Intermittent negotiations and exchanges of fire in Middle East are the future: CFR's Richard Haass

Summary

Richard Haass discusses the future of intermittent conflict in the Middle East and its implications for oil markets, arguing that markets will adapt, dependence on the Strait of Hormuz will decrease, and oil price volatility will decline.

• Richard Haass says the cease-fire with Iran is not real, and intermittent negotiations and military exchanges will be the new normal.
• Iran has emerged from the conflict in an advantaged position and seeks to assert control over the Strait of Hormuz.
• The future will involve off-and-on negotiations, partial or full closures of the Strait, and off-and-on military fire.
• Markets will likely become inured to Middle East turbulence, leading to less oil price volatility over time.
• Increased pipeline construction and alternative oil production will reduce the centrality of the Strait of Hormuz.
• Demand destruction in China and replacement supply from the U.S. and Venezuela will erode Iran's leverage.
• Concerns will remain, particularly over Iran's nuclear program.