LOS ANGELES (OC).–Oil price spiked today to over $100 a barrel with gold sliding again another $80 to $4,800 an oune showing the kind of uncertainty from the Iran War. President Donald Trump has apparently rejected Iran’s peace plan brokered in Islamabad for the U.S. to remove its blockade on Iranian ships in exchange for Iran opening up the Strait of Hormuz. Trump finds Iran’s peace plans unacceptable because they don’t involve a permanent resolution to the nuke deal where Iran wants to reserve its rights to enrich uranium. Over the last several years, Iran has enriched uranium to voer 60%, just below weapons grade material. Nuclear energy experts estimate that Iran has stockpiled over 1,000 pounds of near weapons grade uranium, capable to building several nuclear bombs. Trump wants Iran to agree to stop enriching uranium and allow the U.S. to take its uranium stockpile.
Negotiating in Islamabad to end the war, Iran’s Foreign Minister Abbas Aragchi insists that the nuke issue must be taken separately, left for a later time, something Trump finds objectionable. Thinking the U.S. hold all the cards in Iran, Trump miscalculates the potential damage to the U.S. economy. Federal Reserve Board Chairman Jerome Powell plans to leave the Federal Funds rate at 3.5% to 3.75%, making the Prime Interest Rate at 6.75%, still to high for consumers hoping for a break. With fuel prices skyrocketing, American consumers aren’t happy with Trump’s Iran War, despite knowing that it’s good for U.S.foreign policy and national security. Trump said he hold all the cards with Iran but knows that voters won’t reward him without a break in high pump prices and interst rates. Consumers need a break from the high interest rates and fuel prices.
If Trump rejects Iran’s peace proposal, Wall Street won’t take it lightly, most likely continuing its sell-off because of market uncertainty. When it comes to opening the Strait of Hormuz permanently without future interference from Iran, Trump will have succeeded in driving down today’s skyrocketing oil market, all destabilized by Iran’s terrorist acts on commercial shipping in the Hormuz Strait. While the U.S. navy clears mines in the Strait, Iran still has heavily armed swift-boats, capable of causing serious damage to commercial vessels transiting the Strait. Most shipping companies, especially those coming from the oi-rich Arab Gulf States refuse to transit the Hormuz Strait because of risks to commercial ships. Trump hasn’t been able to neutralize the Iranian threat to commercial shipping, leaving global oil markets in chaos.
Trump said on Truth Social today that Iranian officials told him the state is “in a state of collapse.” Whether that’s true or not, Iran continues to scare off commercial shipping knowing the rist of severe damage to ships. Whether Trump is bluffing that he won’t take the latest Iranian peace deal is anyone’e guess. But Wall Street has already shows signs that it’s ready to sell-off. With the UAE announcing that they’re leaving OPEC, oil market are already shaky, uncertain where things will go. If Trump returns to bombing Iran’s energy infrastructure, financial markets won’t take it lightly. Trump simplay can’t afford to let global oil markets spiral out of control because of the Iran War. Whatever Iran offered, he has to take any peace deal seriously because it could have draconic consequences to Wall Street. Some peace deal is better than no peace deal to Wall Street.
Getting the Strait of Hormuz open should be Trump’s highest priority, not making demands on Iran’s nuclear enrichment program. No one know much about the condition of Iran’s centrifuges after frequent U.S. and Israel strike on its underground enrichment facilities Trump hit Iran’s underground facilities recently with GR-57 bunker-busting bomb delivered by U.S. B-2 bombers. So, when it comes to Iran’s nuke program, it’s been sufficiently neutralized to the point it’s most likely not enriching uranium. So, Trump must get his priorities strait before rejecting the Iran’s most recent peace proposal. Trump seems content to let the blockade go on a while longer to give Iran something to think about in any settlement. Every day that goes by, Iran loses more national income. Letting the blockade continue turns the screws on Iran’s to make a better deal.
Iran’s blockade on the Strait of Hormuz has sent the worldwide supply of crude oil dowon 13.7 billion barrels of crude oil, creating shortage of gasoline and jet fuel especially in the European Union. Air travel got a lot more expensive as airlines boosted ticket prices to cover inflated tfuel costs. So, when it comes to ending the Iran War, Trump must do what cause less pain to ordinary consumers now suffering from runaway pump prices. Trump faces many unknowns keeping the war going much longer to to shortages and skyrocketing fuel prices. As it looks now, the goal of regime change in Tehran looks next to impossible without a major escalation to the war. Escalating the war would trigger a vicious cycle with fossil fuels, driving up prices and creating shortages. No peace deal is perfect, requiring both sides to make compromises to get it done.
About the Autho
John M. Curits writies politically neutral commentary analyzing spin in national and global news. He’s editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.
