US-Iran standoff hinges on the Strait of Hormuz | Cash Call | Andrew Wong

The conflict between the United States and Iran may appear to be easing, yet the reality is that relations between the two sides have followed this same pattern since mid-April. US President Donald Trump has repeatedly claimed that “positive developments” are imminent, while insisting that Iran is eager to secure a lasting ceasefire agreement. However, Tehran has maintained that Washington’s proposed terms are unacceptable. At the same time, Iran has stressed that it retains control of the Strait of Hormuz and has demanded compensation from the United States for losses incurred in the latest confrontation.

As a result, regardless of whether Washington and Tehran eventually agree to a temporary ceasefire arrangement, the broader situation in the Middle East has not fundamentally changed. Over the past month and a half, there has in fact been no large-scale direct military confrontation between the United States and Iran. President Trump even informed Congress that US military operations against Iran had effectively concluded in early April, noting that American forces had not launched further attacks on Iranian targets thereafter.

This assessment is broadly accurate. Yet the central concern for the Trump administration – and indeed for the global community – is no longer whether military clashes between the United States and Iran continue to occur. What markets and governments are truly focused on is whether the Strait of Hormuz can continue to function normally. Should disruptions in the waterway persist, the world could face a severe energy crisis. In other words, not only the United States but the global economy as a whole may ultimately bear an enormous cost stemming from this latest US-Iran confrontation.

In fact, the executive director of the International Energy Agency recently warned that the current oil crisis triggered by tensions in the Middle East may be even more severe than the three major energy crises of the past – including the 1973 and 1979 Middle East oil shocks, as well as the crisis triggered by Russia’s full-scale invasion of Ukraine four years ago. According to the assessment, the market is currently facing a shortfall of approximately 14 million barrels of crude oil per day.

Consequently, even if Washington and Tehran fail to reach a genuine ceasefire agreement, the Trump administration is highly unlikely to resume large-scale airstrikes against Iran in the near term, largely because the economic and geopolitical costs have become increasingly evident. Nevertheless, even in the absence of renewed military escalation, the global energy crisis will remain unresolved if the Strait of Hormuz cannot operate normally – and that, ultimately, is the issue that matters most.

Andrew Wong is a veteran independent commentator

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