Observers ask – will the war between Israel and Hezbollah derail the ceasefire? This week saw the heaviest bombardment of Lebanon by Israel in this conflict. From the south to the east and Beirut, for 10 minutes, the country was under heavy attack. The health ministry says at least 112 people have been killed and more than 800 wounded.
At the site of the largest air strike on Beirut, hours later, emergency workers were still searching the damaged buildings. Following a deluge of bombs, Iran wants a permanent end to its conflict with America and reckons that control of Hormuz will help it achieve that goal. It will not want to reopen the strait, and give Mr Trump a respite from soaring energy prices, in exchange for nothing more than a brief truce. Roughly 20% of global oil and LNG normally passes through the strait, it stands to reason that this war and repeated closures have already brought tanker traffic to a near standstill.
Back to Lebanon, its leaders are angry with Hezbollah, saying it has dragged the country into an unwanted war. Despite thousands of Israeli and American air strikes, Hezbollah was still able to launch dozens of missiles and drones at Israel and the Gulf countries every day. Many believe that America and Israel had bombed most nuclear-research centres, but Iran still has over 400kg of enriched uranium, presumably hidden underground so Israel’s desire, to topple the Iranian regime, looks further off than it did before the conflict started. One needs to assess the financial turmoil that the brief Iran invasion has created so far. One reads how following Iran’s announcement of a conditional safe passage during a two-week US-Iran ceasefire window, oil prices have plunged sharply. Brent fell to around $91–95/bbl and WTI to $92–96/bbl in early trading, with intraday drops exceeding 15% in some sessions — the steepest single-day declines in years. Some commentators and foreign‑policy analysts have argued that the ceasefire terms may disadvantage the United States, while others say the deal was the only realistic way to pause escalation. Whether anyone was “cheated” is a matter of interpretation, not an established fact. Certainly, it was a clever move by Iran to use the Strait of Hormuz as a bargaining chip. This leads some commentators to say the U.S. may have given Iran room to manoeuvre.
It is also fair to say that the U.S. avoided a wider war, which would have led to a full US-Iran military confrontation. From this perspective, the U.S. was not cheated but rather made a pragmatic choice to avoid escalation. Now, Iran is reputed saying it has the right to impose tolls; but U.S. officials said the deal required free passage. Global shares rallied to their highest levels in more than a month on 7th April, as investors rushed to buy following the announcement of a two-week ceasefire between the US, Israel and Iran. Oil prices fell the most in almost six years on the ceasefire proposal, which revived risk sentiment across global markets. US claims it had already achieved its military objectives while on the other hand, Tehran is setting the terms for further negotiations. Some statements from both sides point towards a strategic defeat for the US that could transform Iran’s geopolitical position and its privileged role in the Gulf. Iran and Pakistan as a mediator said the ceasefire also applied to Israel’s campaign in Lebanon, a development that would reflect its status as a junior partner in the US-led war who must fall into line with Washington – though Israeli prime minister Binyamin Netanyahu later said the ceasefire “does not include Lebanon”. Iran may demand that shipping companies pay tolls in cryptocurrency for oil tankers passing through the Strait of Hormuz, as it seeks to retain control over passage through the key waterway during the two-week ceasefire. Hamid Hosseini, a spokesperson for Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, told the Financial Times that Iran wanted to collect tolling fees from any tanker passing and to assess each ship. Many underwriters and clubs charge additional war-risk/Gulf-transit premiums or surcharges for vessels calling at or transiting the Strait of Hormuz, the Gulf of Oman and adjacent high-risk areas. Cover can be restricted or subject to extra premium, higher deductibles, endorsements, or outright exclusion unless extra terms are agreed. There will be significant additional cost per voyage in higher-risk periods; for some trades the surcharge can be material to voyage economics. Iran states that passage is only possible “via coordination with Iran’s Armed Forces and with due consideration to technical limitations”. This effectively gives Iran veto power over every tanker movement. If the truce holds perhaps, one hopes that this condition limiting passage through the Hormuz Strait may be lifted.
George M Mangion is a Senior Partner ay PKF Malta
