Commodity Comment: No Easy Passage

Research evidence excerpt

Commodity Comment: No Easy Passage

ng the Strait, we still

on the tenuous assumption that there is relatively easy policy question how much capital they will deploy to resolve the

lever that can be pulled to get ships moving again through the stalemate. Any scenario that ends with Iran determining which

Strait once the economic pain becomes unbearable. Much of ships navigate the Strait will result in flows appreciably below

the June reopening optimism seems to assume a negotiated pre-war levels in our view. As long as the IRGC remains aSTRATEGY settlement or a unilateral US exit. We are skeptical of an sanctioned entity, we think Western companies will be wary of

imminent diplomatic resolution given the unresolved sticking paying a toll to access the approved shipping lane, and the risk

points over Iranian enrichment capabilities and uranium of renewed maritime attacks will potentially disincentivize an

stockpiles. Moreover, even in the event of a resolution to these immediate return. Indeed, leading shipping industry experts

nuclear issues, we believe the IRGC will seek to maintain control have already indicated that an Iranian controlled reopening

over the Strait of Hormuz. The waterway has now become scenario would likely result in restricted volumes and that a

arguably even more strategically important to reestablishing clear Iranian military defeat and unrestricted transit access are

deterrence than the nuclear program. We believe the regime likely prerequisites for a full Hormuz recovery.

will be extremely reluctant to give up this newfound…

Oil: The Lull christopher.louney@rbccm.com

Despite the ongoing supply disruptions out of the Middle East, $/bbl BFOET/WAF Regional Avg. Physical Differentials