The US has a sanctions problem
Tehran and Muscat are scrapping over who will control the Strait of Hormuz, but for ships to actually start moving, it will require a new deal with Washington and a rethinking of US sanctions.
The latest development in US-Iran relations, the proposed agreement between Iran and Oman, does not signify an imminent resumption of oil shipments through the Strait of Hormuz. This deal primarily focuses on specifying shipping routes and fees, but the crucial factor of US engagement remains absent. The US insists on returning to prewar conditions of unrestricted navigation, a stance that requires addressing the nation's sanctions conundrum.
The June memorandum of understanding between Iran and the US sparked criticism from sanctions experts, who deemed it "a memorandum of confusion and misunderstanding." The agreement offered Iran no new sanctions, freed its oil exports from US sanctions, and committed to lifting all sanctions post-nuclear deal completion. However, the lack of congressional consensus on scrapping all sanctions and the prospect of Iran exporting $6 billion in oil triggered concerns.
Critics argue that this arrangement could weaken US leverage during nuclear talks and embolden Iran, undermining recent ceasefire agreements. A potential solution, like the US' approach with Venezuela, is not without its flaws. Congressional Democrats demand rigorous oversight of Iran's oil revenue flow into Treasury-controlled escrow accounts, raising questions about its effectiveness in altering Iran's military tactics.
The uncertainty surrounding both Washington's and Tehran's intentions, compounded by a lack of clarity on the next memorandum of understanding, suggests that the volatile oil market will continue to experience fluctuations in the near future.
Written by urgent.news from Semafor's reporting — not their text. Machine-written; read the original for the full account.
