US and Iran reach deal to end war, reopen Strait of Hormuz

The United States and Iran agreed June 15 to end nearly four months of war and reopen the Strait of Hormuz, a corridor for roughly one-fifth of global seaborne fertilizer trade.

Pakistan brokered the agreement, with a formal signing scheduled for June 19 in Geneva. The deal lifts the U.S. naval blockade of Iranian ports and opens 60 days of talks on Iran’s nuclear program and the possible removal of sanctions.

Brent crude fell 4.7% to $83.17 a barrel Monday, its lowest close since early March, as the announcement eased fears of prolonged supply disruption. Normalization will be gradual: roughly 500 vessels remain queued in the strait, and shipping intelligence firm Kpler estimates two to three months are needed to restore prewar transit volumes.

The Pentagon has said mine clearance in the waterway could take up to six months. Gulf nations supply about one-fifth of global seaborne fertilizer exports, and shipowners are awaiting further detail on transit safety before resuming normal fertilizer cargo movements, Bloomberg reported.

The next milestone is Friday’s signing in Geneva, which will test whether shipping volumes begin to recover before the Northern Hemisphere’s fall fertilizer-buying season.

Source: Bloomberg