The Strait of Hormuz Was (Briefly) Open. Now What?

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1:51Bloomberg Audio Studios. Podcasts. Radio. News. The Strait of Hormuz is now open. The news came at 8.45 a.m. Eastern Standard Time. In a post on X, Foreign Minister Ambas Arachi said in line with the ceasefire in Lebanon, the passage for all commercial vessels through the Strait of Hormuz is declared completely open for the remaining period of ceasefire. How did you react to that news? What was your first thought? My first thought was the oil price. Bloomberg's Patrick Sykes, who edits breaking news out of the Middle East, watched as the price of Brent crude plunged by as much as 10 percent to$88 a barrel on optimism that oil from the region will be able to reach global markets once again.

2:37My second thought was, hang on a minute, he's clearly still referring to that Iran-approved route. A key second part of that social media post from the foreign minister, that ships must travel on a specific route determined by Iran. Iran still wants to see vessels coming via that new route closer to its shore than the previous one, and still working in coordination with its authorities, namely the military, the IRGC. So I think important to emphasize this is not a return to the pre-war status quo. Iran is still the one setting the terms of entry and exit. And it's still the one setting the terms of how those passages will be done.

3:19That is not how President Trump sees it. He was posting on social media throughout the morning, throughout my conversation with Patrick, celebrating the news, saying the strait is completely open and ready for business, declaring a great and brilliant day for the world. It's something he doubled down on. In a phone interview with Bloomberg White House correspondent Kate Sullivan, Trump said a deal to end the war is mostly complete, that Iran has agreed to suspend its nuclear program indefinitely. So when I spoke to him for a few minutes this morning on the phone, there were all these questions about whether this would be a temporary or indefinite, and the president was very clear.

3:54He said, no years, unlimited. He said, I asked him a couple times whether this would be indefinite. He said, no, unlimited. But even as we're seeing ships enter the strait, testing this new openness, Patrick says there is still a lot of uncertainty.

4:15I'm David Gurra, and this is The Big Take from Bloomberg News. Today on the show, how open is the Strait of Hormuz? How did this dramatic reversal come to be? And the world is wondering, will it last?

4:32While the Strait of Hormuz is now open, President Trump posted on social media this morning that the U.S. blockade of vessels attempting to enter or exit Iranian ports will continue. We've lost one of the two blockades, right? We had kind of two parallel blockades facing each other. Iran, on the one hand, dictating its own terms for who could and couldn't come out of the strait. and the US doing the same, but obviously targeted specifically at Iranian shipping interests. So as of now, it seems that Iran is happy to let those other ships, including American or American-linked ones, come. That wasn't the case ever since the war broke out.

5:11But on the flip side, the US still ostensibly intends to interdict, potentially even seize sanctioned Iranian ships, Iranian ships that it considers to be carrying contraband. Patrick, walk us through what's going to happen here over the next few minutes and hours and days. We had a conversation a few weeks ago with the retired Admiral James Tavridis, who talked about kind of the psychology of captains of these ships would be worried about taking their vessels through the strait, given what may or may not be there or how open it, in fact, may actually be. I guess my first thought here was, would I want to be that captain taking my ship through first?

5:47I think you'd feel a little more assured than yesterday, but you wouldn't be fully reassured. I think we've had some initial conversations with owners and traders already, and people are saying, OK, this is good news. This is welcome kind of signaling. But we do need to see how it translates on the ground. In particular, they still want to know what insurers make of it. That piece of the puzzle, the insurance, was the key element that meant some of those who maybe had the risk appetite themselves to go in and out of Hormuz or try to do so didn't feel comfortable doing so because ultimately they didn't have the cover that they needed.

6:26So far, we've seen some industry associations, tanker operators and so on saying that they still need to see exactly how it would work. And I think we can expect a lot more of that. You and I are talking mid-morning New York time. Best we know right now, how did this reopening come to be? I see it in the light of the expected resumption of talks between Iran and the US in the coming days, potentially this weekend. Recall that the ceasefire between them is set to expire early next week. So if that's not going to be extended, as Trump signaled in some of his latest comments, we do need to see some kind of deal, however preliminary, over the weekend, right?

7:09So I think from Iran, this is a kind of a gesture, a positive gesture. They'll frame it as one of goodwill in order to keep those negotiations on track. And we can see from Trump's reaction from the market reaction that it's being perceived, I think, suitably positively, even if substantively, for the reasons I mentioned about insurance and a lack of clarity on the ground, it may not actually change that much. Lebanon has been a huge sticking point here. We had this meeting in Washington, D.C. this week between Israel's ambassador to the U.S. and Lebanon's ambassador to the U.S. Wouldn't call it negotiations, just talks, but these were talks without precedent.

7:46We haven't had them for many years as kind of direct talks. Why has Lebanon shaped up to be such a sticking point here in this other conflict, in the Iran war? Yeah, I said Lebanon became really important, and we saw that in the first round of talks. Iran wouldn't even walk into the actual negotiation room until it was able to say, rightly or wrongly, that it felt Israel had pulled back somewhat on its Lebanese front and had therefore taken a step towards implementing the ceasefire. Iran is basically linking the two conflicts, right? Making its own ceasefire with the U.S., conditional on the implementation of Israel's ceasefire with Lebanon.

8:24or more specifically with Hezbollah. For Iran, this is partly a political thing. They don't want to be seen to be disowning their allies in the region. Hezbollah, of course, one of their main proxies. But beyond that, I think it also feeds into the Iranians' demand that however this war ends, it ends in a way that brings a conclusion to the conflict, not just in Iran, but in the whole region. We've seen these bouts over the past year or even longer, ever since October the 7th in Gaza, right, in Israel. These bouts of conflict where it's come up again and again, and Iran in particular feels it's been burned by holding negotiations multiple times only for them to collapse into conflict.

9:07So it's looking for a more lasting conclusion to the conflict, not just at home, but in the region. As you and I are talking, the President of the United States is still posting on social media. And he writes, again, this deal is not tied in any way to Lebanon, but we will make Lebanon great again. Maybe we can step back and talk a bit about the U.S.'s engagement with that other conflict. So, of course, the U.S. and Israel launching this war against Iran. At the same time, Israel launching this incursion into Lebanon. What does that tweet say to you broadly about the president's engagement with that other conflict between Israel and Lebanon?

9:44I think it says that he's got to balance those two audiences, right? He wants a deal with Iran, but he also doesn't want to be seen to be caving to Iranian demands that he, quote, reign in Israel, his key ally in all of this. And that, I think, is exactly how Iran is going to frame it, right? It's going to say that we were able, through the leverage we'd accrued in the course of the war, to force America, the great Satan, the global superpower, to reign in Israel on our terms. That's how I think we can expect Iran to be framing it. Patrick, you mentioned the fragility of this ceasefire. What needs to happen here in the next 10 days for that ceasefire to hold longer than that?

10:25I think we need a deal, right? We need a deal. As soon as this weekend, we know that the sides have talked about a freeze on Iran's uranium enrichment. The other point I think there's less clarity on is what happens to Iran's stockpile of highly enriched uranium. If the U.S. were to negotiate some kind of way to extract or neutralize that, that I think it could claim as a major win of the kind of caliber that would allow it to draw a line under the conflict. Whether or not that in turn keeps Israel in check and Israel sticks to the terms of that, not just in the immediate aftermath, but longer term as well, I think is less certain and remains to be seen.

11:05Coming up, for years, Iran had threatened to close the Strait of Hormuz. Now that the country has done it, will it do it again?

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14:40Patrick, I go back to what you said at the beginning, which is you saw this news and immediately thought about the price of oil. And indeed, we've seen oil prices plunge off of this news. The S &P was already rallying going into this. What does all of this say about the way investors are thinking about this conflict now seven weeks in? I think it's testament to the fact that traders are digesting this news with just voracious appetite, right? And that all of the president's tweets, his comments, however often contradictory they may be, they have that power to push markets in one direction or another.

15:16just because A, the appetite is so great, and B, ultimately it is the president of the United States. And whatever your view on Trump's credibility as a speaker, I think markets do have to, to an extent, take him at his word because those words are sending signals to markets in real time. His credibility as a speaker and a tweeter as well. I keep going back to the post that he's making this morning, and another one has to do with the prospect of there being mines in the Strait of Hormuz. He wrote, Iran, with the help of the USA, has removed or is removing all sea mines. What sense do we have of how littered this strait is with mines, how real that danger is, and how much progress indeed the U.S.

16:00has made clearing those from this waterway? Very little, in short. I mean, Iran has been deliberately ambiguous about whether or not it has indeed mined the strait. The most recent indication we had was last week when the authorities in Iran published this map of their new accepted route through the strait closer to the Iranian shore. It said that it was establishing this route in order to protect shipping from mines, right? So it hints that there's a danger there without claiming to be the party responsible for it. Beyond that, the reporting has been more mixed about, you know, the extent to which it's been mined, the number of mines in the area.

16:40But ultimately, the clearing of them, however many they are, wherever they were initially placed, will be really important because it may be that they are no longer in the place that they were initially set down by Iran. And that brings whole new risks if they've come closer to the Armani shore, that being, of course, closer to where the previous transit route through Hormuz was. It's just a whole other danger that is going to outlive the actual hot conflict that could be resolved with the deal. Before this conflict, there was always this fear out there that Iran could do something like this, could shut down traffic through this crucial passageway, create chaos in the global oil market.

17:19The idea that it could weaponize the Strait of Hormuz, that threat alone, seemingly enough to move markets here. Now that Iran has done this over these last few weeks, what have we learned about that as a potent weapon? I think we've learned that it will cross the Rubicon, right? it's been a threat made for decades. And it was a frequent judgment call we had to make reporting on it when, you know, some military official would refer to this threat. We'd have to assess, okay, how seriously do we take it in the current context from this guy and so on. Now that it's been done, I think those threats are going to be taken a lot more seriously whenever they're made and whoever they're made by.

17:57Iran has said that it is prepared to use that nuclear option. And it's indeed referred to this as its nuclear weapon, right? This ability to stranglehold the global economy. It's a kind of leverage that it never got with the whole nuclear debate, no matter how much it enriched, no matter how much it stockpiled, it was never able to exert this kind of outsized asymmetric influence far beyond its borders. So it's crossed the Rubicon and I don't think it's going to easily give up on the threat and even the control that is accrued. I'll ask you lastly just about the way in which the U.S. has processed the might of this new weapon of being able to close the strait.

18:39And the president posted this morning, Iran has agreed to never close the Strait of Hormuz again. It will no longer be used as a weapon against the world. The president signing that post once again. Over the last 24, 48 hours, the president has made claims about what Iran has said it would agree to or has agreed to, claims that we haven't been able to verify from the Iranians themselves. What do you make of the way that the U.S. has reacted to Iran's recognition of this power that they have in controlling that waterway? This sounds to me like building the material for a claim of victory, right?

19:09The Iranians, as you say, have been much less vocal about how positively things are going. I don't see them making any public statement to the effect that they will never close it again, because the whole strength of the threat rests on the uncertainty about whether they will or won't use it and in what circumstances. And I think I'd just go back to that, the original tweet by the foreign minister, Ar-Rol Shee, where he makes very clear this is conditional. This is as long as the ceasefire lasts. And it's only happening now because the ceasefire in Lebanon is at a maturity that we feel is sufficient.

19:46So the signaling from Iran is much more cautious. I think statements from the president that it would never happen again. He may be hoping, though that kind of thing is easily forgotten if within a few days we're talking about a peace deal and that becomes the headline that dominates the agenda.

20:25Naomi Shavin, Alex Segura, Julia Weaver, Yang Yang, and Taka Yasuzawa. There's much more on Bloomberg.com. Get unlimited access to all of our coverage at a special rate for listeners at Bloomberg.com slash podcast offer. Thanks for listening. We'll be back on Monday.

20:51Bethany Frankel here from Just Be With Bethany Frankel, and I am just going to say it. The drinks aisle needs an intervention. Bottles, cans, all promising health and wellness. But after a glug, you just shrug. Then there's Synergy Kombucha, real kombucha. Synergy supports mind and body through your gut with 9 billion probiotics. Yup, 9 billion probiotics. Can you even count that high? In flavors you will love. No hype, just quality, taste, and real benefits. That's kombucha made the right way. Don't chase fads, choose standards. DM at Synergy Kombucha on Instagram with the code TheRealKombucha to get a free bottle while supplies last.

21:31Synergy, the kombucha with standards. American soccer is about to explode. The World Cup is coming.

21:44I'm Tab Ramos. I'm Tom Bogart. On our podcast, Inside American Soccer, you'll get the real storylines, the biggest decisions, and the truth about the U.S. national team. It wouldn't be a huge surprise if our team ends up in the quarterfinals or potentially a great run into the semifinals. Listen to Inside American Soccer with Tom Bogart and Tab Ramos on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Hi, I'm Iris Palmer, host of the Against All Odds podcast. Every week, I'm sitting down with exceptional people who have broken barriers even when the odds were stacked against them, like chef Victor Villa of Villa's Tacos.

22:22You know the taquero from the Bad Bunny halftime show? It was great. It was a big moment. It was special. And I felt like I was really representing my family, you know, my brand, my city. I was representing all taqueros, not only of like, you know, the U.S., but of Mexico and beyond. All the taqueros of the world. Listen to Against All Odds on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.