Summary

• Another weekend, another failed deal, and this might be the last chance to negotiate the reopening of Hormuz before a major inflationary shock.
• Specifically, IEA data suggests global oil inventories will reach critical levels in June, potentially triggering oil prices above $150/barrel.
• The markets continue to optimistically price the deal, but the "real" deal is unlikely; neither side can make the required concessions.

No Deal - Again

Another weekend, and another wait for the Iran deal. And another disappointment. No deal - again.

Let's rewind:

Last weekend Iran sent their counterproposal to the US, and the US rejected it. Then, Trump stated that he "delayed" the planned resumption of kinetic war activities with another strike on Iran - to give it one last chance to negotiate a peaceful solution.

This weekend we got a very optimistic story from all sides, especially the US, with Trump stating that "the deal is largely negotiated." But then on Sunday, Trump stated that he is in "no rush to make the deal" - with implication that the deal has not been reached - again. Yet, the negotiations continue, and the planned bombing remains delayed.

The Last Chance - Time is Running Out

However, the unfolding negotiations are likely the last chance to make a diplomatic solution before the war resumes.

Specifically, the US has to reopen the Strait of Hormuz immediately - before a major crude oil shortage starts in June, with oil spiking above $150/barrel. After Hormuz closed on February 28th, the oil shortage has been filled with inventories from strategic reserves, but these inventories are expected to reach critical levels in June. At that point, the crude oil price is expected to start spiking, causing a massive global inflationary shock. These are the May IEA recent predictions:

• Total March–April inventory draws: 250 mb
• Only April OECD inventory draw: 146 mb
• Draw rate: 4–8 mb/day
• Gulf supply loss: 14 mb/day
• Summer demand peak begins in June
• At a 4–8 mb/day deficit, June alone removes 120–240 million barrels.
• This pushes global inventories into the 90–92 days of forward cover zone, which is the threshold the industry defines as minimum operational level.

So, that's it. Hormuz has to reopen

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