A day, a week, a month?
No one knows how long each round will last, but there are constraints on America and Iran limiting the duration of the conflict.
Commercial topics: resumed energy blockade? Bab al-Mandab. Duration of the conflict. Risks to energy infrastructure.
It is impossible to guess how long does any given round between Iran and the USA continue. Last night, the USA launched 80 attacks on Iran, while the Iranians claimed to have launched 85 attacks on American assets in the region. Kuwait reported power outages resulting from Iranian strikes. As of the time of this writing, the fighting has stopped. However, we maintain our view that the two sides are not capable of a stable agreement (below).
For all we know, after this round, which was initiated by Iran launching missiles and drones at four ships in one day, global shippers will decide to use the Iranian-approved lane in the Strait of Hormuz, and, after 18 August, when the ceasefire terminates, they will pay Iran fees while talks continue. This would satisfy Iran, but it would be an embarrassment for Trump, who would instead pivot to talking about the mid-terms.
Conversely, Trump could decide that the mid-terms are lost anyway, the economy will not recover before Hormuz is fully opened, and that he has to see through the destruction of Iran until total victory. The war would then resume in full, and continue for several months.
That said, it is worth reviewing the drivers and constraints for the two sides:
Iran needs to export oil, with or without sanctions. If the Americans reintroduce the blockade on Iranian trade, the country will be in real trouble.
Iran received a lifeline as it already managed to export some 50 million barrels of oil since the ceasefire.
The USA cannot afford a surge in oil prices that would trigger a rise in interest rates. However, with oil prices at $72, he’s sitting quite comfortably. This permits American President Donald Trump to escalate.
Iran needs the oil price rising well above $72, and for it to be closer to a $100, for it to have meaningful leverage over the world economy. This forces Iran to escalate more.
The Americans are very low on interceptors. They are not sending interceptors to Ukraine, as these are needed in the Middle East.
There is no popular support for the war, and Trump does need to show it is over by the mid-terms.
However, as the mid-terms approach, and especially if oil prices rise again, ending the war serves no political purpose: the economic damage would linger for several weeks after a ceasefire regardless.
A key issue, which is not easy to categorise as a driver or a constraint, is President Trump’s utter and complete lack of credibility. He has pivoted and changed his mind so many times that neither his threats nor his promises are worth much.
