ACCORDING to US President Donald Trump, a peace settlement with Iran is “95% there”. Well, that was supposed to be the case on Sunday.

Two days later, the US launched an air strike on an alleged drone control station near the port city of Bandar Abbas, sparking Iranian retaliation on Thursday morning.

If just 5% separates the two sides, what is stopping them coming to terms?

It is now exactly three months since the onset of the latest war in the Middle East, and it is business as usual in the Strait of Hormuz. Which is to say, very little business.

As our Asia-Pacific editor Cichen Shen reports, China’s diplomatic clout has allowed Cosco to negotiate the release of some 10 vessels that would otherwise have been trapped in the Middle East Gulf.

That’s better than nothing. But in normal times, between 130 and 140 ships transit the maritime chokepoint every day, and at the start of this year, extended closure was not on anybody’s bingo card.

The consequences are already being felt, ranging from increasing energy bills to fuel riots in several African countries to airlines cancelling tens of thousands of flights because of a shortage of jet fuel.

Worse is likely to come. Food will become more expensive as a result of a 50% jump in fertiliser prices, while car manufacturers and petrochemical companies point to impending gridlock in their respective global supply chains.

These developments are set to boost inflation even as economic growth slows, leaving central bankers facing an impossible quandary on interest rates.

While much of the damage has already been inflicted and may prove irreversible, it is difficult to see what possible advantages any of the parties involved in the hostilities could secure by deepening it.

Judging by the title of his 1987 memoir, President Trump prides himself on being the master of The Art of The Deal. It’s time for him to prove the point.

David Osler
Law and marine insurance editor, Lloyd’s List 

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