The US and Iran are reportedly closing in on a 60 day agreement to wind down their conflict.
The war has choked off the Strait of Hormuz and sent global energy prices soaring.
Now Treasury Secretary stating that the makings of a deal are on the table, outlining a phase plan to unwind maritime blockades as well as eventually strip Iran of its highly enriched uranium.
Both the state and Treasury Departments also issuing new sanctions on the sales of Iranian oil.
They are targeting the players involved in the.
Work to cut off billions in funding for the IRGC.
Well joining me on this Friday morning to weigh in is Matt Gertken, Chief Strategist, Geopolitical and US Political Strategy at BCA Research.
Matt, good morning and happy Friday.
Thank you so much for joining me.
I do want to get your take on what's unfolding right now, as well as the Trump timeline for this and the Abraham Accord.
So what do you make of what is unfolding and where do you think we are in terms of the negotiations?
The strategic elements of the conflict until after the midterm election.
He still has reason to believe that he can salvage the Senate for the Republican Party in the midterm, and he needs to get the oil price down in order to make that happen.
And so he's willing to bend over backwards and come up with all kinds of compromises to try to, to try to extend this ceasefire, but to actually have an agreement on the strategic elements you need free passage in the Strait of Hormuz for all traffic, and you need Iran to hand over highly enriched uranium and agree to inspections of their nuclear facilities, and that's not going to be agreed in the short term.
Yes, and that the reality is also that the conflict on the ground has hardly paused, and Secretary Treasury Secretary Besan also announcing sanctions to stop Iran from collecting tolls in the Strait.
And just yesterday we know that Tehran fired a ballistic missile at Kuwait as well.
So how do you actually reconcile these fragile peace negotiations with the reality that economic pressure, as well as military exchanges are still happening today?
I think the way to reconcile it is to think in time frames.
In the very short term, because of the election pressure, the president will try to do everything he can to get the ceasefire and to get some shipping moving, and that may mean all kinds of squishy compromises like not fully enforcing the blockade on Iran or agreeing to let Iran sort of administer or nodding toward or condoning Iran administering traffic to some degree.
But the problem is later.
So when we extend the timeframe beyond the election, that's where the president has to achieve American national interests and security interests, which would include making sure that Hormuz is open and making sure that the nuclear program is is contained and that there's some kind of resolution there.
And so President Trump is going to have to attack those issues again and maybe even attack Iran again.
After the election, and investors just need to keep these two time frames in mind.
Iran, of course, has leverage before the election, and that's where they may continue to delay on the resumption of shipping.
And that we have less than 60 seconds here as we are counting down to the opening bell here on Wall Street.
So when it comes to timeline, even once a deal is potentially resolved, what do you expect to see in terms of timeline?
Well, I think in the immediate term we'll get some kind of extension of the ceasefire.
Remember, the president himself has already said that it's an indefinite ceasefire, so extending it by 60 days is no big deal.
The big news in the short term would be that Iran's going to allow shipping to resume, and then we'd have a 30 day period where they would presumably be allowing some improvement in shipping.
It wouldn't be a full resumption, but there would be some improvements.
And also they would be expected to begin a new round of nuclear negotiations and if those things happen over the course of June, then the equity markets and global financial markets will continue to benefit from that diplomatic background, even though it's not very solid ground on a 12 month basis.
Well, Matt, a lot to keep our eyes on, so I appreciate your time.
Thank you so much for joining us on this Friday and have a great weekend.
Thank you, you too.
