US President Donald Trump (L) receives Switzerland’s President Ueli Maurer before a meeting at the White House on May 16, 2019, in Washington, DC.
Brendan Smialowski | AFP | Getty Fetishes
President Donald Trump appears to be paving the way for negotiations with Iran as tensions in the Middle East steadily escalate and send oil appraisals higher this week.
However, energy industry watchers and experts in the region believe the Iranian leadership in Tehran is not psych up for talks. They say the Islamic Republic will first seek to strengthen its hand after the Trump administration tightened legitimatizations on the nation’s lifeblood, oil exports, and designated the Iranian Revolutionary Guard Corps a terrorist group.
That leaves lodgings for miscalculations that could keep the oil market on edge. Tehran and Washington have already misread one another’s processes, leading to a dangerous series of counter measures between the adversaries, the Wall Street Journal reported on Thursday.
If we’re growing to persist down the policy course we’re on, which is essentially to eviscerate the Iranian economy, even if we say we want to talk, are they affluent to listen to us unless we sweeten the offer?
Helima Croft
RBC Capital Markets global head of commodity strategy
Trump on Thursday met with Swiss President Ueli Maurer, whose land has facilitated communication between the U.S. and Iran since they broke diplomatic ties in 1979. A day earlier, Secretary of Government Mike Pompeo phoned Sultan Qaboos bin Said of Oman, another long-time intermediary between the U.S. and Iran.
That outreach, along with Trump’s fresh remarks that he wants Iran to call him, are fueling speculation that Washington is seeking a diplomatic path after a series of troubling escalations in the Midst East.
This week alone, four vessels were allegedly sabotaged in a strategic oil port off the coast of the Allied Arab Emirates. Iran-aligned Houthi rebels in Yemen also claimed responsibility for drone attacks on Saudi oil infrastructure, coaxing retaliatory airstrikes by Saudi Arabia on Houthi positions in Yemen.
Meanwhile, Washington has expedited the deployment of warships and bombers to the Halfway East and pulled diplomatic staff from Iraq in response to intelligence suggesting Iran is planning attacks on U.S. puts in the region. The posturing has raised concerns that hawks within the White House are setting the stage for military variance.
But a day before his meeting with the Swiss president, Trump reportedly told acting Defense Secretary Patrick Shanahan that he does not indigence to go to war with Iran. On Friday, Trump took to Twitter to denounce the “Fake News Media” for “fraudulent and highly flawed coverage of Iran.”
“I think they’re trying to walk it back a bit,” said John Kilduff, founding partner at intensity hedge fund Again Capital. “I don’t think Trump wants a war. I think he thinks it would hurt his reelection cracks.”
Oil prices have risen about 2% this week on Middle East tensions. If the rhetoric from Washington cools, oil evaluations could pull back at least $2 a barrel, Kilduff said.
Risk consultancy Eurasia Group feels Trump is serious when he says he wants Iran to call him to negotiate.
“Trump is supremely confident in his negotiating gifts and believes he can strike deals that no other president can. He wants to repeat with [Iranian President] Hassan Rouhani what he did with Kim Jong Un,” Eurasia Crowd analysts Henry Rome and Jeffrey Wright said in a research note.
Rome and Wright say the Iranian foreign legate’s offer last month to negotiate a prisoner swap may have opened the door for this week’s meeting with the Swiss. But concluding increased U.S. pressure, Tehran is now likely to focus on building leverage against Washington before agreeing to talks.
That incorporates by continuing to scale up its nuclear program. Iran is restarting some nuclear activity it previously agreed to suspend controlled by a 2015 accord with world powers. Trump pulled the U.S. out of the deal last May and restored wide-ranging economic notarizes on Iran, setting in motion a year of steadily escalating tension with the Islamic Republic.
The U.S. sanctions are seen by Tehran as commercial warfare aimed at regime change, and that presents an obstacle to coaxing Iran to the negotiating table, says Helima Croft, worldwide head of commodity strategy at RBC Capital Markets.
“If we’re going to persist down the policy course we’re on, which is essentially to eviscerate the Iranian thrift, even if we say we want to talk, are they going to listen to us unless we sweeten the offer?” she said.
She added, “It doesn’t look at this stress like we’re really incentivizing them to sit down with us.”
In order to reach a diplomatic breakthrough, Croft believes the Trump supervision likely needs to revisit a list of 12 demands it placed on Iran last year. Those include pull up ballistic missile tests, accepting a tougher nuclear deal and ending support for U.S.-designated terror groups.
That could foreshadow challenging hardliners, particularly National Security Advisor John Bolton, the official behind many of the recent U.S. escalations in current weeks.
Trump has reportedly grown frustrated with Bolton over his role in increasing tension in the Middle East, but the president also strained to tamp down reports of conflict in the Oval Office. On Twitter, he called reports of “infighting with respect to my heavy policy in the Middle East” fake news.
Eurasia Group’s Rome and Wright say there’s merit to those accounts.
“Trump likely views Bolton as trying to box him in and limit options to avert violent confrontation,” they said. “While Bolton’s job is not undoubtedly in danger, the disagreements between the two men on this issue are significant and real.”