The oil market is bracing for a prolonged stalemate between Iran and the US, rather than a swift resolution or escalation. While some anticipate renewed hostilities after the US midterm elections, industry executives are quietly preparing for a prolonged deadlock. The conflict, now nearing 250 days, has kept oil prices above $US100 a barrel, with no clear end in sight.
President Donald Trump has hinted at both diplomatic and military options, but his remarks have lacked consistency. Iran's Supreme Leader Mojtaba Khamenei has also reiterated his conditions for peace, though neither side seems willing to concede. The status quo may be the most manageable outcome for both, despite the economic and strategic costs.
For the US, extending the stalemate means absorbing higher oil prices, while for Iran, it means economic isolation and potential social unrest. However, the Strait of Hormuz remains partially open, with Middle Eastern oil flows nearing pre-war levels. US Secretary of Energy Chris Wright noted that supply has recovered to about 80% of pre-war levels, helping stabilize prices.
Iran, meanwhile, faces severe financial strain, with its currency losing a quarter of its value in two months. Despite the pressure, the regime has historically endured hardship and may rely on smuggling networks to sustain itself. Unless economic collapse forces a change, the stalemate is likely to persist.