The United States and Iran have reached a deal in principle that calls for the reopening of the Strait of Hormuz, a U.S. official said on Sunday. But the announcement left many questions unanswered, starting with how soon normal shipping through the strait could resume and when oil prices would begin to come down.
The short answer is “nobody knows,” said Carl Weinberg, the chief economist of High Frequency Economics, a daily economics newsletter.
One thing is certain, Mr. Weinberg said: “Prices are not going to drop quickly.”
Before the start of the conflict on Feb. 28, about 20 percent of the world’s oil and natural gas supplies moved through the strait. Since then, the strait has been effectively closed.
With the details of an agreement still to be worked out, it was unclear what control — if any — that Iran would continue to exert over the strait, including whether it would be able to charge a fee for passage.
Adding to the uncertainty on Sunday, a military adviser to Iran’s supreme leader said that the country had a “legal right” to manage the strait, according to Iranian news agencies. The statement implied that Iran would use its newfound leverage over the strait to raise badly needed funds.
About 1,500 to 2,000 ships have been trapped in the Persian Gulf by the conflict. Even if the strait were to be officially reopened soon, there remain many variables to getting shipping back on track. The first question will be whether shippers will conclude that the peace agreement is durable and that it is safe to send tankers through the narrow waterway.
