.
— In response, Iran has several lines of counteraction: it can increase "gray" export schemes, for example, transshipment of oil at sea, changing the flags of ships, using alternative routes and payment chains. At the same time, Tehran is able to use asymmetric levers: from regulating the volume of supplies to the market through OPEC+ to increasing influence in transit corridors and pressure on regional points of tension, which will again translate into an increase in the risk premium in oil prices," explains Rastorguev.
Even if a truce is reached, it will clearly be fragile, experts agree. Now both sides have enough reasons to keep it: the United States is interested in reducing oil prices and gasoline prices, Iran is interested in restoring exports and easing military pressure. However, the main contradictions have not disappeared — these are sanctions, the nuclear program, frozen assets and the future order of navigation through Hormuz.
— A ceasefire and a political settlement should be separated. The first one may well hold out, because now it is beneficial to both sides, but the second one is much more difficult. For the oil market, the most important thing is whether tankers are passing freely, whether insurance premiums are decreasing and whether export volumes are returning," Veretennikova concludes.
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