00:00How do you read President Trump's ceasefire announcement?
00:03So I think this is really a case of the Iranians having the upper hand,
00:07not necessarily in the sense that they'll win the war or that they'll end up with a good deal.
00:12I actually think our base case at Signum is that President Trump is going to lose patience with them
00:17and restart the war, and that is going to hurt Iran perhaps more than it hurts the U.S.
00:21So I wouldn't say necessarily that Iran is going to continue to have the upper hand.
00:25But at this juncture, I think the fact that he extended the ceasefire is a sign that they are
00:29leading the negotiations as far as pace and rhythm.
00:34Okay, what is the likelihood in your view that we return to a kinetic war,
00:38that there's a real chance once again of military escalation?
00:43Yeah, so I think you hinted at this very well in the introduction,
00:45which is we're in a state of disequilibrium, right?
00:47Things can go on the way that they are.
00:49And so I think they have to resolve either with talks or with war.
00:53And our base case is that they'll resolve with both, i.e. we will have talks first.
00:57I think it's very likely that President Trump is going to agree to ease the U.S.
01:01blockade on Iran in exchange for a second round of negotiations being held.
01:05But those talks, unfortunately, in our view, are not going to lead to a permanent deal.
01:12So here's the thing.
01:13And even just a short while ago, Trump was posting about the economic pain that Iran are sustaining
01:20because of the ongoing closure of the straits of the U.S. naval blockade.
01:25Is the thinking here that at some point Iran is going to capitulate
01:30because the economic costs around the closure of the straits of Hormuz are just too high to bear?
01:36Because, again, you know, many analysts in the space will say that that thinking is misplaced.
01:42Perhaps the Iranians, for their part, continue to be defiant.
01:45And if they come out the other side of this having just survived, that's enough.
01:51That's exactly correct.
01:52That is the thinking, and it is a mistake.
01:55And I think it encapsulates the evolution of this war,
01:58which is that at every juncture, President Trump has totally misread the Iranian situation
02:01and the Iranian leadership.
02:02I will point out one thing, though, which is that not only will the Iranians, quote-unquote,
02:08survive this blockade, but they have the upper hand in terms of escalation
02:11because they can at any point close the Yomu pipeline or attempt to do so,
02:16which they would have quite some success in doing, I think.
02:19And that would mean that you lose an extra 5 to 7 million barrels of oil off the market pretty
02:23quickly.
02:26What do you think happens to the straits, ultimately?
02:28Is there going to be a new protocol structure around the Strait of Hormuz once this is over?
02:34Or is Iran just using it as a tool to extract more concessions from the U.S.
02:41when it comes to the lifting of sanctions and frozen assets?
02:44So as regards the financial aspect of Hormuz, i.e. this idea of a toll booth
02:49and an environmental or safety fee, as the Iranians would like to call the new sort of racketeering system,
02:54I think that is bluster.
02:56That is, them using this as leverage to try to extract greater frozen asset,
03:01you know, sort of unfreezing and sanctions relief.
03:04But as regards the possibility of an Iranian de facto or even, not the jury,
03:10but paperwork-based veto over what comes through the strait,
03:14that is something that even in the Iranians' sort of absolute bare minimum line,
03:19they will insist on, which is not me suggesting whatsoever that that is acceptable.
03:24But I think that's one of the points on which these negotiations could break.
03:30Trump described Iranian leadership as being fractured.
03:34And again, there's been a lot of reporting the last couple of days,
03:37suggesting that there's sort of a line emerging between the more pragmatic voices in Iranian leadership,
03:43those who led the discussions, the first round of discussions in Islamabad,
03:47versus the more conservative clerics, the hardliner, IRGC commanders.
03:53Do you believe that that is the case on the ground?
03:56Is there a real fracturing of leadership going on?
03:58Or is there still an element of cohesion, which is what, you know, the state media are trying to present?
04:05Yeah, I think it's very highbrow, and most Iran experts will try to downplay the divisions and say that that's
04:11all hype.
04:12I think it's pretty clear that there are divisions, right?
04:15That the hardliners really do have, I wouldn't necessarily say the upper hand,
04:19but veto power over what's being negotiated, and that they are driving a much harder bargain.
04:23So yes, I would say there is definitely a division.
04:28Okay, so then where does this lead, what does this all lead to the potential of some form of a
04:34deal at some point in the future?
04:36We know that from the Iranian perspective, they can keep negotiating for a very long time,
04:43and historically that has been the case.
04:45It took years to get JCPOA over the line.
04:47Where does this lead the current state of affairs,
04:51and is there a possibility of a deal being inked in the coming weeks, do you think?
04:56Right, so going back to this point that we're not in a stable equilibrium,
04:59I don't think that endless talks is a solution.
05:02I think much more likely is that we're going to have anywhere between one and three more weeks of talks,
05:08and then the world will resume, at which stage we could be in fighting for weeks or months, potentially,
05:14before, you know, if you really want to fast forward, before potentially another deal comes about,
05:19but in a situation where the world economy has deteriorated meaningfully since then.
05:25Okay, and the reason you think that is because there's just not going to be a breakthrough
05:29if there's another round of talks, to be clear.
05:31That is exactly correct.
05:32I think the bid and the ask are not going to overlap,
05:36and I think it's going to be very hard for President Trump to sort of look the other way all
05:40through the midterms.
05:41I think it's going to be very hard for President Trump to sort of look the other way all through
05:41the midterms of the midterms of the midterms of the midterms of the midterms of the midterms of the midterms
05:41of the midterms.
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