US Treasury Secretary Scott Besent said the country’s pressure campaign pushed Iran into talks, claiming that the government in Tehran was forced to negotiate after its financial resources collapsed.
“We have destroyed the Iranian economy, and that is what brought them to the table,” Besant said while talking about the direction the American economy is headed after the war with Iran.
He pointed to the impact of the sanctions and said that Washington and Tehran had reached an agreement that obligated Iran to do so Reopening of the Strait of HormuzIt is the narrow waterway that transports nearly a fifth of the world’s oil.
When fighting spread across the Middle East, the road was closed. This closure led to higher oil and gas prices and helped raise inflation in the United States.
The Bureau of Labor Statistics said higher energy costs were the main reason for the price increase in May.
Energy prices, including gasoline and heating fuel, accounted for more than 60% of the increase, with gas prices rising by about 59% compared to last year.
The recent agreement to end the US-Israeli war led to the reopening of the strait to shipping and the start of a crisis 60-day period of talks On issues such as the Iranian nuclear program.
Officials expect oil supplies to increase because Iran may be able to sell more oil during the temporary easing of US sanctions and a short-term waiver that allows buyers to receive oil already loaded on ships.
Oil floods back into the market
Once the road opened again, oil returned to the market. Minister of Energy Chris Wright said About 20 million barrels of crude oil left the Strait of Hormuz within 24 hours on board 72 ships.
Traffic through the corridor has doubled from the previous day and reached its highest point since late February, based on CNN and MarineTraffic numbers.
“We have normal flows today,” Wright said, noting that the amount matches recent levels after a previous agreement between the United States and Iran to stop the fighting.
He added: “Iran will not have the ability to close the Strait of Hormuz in the future. This is critical, and this is their main influence, and we are depriving them of this influence.”
Most of the increase in traffic came from ships departing rather than entering, said Giovanni Stanovo, an analyst at UBS. “Most of the increase in flows from the Gulf is going outward, with ships exiting the strait,” he said.
He noted that shipments had already picked up in early June, supported by ship-to-ship transfers in the Gulf of Oman, raising total flows from a May low of 9.6 million barrels per day to about 12 million.
New concern for the economy
Low prices bring their own problems to the economy.
Apollo’s chief economist warned that reopening the Strait could “overheat” the economy, raise inflation further and prompt the Federal Reserve to raise interest rates.
The Fed said in its latest decision that inflation “remains elevated” versus its 2% target, and officials cited “increased risks” that it could take longer to calm, with most saying a rate hike may be needed.
Torsten wrote Sloak or Apollo “The discourse in the markets is changing,” he said, arguing that lower oil prices could add more demand to “an already overheated economy.”
He cited April’s CPI at 3.8% and May’s at 4.2%, the highest level since April 2023, as well as 172,000 new nonfarm jobs in May and a “hawkish” Fed.
