Amos Hochstein on U.S.-Iran war: We're seeing the consequences of a hurried deal

Summary

Amos Hochstein discusses the fragile US-Iran situation, arguing that the ceasefire is effectively over and the Strait of Hormuz has become a new point of leverage for Iran. He believes oil markets are underpricing significant geopolitical and supply risks, including potential Houthi escalation and ongoing Ukraine strikes on Russian fuel infrastructure, while inventories are tight heading into hurricane season.

• US-Iran ceasefire/MOU is broken, with sporadic violence likely to persist through year-end.
• Iran now uses control of the Strait of Hormuz as leverage, complicating any nuclear deal.
• Additional risks include Saudi strikes in Yemen and potential Houthi retaliation that could disrupt cargo flows.
• Ukraine's attacks on Russian fuel infrastructure are increasing, set to raise fuel prices globally.
• Oil prices (WTI ~$73, Brent ~$78) are seen as too low given these elevated risks.
• Tight US inventories, a lack of spare production capacity, and hurricane season add to supply fragility.
• Iran is benefiting by selling more oil at higher prices, funding rearming, and has incentive to prolong the current limbo.