Why The Iran Peace Deal Is Really An Oil Deal

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Make no mistake about it: The peace deal between the U.S. and Iran is, at its heart, an oil deal.

Yes, myriad other implications are in play in the 14-point agreement, but there is no question that oil, and the urgent need to get oil flows through the Strait of Hormuz quickly restored was the driving force behind getting this deal done now.

ExxonMobil CEO Darren Woods laid it all out in remarks delivered during his company’s first quarter earnings call on June 8, warning analysts that the paper markets have yet to absorb and account for the full impacts of the 3-month-long closure of the Strait. “There was a lot of oil in transit on the water, a lot of inventory on the water that has been deployed in the first month of the conflict. Strategic petroleum reserves have been released, commercial inventories have been drawn down,” Woods said, as first reported by CNBC.

Woods echoed previous remarks by Chevron CEO Mike Wirth and ExxonMobil Senior Vice President Neil Chapman at the May 28 Bernstein conference, warning that once the market fully accounts for those cushioning factors, crude prices could rapidly rise unless the Strait fully reopens, and fast. (RELATED: Oil Plummets After Tentative US-Iran Peace Deal)

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