US President Donald Trump and Iran have announced they have agreed on a deal. Markets have welcomed the news, and oil prices have responded positively. But before declaring the crisis over, it's worth asking a simple question. Have the issues that brought both sides to the brink of conflict actually been resolved?
I'm not convinced.
Since the early days of the war my thesis has been that Iran will use the Strait of Hormuz to teach the US and the rest of the world a lesson. They want to send a message: if you attack us, we will choke off the oil and gas supply and create a global recession. They want to make the outcome severe enough that no one ever attempts this again.
There's an argument that Iran's economy is in such a bad state that they need a deal more than the USA. I think that's a very western assumption. Firstly, their economy has been bad for decades. Secondly, they are facing what many in the regime would view as an existential threat. Economics becomes a secondary concern. The hardliners in Iran will do whatever they believe is necessary to survive.
There is another angle here, too. After decades of trying to draw the US into a conflict, Israel has little incentive to see America disengage before its objectives have been achieved.
The US appears to have underestimated both Iran's ability to influence events in the Strait of Hormuz and its ability to control the broader outcome of the conflict. Since then, Trump has appeared increasingly keen to find an off-ramp.
To his credit, he has done a good job of jawboning the economic fallout to date. The memes on the internet declaring that Trump has won this war more times than anyone else has won a war humorously allude to his many declarations of victory and repeated assurances that a deal was imminent. Does anyone believe him now? Oil markets seem to. Share markets too.
That has been a major win for him. It has helped keep oil prices below $100 a barrel and supported the share market.
The price of oil matters even more as the US midterm elections approach. Higher fuel prices are a lightning rod for the US consumer, including many of his most ardent supporters. So a deal, or at least the perception of progress towards one, is politically valuable.
But this is not really a deal. It's a deal to do a deal. It's actually just a headline.
The most difficult matters have been deferred for 60 days. Iran is still insisting that it will place a toll on the Strait of Hormuz. That is unpalatable to both the US and many nations in the region. Both sides appear to have red lines that remain fundamentally incompatible.
How much oil and gas is actually getting through the Strait of Hormuz is all that really matters. Countries around the world have been drawing down strategic reserves. In the weeks and months ahead, as those reserves deplete, that is when shortages become critical. At that point, only physical supply matters. The key variable is the volume of oil and gas moving through the strait.
I think the hardliners in Iran will ultimately get their way. I also doubt Israel will be enthusiastic about seeing the US withdraw its military support before the conflict's objectives are achieved.
Those forces are the weakest link in this agreement.
That is why I remain very sceptical. This may prove to be a successful deal. But for now it looks more like a temporary pause than a lasting settlement.