Tag Archives: memorandum of understanding (MOU)

Everyone Eventually Runs Out Of Patience

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On Wednesday, Zero Hedge posted an update on what is happening in Iran and the Strait of Hormuz.

The article reports:

  • US strikes on Iran announced, as ‘heavy costs’ for earlier targeting of multiple commercial vessels
  • Oil rises as Treasury revokes June 21 Iran oil waiver
  • Hormuz Threat Level Raised To “Severe” 
  • Three maritime incidents reported on Hormuz in last 24 hours 
  • Another unidentified vessel hit by a Drone
  • IRGC forces hit a Saudi Tanker 
  • IRGC forces hit a Qatari LNG tanker

These are the actions of a cornered animal fighting for its life.

The article concludes with a summary of the impact of the current situation:

Diplomatic Developments

• Iran’s Foreign Minister Abbas Araghchi warned on Tuesday that negotiations on a final deal will not commence if threats continue, referencing a memorandum of understanding with the US

• Iranian President Masoud Pezeshkian will travel to Iraq on Tuesday to attend funeral processions for former Supreme Leader Ali Khamenei, scheduled for Wednesday in Najaf and Karbala

Market Impact

• European natural gas prices surged as much as 6% on Tuesday, the most in a month, following the attacks on ships in the Strait of Hormuz

• Oil prices climbed on Tuesday, with Brent trading near $73 a barrel, as the attacks highlighted continued risks to vessels in the critical waterway

• Gold fell for a second day on Tuesday, dropping as much as 1.2% to below $4,120 an ounce, as the Hormuz attacks rekindled inflation concerns

• France lowered its 2026 GDP growth forecast to 0.7% from 0.9%, citing the Middle East conflict as a factor holding back output

Oil Trade Developments

• India’s state-run refiners are in talks with traders marketing Iranian crude and preparing to buy barrels if the US extends waivers beyond August or eases restrictions

• Two supertankers hauling Saudi crude are heading to the US for the first time since February, following the reopening of the Strait of Hormuz

• Russia’s Urals crude price averaged $41.66 a barrel at western ports in early July, falling to pre-Iran war levels and less than half the level during the height of oil market turmoil in April

There are a lot of moving parts here.

For instance, according to Artificial Intelligence (AI):

To understand the price of oil needed to sustain the Russian economy today, consider the following factors:

    1. Budget Breakeven: The Russian government requires oil prices to be around $40-$50 per barrel to balance its budget.
    2. Economic Stability: Prices above $60 per barrel are generally needed for economic stability and growth.
    3. Inflation Control: Higher oil prices help manage inflation and support the ruble’s value.
    4. Social Spending: Sustaining social programs and pensions often requires oil prices to exceed $70 per barrel.
    5. Global Market Influence: Fluctuations in global oil demand and geopolitical tensions can impact the necessary price for sustainability.
    6. Long-term Investments: To fund future projects and infrastructure, prices above $80 per barrel are preferable.

Russia is an ally of Iran. Russia needs high energy prices to sustain its economy. Did Russia play a role in encouraging the attacks in the Strait of Hormuz?

Victor Davis Hanson And The War In Iran

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Victor David Hanson is one of America’s foremost historians. He is known for his clear analysis of both past and present history. On Saturday, Fox News posted some of this analysis on its website.

Here are some highlights from the article.:

Historian Victor Davis Hanson called out critics of the newly signed U.S.-Iran preliminary agreement, arguing that they are misreading American leverage in negotiations.

Speaking on “Jesse Watters Primetime,” Hanson disputed what he described as misconceptions about the deal and said the military conflict dismantled Iran’s infrastructure, leaving Tehran with no cards to play.

“They’ve suffered probably a half a trillion dollars to their nuclear military industrial complex that took them 50 years to build,” Hanson said in response to what he called “unhinged” arguments that Iran is better off now than before the conflict.

…The Trump administration’s memorandum of understanding (MOU) with Iran was released this week, laying out the terms of the deal reached by both parties for a 60-day ceasefire and a framework for negotiations.

The deal itself has drawn criticism from both sides of the political aisle, with critics arguing that it does not include aspects like an immediate dismantling of Iran’s nuclear infrastructure or the removal of enriched uranium stockpiles.

Hanson also pushed back against critics who have cited difficulties moving oil out of the region due to Iranian actions in the Strait of Hormuz.

The article concludes:

He suggested that Tehran is concerned about America’s upcoming midterm elections and the nation’s 250th anniversary.

Hanson argued that if the conflict goes past the midterms, Trump will be less constrained by electoral considerations.

“They are terrified that if he wins the midterms and the price of gas goes down, he’s got a free hand, and he already has a free hand now,” Hanson said.

“They are afraid that Donald Trump is [going to] drag it out because if he drags it out after the midterm, after the 250th anniversary, he’s [going to] have a lot more options than he does now when he’s worried about gas and the midterm. So the dynamic is all upside down. They are the ones that have the time clock.”

It is going to be an interesting few months.