The ceasefire was agreed with mediation by Pakistan just 10
minutes before a deadline by US President Trump, after which the US was attack
Iran’s bridges and energy infrastructure if Iran did not fully reopen the
Strait of Hormuz.
Pakistan's Prime Minister Shehbaz Sharif, "With the
greatest humility, I am pleased to announce that the Islamic Republic of Iran
and the United States of America, along with their allies, have agreed to an
immediate ceasefire everywhere including Lebanon and elsewhere, effective
immediately."
Ahead of the announcement that the ceasefire had been agreed
Trump posted on Truth Social, said that he had agreed to suspend the bombing
and attack of Iran, “subject to the Islamic Republic of Iran agreeing to the complete
immediate, and safe opening of the Strait of Hormuz”.
However, a statement from Iran’s Minister of Foreign Affairs
Seyed Abbas Araghchi framed the re-opening of the Strait somewhat differently
with Iran coordinating and controlling transits of the key waterway.
“For a
period of two weeks, safe passage through the Strait of Hormuz will be possible
via coordination with Iran’s Armed Forces and with due consideration to
technical limitations.”
The statement by the Iranian Foreign Minister was reposted
on Trump’s Truth Social feed.
Associated Press reported, quoting an undisclosed regional
official, that ceasefire
plan allows the littoral states of Iran and Oman to charge a fee for transit of
the Strait of Hormuz. In recent weeks Iran has been reportedly charged US$2 million in either Chinese
Yuan or crypto currency for approved transits of the waterway.
In a later post on the Truth Social Trump said, "The
United States of America will be helping with the traffic buildup in the Strait
of Hormuz." No details of given as to what this help might entail.
One of
the points of Iran’s 10 point-proposal as a basis for negotiations is “the
continuation of Iran’s control over the Strait of Hormuz”, Iran’s Supreme
National Security Council stated. Talks between the two sides are scheduled to
start in Islamabad on Friday.
The effective closure of the Strait of Hormuz by Iran since
the conflict started on 28 February created a global energy crisis with around
20% of the world’s crude oil and LNG exported from the Arabian Gulf
via the Strait.
The oil price dropped sharply on news of the
ceasefire dropping below US$100 per barrel. WTI Crude is trading at US$97.36
down 13.8% and Brent Crude is US$95.36 down 12.73%.
Despite
the declaration of the ceasefire strikes are reported to be continuing in Iran
and Israel as well as regional countries including Bahrain, Qatar, UAE, and
Saudi Arabia.
Assuming the ceasefire hold how much shipping traffic will
move through the Strait of Hormuz given the fragile security situation.
Certainly, owners will be keen to move an estimated 1,000
international trading ships with some 20,000 crew stranded in the Gulf since
the start of the war on 28 February out of the region.
However, westbound transits of the Strait to load cargoes
risk a restarting of the conflict and that these vessels would become trapped
in the region in the face of renewed hostilities.
