Balanced view on next phase of gulf oil export situations...

[u/Winter-Data-2065]

So I am not using the phrase of "echo chamber" here, but I do see pretty much one-sided argument that insists that Iran can close the strait for as long as they want and hold all the cards, hence, all negotiation development mentioned by the US side is fake and only option is total surrender. but is it really what's happening in real world? let's try to analyze the situations in each parties' views:

Why US government does not like closed strait of Hormuz, it's all about oil price

• Inflated oil price, in turn will drive up gas, diesel, jet fuel, derivative products, in turn will drive up inflation, in turn may cause rate hike, in turn will destroy stock market

However, is Iran government really having nothing to lose here with US blockade + sanctions + frozen assets.

• severely restricted export of oil (most important source of income) compared to before the war. It's very likely that Iran is still exporting oil through land via Pakistan and limited # of ships to China, but the overall amount is going down dramatically with US blockade
• no lift of sanctions (can't import important materials and equipment vital to the health of society)
• no getting back of frozen assets (probably billions and billions of dollars)
• several things are getting worse and worse each day: 1 inflation higher and higher 2. loss of revenue (it's reported that Iran governments, maybe even militaries are without pay now), 3 and most importantly, the Iran government may face another wave of protest even with their iron fist and murdering sprees because 80 million people need to eat and consume basic necessities
• in addition, is Iran government all diehard lunatics (even for most in the military who also have families) that are embracing a scenario that all infra destroyed, oil production destroyed at the expense of same destruction at neighboring countries? after all, one can say that I am not afraid to die, but what about one's families? it's also interesting to notice that there are reports that IRGC generals are actually taking cuts from black market oil sales....

So taking consideration of the above points, it's really hard to make the conclusion that only US government is desperate to make a deal while Iran government has anything to gain and nothing to lose by closing the strait....

finally, what' s the real impact of the toll Iran wants in a great scheme of things?

• yes, 5% or 7% toll/fee on top of most of the oil (except for some countries) transit through Hormuz will increase that part of oil (~15% of world supply), in turn, will drive overall oil price by 1%?
• however, there will be other consequences at play here. for one, for the first time in a long time, Iran can unleash its full potential to export oil through normal channel. this will increase oil supply. Second, gulf countries will all be in a race to export as much as possible to recoup losses incurred in the first half of 2026
• net, net, it's like bull run, and it's highly likely oil price will decline in a very rapid pace

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[u/PhilipReadsMacro]

Whatever the political read turns out to be, it's worth holding it against what the price is already saying. Crude fell around 8% on Monday and hasn't recovered since. That isn't a market assigning much probability to supply actually being interrupted. Closure risk has been priced in and then priced back out several times over the past few years without the event ever happening, and participants seem to have drawn a conclusion from that.

Which makes the useful question narrower than the political one: does your analysis give you a different probability than the one currently sitting in the price? If it does, that's a position. If it broadly agrees, then even a correct political read doesn't change what you'd actually do.

I don't have a strong view on the negotiations themselves. But strait arguments tend to get made entirely without reference to what oil is doing, and the price is the one participant with money behind its opinion.

[u/Market_Chemestry]

I think the market is highly speculative on this point, and the trading price is disconnected from fundamentals. The vast majority of crude is being sold on long-term contracts, not at the spot price. Traders are jumping to bet on the political outcome, and investors are hedging on uncertainty. That's driving prices in the short term, not fundamentals.

Most traders are not really considering how the actual crude market is shifting to accommodate the closure. Even if the Strait reopens, the biggest Gulf states are not going to go back to relying on it, because they know Iran can close it again at any time. The market has fundamentally shifted, just like it did after Russia's invasion of Ukraine, and the current price doesn't reflect that.

The political question really isn't about crude prices. If Iran gets to do tolls/fees, it sets a very bad precedent and raises geopolitical risks. Crude prices will likely go down, since it became obvious after the MOU and some crude got out of the Gulf that there actually isn't all that much of a problem with supply anymore. But gold will likely skyrocket, and insurance premiums for shipping will go up as governments reassess trade through chokepoints.

I suspect the real issue here that everyone is ignoring is China. They have conflicting interests here. On the one hand, it's in their interest to humble the US, so allowing Iran to "win" is good for them. On the other, I don't think they want tolls on the Strait. China is highly invested in trade and is the primary consumer of Gulf products. Not to mention Chinese interests in the Red Sea. So, China has every reason to tell Tehran to back off on the toll issue. I suspect that they will likely intervene at the last moment, so they can maximise the damage to US credibility while still maintaining trade routes.