Two weeks have passed since the United States and Iran signed their agreement memorandum of understanding to end heavy fighting in the latest war in the Middle East, so the logical question to ask is: How are things going?
The answer is: not much. Iran has already received sanctions relief in the summer, increasing its oil exports, as well as written commitments from the United States to release billions of dollars in stored assets. The Strait of Hormuz, while not completely closed as it was this spring, has not yet been fully opened, even though that was the whole intention of the MOU. Any gains the US had until recently have been wiped out, as it were armory.
Two weeks have passed since the United States and Iran signed their agreement memorandum of understanding to end heavy fighting in the latest war in the Middle East, so the logical question to ask is: How are things going?
The answer is: not much. Iran has already received sanctions relief in the summer, increasing its oil exports, as well as written commitments from the United States to release billions of dollars in stored assets. The Strait of Hormuz, while not completely closed as it was this spring, is not yet completely open, either, although that was the entire MOU. Any gains the US had until recently have been wiped out, as it were armory.
Take Hormuz. Traffic is kind of moving again-not at the same level as before the war, when more than 100 ships would pass through the narrow strip every day. But for the past week, about 40 ships have entered or left each day, a sharp increase from the war-bound months when no ships could venture out. More importantly, more ships are passing through with their tankers (defying Iranian threats and remaining visible), and more tankers are passing through as well. Benchmark oil prices continue to fall, to around $70 a barrel.
On the other hand, most of the ships belong to Iran. Speaker of Iran’s parliament Mohammad Bagher Ghalibaf he said on Tuesday that Iran had exported 40 million barrels of oil since the signing of the MOU, which, if true, would amount to 3 million barrels per day. That’s more than Iran was exporting before the war, but since most of that oil came from “floating storage,” or oil stored on tankers, it’s possible. Either way, Tehran is making money—up for sure.
U.S. sanctions relief on Iranian oil exports has an expiration date: General License X expires at the end of August. Many countries, banks, and refiners it’s crazy of dealing with authorized entities until they have a clear understanding that such business will be legitimate. So, for now, Iran is just pushing more goods to its usual buyers (ie, China).
The problems that arise in the relationship between the United States and Iran are largely due to the 14-point MOU that gave the United States a lot and Iran a little. In exchange for sanctions relief, access to frozen funds, Iran’s pledge to control the Strait of Hormuz but later, and billions of dollars in future reconstruction funds if a final deal is signed, Iran offered to do nothing.
“The document is framed in what I’ve been calling a ‘disagreement memo,'” said Miad Maleki, a sanctions expert at the Foundation for Defense of Democracies, a Washington-based think tank that advocates a hawkish approach to Iran.
“This is the Iranian way. In some respects, such as sanctions relief, they know what they want, while their phase commitments are unclear,” said Maleki, who spent nearly a decade at the US Treasury Department preparing sanctions. “The Iranian regime never wants to negotiate to solve the problem – they negotiate to manage the pressure.”
Example: This week’s indirect talks in Doha, Qatar, between the United States and Iran—which, from the American point of view, were meant to get to the bottom of the issue of Iran’s nuclear program—still, at Tehran’s behest, stalled on the implementation of the compromise reached last month. Iranian officials such as Ghalibaf emphasize that the United States should fulfill the written conditions set out in the MOU before more serious negotiations can begin.
Just to take a step back: the United States used most of its weapons, bombs and precision-guided missiles such as Tomahawks and advanced missile launchers such as Patriots, in a weeks-long burst of “great fury” to create a situation where Iran believes it will remain in control of one of the world’s main shipping corridors (and can do so for billions), while ensuring billions of dollars in economic relief.
While US President Donald Trump is still considering the idea of start over war with Iran, few take it seriously because kinetic action achieved little except higher gasoline prices, and the US midterm elections are now even closer. To find short-term peace, Trump offered all the carrots and no sticks. Even future carrots: The MOU makes the US refrain from future sanctions on Iran.
“The only option we have left is to threaten to restore the blockade,” said Maleki, noting how damaging the US sanctions on maritime transport have been, by Tehran’s admission, to Iran’s economy. “I feel like we gave away the energy we had with nothing, not even the opening of Hormuz.”
Even if the Biden administration was sometimes lax in the implementation of sanctions against Iran, such as shadow ships and oil shipments, former President Joe “Biden never said there are no new sanctions. We have not accepted new sanctions, so that is a very important leverage step that the Iranians got from us,” Maleki added.
The most pressing question is what is happening to Hormuz. Iran has said for months that it has no intention of going back to the way things were, before the war, and it has to be played a tax plan or a service fee plan and every form of intervention in the free movement of ships. now, is reportedOmanis are on board with some kind of payment system to play for shipping in the Persian Gulf.
It is important to separate Iran’s rhetoric from the reality of the future. While Iran and Oman do, in to be connected with US Central Command, controlling the Strait of Hormuz today, tomorrow may be different. Iran doesn’t have many friends, and the ones it does have either live in the sea channel or depend on it.
“Iran cannot go against the only partners it has left. It should go back to the way it was. So it will have to reevaluate what they are doing in the settlement,” Maleki said.
Once US attention shifts from the Middle East, “Iran will focus on how to repair its relations with its Gulf allies and the Chinese, and the only way to do that is to restore free transit through the strait.”
