The Iran Deal & Energy — A Quick Take

Not that the deal wasn't going to be one-sided. No. It always was. It was that Trump was going to make the Iranians an “offer they could not refuse” and so quickly, literally giving them everything they could have wanted and more.

I can see the negotiations now as if I was standing there inside the Pakistani’s Islamabad hotel:

I will say I never expected such a capitulation and barring it, I was convinced that the Strait would remain closed until at least the midterms. Clearly, Trump thought it much less costly to give everything now and not risk a catastrophic economic event from oil stockpiles that were getting dangerously low, much less the political catastrophe (for him) of losing the Senate as well as the House in November.

So, now what?

Well, the first big problem for ‘the deal’ is Israel. The question will be whether Bibi will go along with the cessation of military operations in Lebanon against Hezbollah, as ‘agreed to’ by Trump. Netanyahu’s political life is connected to the completion of the military ‘clean-out’ he’s undertaken in Gaza, the West Bank, Lebanon and Iran, and he doesn’t have the slavish base to just ‘declare victory’ and still retain power that Trump does in the US. On the other hand, Israel will have an exceedingly difficult time just ignoring this agreement and continuing their campaign. The US remains their lone, at least semi-reliable ally and cannot be completely ignored, no matter how much Netanyahu would like to.

Two facts enter the calculus – the Israelis could care less about oil and the global economic outlook, and Iran has become geopolitically more powerful through this war, not less. The easily enforced blockade of the Strait of Hormuz has proven a far more convincing weapon than any nuclear device could ever be.

Speaking of energy, because that’s what I do: The timing of this deal has obvious impacts on the energy markets both short term and long term – and it asks far more questions than it answers:

1. The instantaneous reaction has oil prices declining, obviously. But take a closer look: The lack of desire to own futures has WTI crude trading currently at $75 a barrel, with the back months significantly cheaper – this is right in the range that the markets were pre-war. No, I’m not joking. That’s the result of the worst supply disruption we’ve seen (and certainly I’ve seen) in modern history? We had a market that traded between $55 and $75 during most of 2024 and 2025, when everything was as boring as could be imagined and gas was near $3 a gallon. Think about that. I know I have been.
2. There is real distress in global crude stockpiles. China cushioned their blow of imports over the last several war months by calling on the oil they had bought at $50 bucks over the last several years. They were not alone in raiding their emergency storehouse. But now the cupboard, in China and elsewhere, is rather bare. What are they going to do about that? Are they going to do anything about that? I’ve thought about that too.
3. The infrastructure that the Iranians destroyed using cheap and effective missiles and drones was massive, and particularly affected the natural gas and LNG export facilities in the UAE and Qatar. The Ras Laffan damage alone is at least a 3 year mess, with very real force majeure consequences for about 15 metric tons of LNG a year. Further, the deal allows Iran to retain all the military force they need to strike again at any time without any spelled out consequences. With the US in essence leaving the Middle East as a power of real consequence, the UAE now out of OPEC and certainly the secular and adversarial lines drawn around the Gulf States in very stark relief during the war, the energy situation in all its aspects is not, I am convinced, about to get suddenly calm.

These three major new results of this very surprising Iran/US deal has me thinking very carefully about the opportunities that might emerge over the next year or two in energy.

I think they’re going to be absolutely incredible.