The world urgently needs a US-Iran deal now

Without an agreement between Washington and Tehran, closure of the Strait of Hormuz could intensify global energy, food, and cost-of-living crises. Negotiations are reportedly moving toward a possible breakthrough involving more than a ceasefire or a nuclear accord. A proposed arrangement includes a 60-day truce, reopening shipping lanes, some sanctions relief, and renewed talks on Iran’s nuclear program. The urgency is high because about a fifth of the world’s oil and a substantial share of liquefied natural gas pass through the strait. Disruptions have already raised freight costs, energy prices, and insurance premiums. If a durable deal is not reached quickly, impacts will spread across the global economy, hitting wealthier countries through inflation and political pressure and hitting the Global South more severely through cascading energy and food shocks.

"Without a deal between Washington and Tehran, the fallout from Hormuz closure could deepen global energy, food and cost-of-living crises. As negotiations between the United States and Iran appear to move towards a possible breakthrough, the stakes extend far beyond diplomacy between two longstanding adversaries. At issue is not simply a ceasefire or a nuclear agreement. It is whether the world economy can avoid sliding deeper into widening energy, food and cost-of-living crises centred on the Strait of Hormuz."

"Recent reports suggest Washington and Tehran are discussing a deal that would reopen the strait as part of a broader arrangement. The proposal reportedly includes a 60-day truce, the reopening of shipping lanes, some sanctions relief and renewed talks on Iran's nuclear programme. The urgency is obvious. Roughly a fifth of the world's oil and a substantial share of liquefied natural gas supplies normally pass through the Strait of Hormuz."

"Over recent weeks, disruptions to shipping, military tensions and competing naval controls have driven up freight costs, energy prices and insurance premiums. If a durable agreement is not reached soon, the consequences are likely to spread rapidly across the global economy. To be sure, wealthier economies will feel the effects. Higher fuel prices will intensify inflationary pressures already weighing on households in Europe and North America."

"But the effects will be far more severe in the Global South. Many developing economies remain deeply dependent on imported fuel, imported fertiliser and imported food. Energy shocks, therefore, cascade through entire economies. Transport costs rise. Agricultural production becomes more expensive. Food inflation accelerates. Public finances deteriorate as governments try to shield populations from rising prices t"

Read at www.aljazeera.com