Commodity Comment: Uneasy Footing

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Commodity Comment: Uneasy Footing

en for business” headlines, statutory review process. During the mandatory 30-day review,

and yet we question the durability of the deal. Since insurers and the President may “not waive, suspend, reduce, provide relief

shipowners were the first movers on refusing to transit the Strait from, or otherwise limit the application of statutory sanctions.”

— setting off the effective closure — we are closely watching Earlier this week, President Trump had signaled that he wouldSTRATEGY their appetite to do more than a one-way trip. We think that send the MoU to the Hill for review, but if he opts against doing

Iranian operational control over the Strait and tolls, even in a co- so, it could trigger a very messy battle with Iran hawks in his

management situation with Oman, will likely pose a major party. Ongoing Israeli strikes in southern Lebanon, which have

compliance problem for Western tier 1 shipping companies. The continued post-deal signing, pose perhaps the greatest near-

ever-present risk of missiles, drones, and mines will likely give term threat to the deal, as officials in Tehran insist that they

these more risk-averse companies pause about returning to the represent a clear violation of the MoU. Hence, while the deal is

Strait. We are also closely watching congressional opposition to not necessarily dead on arrival, there appear to be real risks to

the agreement as a number of legislators have already voiced… its staying power.

Oil: Suspension of Disbelief christopher.louney@rbccm.com

Amidst the anticipated near-term opening of the Strait, we

mb/d Middle East Crude Exports and Possible Post-

emphasize our view that trade through the waterway could

20 Conflict Normalized

remain constrained for some time following a relief period.