The new oil order that could emerge from an Iran deal

Global oil stockpiles are declining at a record pace, reducing buffers against supply shocks. Normal conditions are unlikely to return soon, and what “normal” means remains uncertain. Near-term shipping depends on whether vessel owners and crews feel safe transiting the Strait of Hormuz. Uncertainty about potential Iranian fees, safety requirements, and insurance costs could lead to stop-and-start export operations. Clearing mines may require two to three months to restore steady exports. Persian Gulf production also needs time to recover after the main export route was disrupted. The meaning of “open” for the shipping lane is unsettled, and floating fees could still benefit Iran even if amounts are small relative to tanker costs.

"“It’s all about whether vessel owners and crews feel safe transiting the Strait of Hormuz,” said oil analyst Ben Cahill of UT-Austin. He notes confusion about whether Iran will imposes some kind of fees, safety, insurance rates and more. “It could be a stop-and-start process as risk-averse shippers work through these uncertainties,” he tells me via email."

"“Following the clearance of any mines, a minimum of two to three months will likely be required to re‑establish steady export operations,” the International Energy Agency said in its mid-May oil market report. And Persian Gulf countries need time to resume production that declined after the main export route was cut off."

"“What ‘open’ means for the world’s most important energy shipping lane is unsettled. Iran may not call it a toll, but Iranianofficials are floating new fees on tankers. This could be a boon to Iran even if the fee is relatively small,” said Edward Fishman, a former State Department aide now with the Council on Foreign Relations."

"“If you look at it from the perspective of market participants, whether it’s oil traders or shippers, even if you’re paying $2 million a pop for a VLCC [Very Large Crude Carrier], that’s $1 a barrel, that’s actually not that economically significant,” he said. “I think that the private sector, if this is the cost of getting ships through the Strait, is going to pay the toll,” he said."

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