Bangkok: It became big news, sending global stock markets into a positive reaction, when President Donald Trump announced via social media that he had reached "The Great Deal" with Iran. This resulted in an immediate drop in Brent crude oil prices to $80 per barrel and a strengthening of the Thai baht by 30 satang. However, leading economist Dr. Supavud Saichue offered an interesting perspective, suggesting that what we are seeing may only be "buying time" rather than lasting peace.
According to Thai News Agency, the ceasefire agreement consists of four preliminary agreements, not yet officially signed but expected to occur on June 19th in Switzerland. The anticipated content focuses on a ceasefire on all fronts, including pressuring Israel to stop attacking Hezbollah in Lebanon, reopening the Strait of Hormuz by ending the US naval blockade, a temporary exemption from sanctions allowing Iran to sell oil for 60 days, and the initiation of technical negotiations on nuclear weapons.
The "nuclear" issue remains a tough challenge that may not be resolved in 60 days. Dr. Supavud points out that dealing with Iran's enriched uranium is critical, as it amounts to 440 kilograms, ready for nuclear weapon development within weeks. While past negotiations under Obama took years and involved numerous experts, Trump's team relies on close associates, who may lack the technical expertise necessary.
Dr. Supavud also analyzes the shifting bargaining power, noting that as the US midterm elections approach in November, Iran's leverage may increase. Trump desires low oil prices to boost votes, yet Iran can threaten to close the Strait of Hormuz to pressure the US into returning frozen assets worth $24 billion.
Geopolitical implications are significant, with Gulf States questioning the security of US military bases on their territories, which could become targets. Iran has discovered that controlling a strategic oil hub can impact major economies more than military actions.
In summary, while lower oil prices and a positive stock market may please investors and the public in the short term, Dr. Supavud warns against complacency. Risks, including unaddressed issues in the Strait of Hormuz and Israel's stance, could lead to volatility if technical negotiations fail. The next 60 days serve as a "halfway point" with potential for significant changes later this year.