The US-Iran deal: the world economy is hopeful

A preliminary agreement between U.S. President Donald Trump and Iran has sparked hope among global economic observers that it could bring about renewed growth. However, the path to stability remains long and complex, as many challenges remain unresolved. The agreement aims to end the ongoing conflict between the two nations, but its immediate effects on trade and transportation have yet to fully materialize. Despite the political resolution, logistical hurdles persist, particularly in the Strait of Hormuz, which has been a focal point of tension during the recent hostilities.

At the time of the announcement, several ships had already begun moving through the strait, signaling the beginning of a potential return to normalcy. Two Iranian supertankers, "Diona" and "Hero 2," departed from Iranian shores carrying nearly 3.8 million barrels of Persian crude oil. A third vessel operated by the National Iranian Tanker Company also entered the previously restricted area under the U.S. naval blockade. This movement suggests that the agreement includes provisions for lifting the Iranian blockade of the Strait of Hormuz, which typically sees around 94 freight vessels pass daily. Nevertheless, major shipping companies such as Maersk, CMA CGM, and Hapag-Lloyd still require specific security guarantees before resuming full operations, including mine clearance, military escorted convoys, and insurance coverage.

Despite these initial steps, over 462 ships remain stranded on both sides of the Strait of Hormuz, including oil tankers, liquefied natural gas carriers, container ships, and freighters. Among them are 46 German-flagged vessels carrying approximately 1,000 crew members. Hapag-Lloyd expressed cautious optimism, stating they hope their ships will be able to transit the strait within the week. However, experts from energy data provider Kpler estimate that it may take weeks or even months before oil traffic returns to pre-conflict levels. Mine clearance and subsequent safety inspections alone could last up to six months, and without this process, insurers remain hesitant. Insurance costs for a very large crude carrier (VLCC) tanker are currently estimated at around $2.5 million, significantly higher than pre-war levels.

The Strait of Hormuz was crucial for global energy transport prior to the conflict, handling 20 percent of world oil trade and 25 percent of liquefied natural gas exports. The blockage has reportedly reduced oil production in the Gulf by 10.5 million barrels per day, roughly one-third of the region's total output according to calculations by the International Energy Agency. Additionally, more than 40 oil and gas facilities in Gulf states have suffered damage due to rocket and drone attacks, requiring repairs estimated to cost up to $58 billion. In Qatar’s Ras Laffan, a key LNG hub where 17 percent of processing plants were destroyed, the estimated repair costs amount to $20 billion, with full recovery expected to take until 2030.

Restoring full oil flow from the Gulf depends on the condition of the halted oil fields, with estimates ranging from a few weeks to half a year. Experts anticipate that the price of oil will not quickly return to the pre-war level of just below $72 per barrel, given the strategic reserves held by the United States and other factors affecting supply and demand dynamics. The situation underscores the complexity of geopolitical tensions and their impact on global markets, highlighting the need for continued monitoring and adaptation by economies reliant on stable energy supplies.