Hormuz Shipping Remains Subdued Despite Apparent Reopening

Politics, Geopolitics & ConflictHormuz is “open”, but nowhere close to functioning normally. The U.S. has cleared mines from the internationally recognized shipping lanes and can technically get vessels through, but Iran’s military capability will still keep most commercial operators away. Only five commodity vessels crossed on Tuesday, compared to some 130 ships a day before the war. Iran is offering a temporary and limited corridor while making full normalization conditional on sanctions relief, an end to the U.S. blockade and, now, an end to Israeli operations in Gaza, Lebanon and Syria. The Israeli demand is a non-starter. Washington cannot guarantee that Israel will stop military operations in three separate theaters, and Israel has shown little willingness to comply at any point in this war. But Trump has rejected the notion of a return to the previous June agreement, which gave Iran quite a lot more in terms of concessions than Washington appears to be willing to offer now. The administration is now betting that economic ostracism and the blockade can force Tehran back on worse terms. Iran is betting on the opposite: that it can withstand the economic pressure longer than Washington and the Gulf can tolerate a crippled Hormuz.Saudi Arabia reiterated Thursday that it will not normalize relations with Israel without an independent Palestinian state, just as Trump made normalization a condition for the kingdom’s nuclear deal with Washington to take effect. Trump has formally sent the 30-year civilian nuclear agreement to Congress, starting a 90-legislative-day review that could clear U.S. companies to export nuclear technology to Saudi Arabia. The agreement also leaves open domestic uranium enrichment under U.S. oversight after a two-year assessment, breaking with the UAE model that prohibits enrichment. Riyadh wants nuclear power to reduce the oil and gas burned for electricity and preserve more hydrocarbons for export, while Washington wants U.S. companies building the kingdom’s nuclear fleet rather than China or Russia. Congress now has the nuclear agreement. Trump still needs a Saudi-Israeli normalization deal that Riyadh says requires a Palestinian state.Turkey is spending $2.4 million to strengthen its lobbying position in Washington as Ankara and Israel compete over U.S. policy in Syria and the wider region. The Turkish Defence Ministry has hired Ballard Partners, one of the best connected firms in Trump’s political network, for $200,000 a month to lobby the administration and Congress. Turkey wants back into the F-35 program and is considering disposing of its Russian S-400 system to remove the main U.S. obstacle, but the lobbying push comes as Ankara has a much larger fight with Israel over Syria. Israel is trying to stop Turkey from establishing a deeper military presence there, while Washington has backed Ahmed al-Sharaa and relies heavily on Turkey to help rebuild and train the Syrian military. Ankara has assembled a lobbying team built for that fight. It includes former Democratic congressman Robert Wexler, a longtime Turkey advocate with strong connections in pro-Israel circles, and former Trump National Security Council official Thomas Boodry. Ballard itself has unusually close ties to Trump: White House Chief of Staff Susie Wiles and former Attorney General Pam Bondi both worked for the firm. Israel has spent decades building influence over U.S. Middle East policy. Turkey is now ready to compete in spending.UAE President Mohamed bin Zayed has bypassed Saudi Crown Prince MBS and written directly to Saudi Arabia’s 90-year-old King Salman as the dispute between Abu Dhabi and Riyadh deepens. The letter contained an invitation to a UN water conference in December, while Saudi reports said it also addressed bilateral relations. U.S. and Arab diplomats see the move as a deliberate attempt to go around MBS, who runs the kingdom and handles its major foreign relationships. The two sides are now fighting over Yemen, backing opposing camps in Sudan and moving into competing regional security blocs. Saudi Arabia has joined Turkey and Pakistan in the Mecca defence pact, while the UAE has built an increasingly close security partnership with Israel. Riyadh had already proposed handling the dispute through Emirati national security adviser Tahnoon bin Zayed and Saudi Defence Minister Khalid bin Salman, but that channel has produced no visible breakthrough. U.S. mediation has gone nowhere, either, with planned visits to Abu Dhabi by senior American officials, including Trump envoy Steve Witkoff, cancelled. MBZ is now taking the dispute above MBS and directly to his father.Canada will impose retaliatory tariffs of up to 50% on nearly $20 billion of U.S. goods beginning September 8 after trade negotiations with Washington collapsed over the weekend. Ottawa will match U.S. tariffs “dollar for dollar, rate for rate,” applying levies of 15%, 25% or 50% to more than 700 American products. The move follows Trump’s 50% tariffs on roughly $20 billion of Canadian exports and his decision to raise tariffs on Canadian vehicles, auto parts and steel to 50% from January 2027.Deals, Mergers & AcquisitionsEnergean is in exclusive talks to buy roughly $1 billion of BP’s Egyptian oil and gas assets as the company looks beyond its heavy exposure to Israel. The package includes BP’s interests in the producing West Nile Delta gas assets and its 50% contractor working interest in the Temsah concession in the eastern Mediterranean, where Eni recently discovered an estimated 2 trillion cubic feet of gas. BP would retain its Egyptian assets held through Arcius, its joint venture with the UAE’s XRG, including the giant Zohr gas field. For Energean, Egypt offers producing assets and new gas development outside Israel, where repeated conflict-related shutdowns have exposed the concentration risk around its flagship fields.Gunvor is in talks to buy up to $1.5 billion of Haynesville natural gas assets as the commodity trader builds a U.S. gas business around LNG exports and rising power demand. The Silver Hill Energy Partners assets cover roughly 58,000 net acres across East Texas and Louisiana and produce about 370 million cubic feet equivalent per day. Western Natural, which Gunvor already backs, would operate the assets if a deal is reached. This would be Gunvor’s second Haynesville deal this year after financing Western Natural’s roughly $300 million acquisition of producing assets in the basin, while Gunvor also added a second long-term LNG offtake agreement with Delfin Midstream in May. Haynesville is one of the closest major gas basins to Gulf Coast export terminals, giving Gunvor upstream supply alongside its growing LNG portfolio as new export capacity comes online and the Iran war pushes buyers toward U.S. gas.Uniper has locked in Norwegian gas through 2041 under a new 15-year supply deal with Equinor, extending Germany’s reliance on Norway well beyond the immediate replacement of Russian supply. Equinor will deliver more than 30 TWh of gas annually from 2027, equivalent to roughly 2.8 billion cubic meters a year, or more than 40 billion cubic meters over the life of the contract. The volumes will be priced against market benchmarks and delivered into Germany and northwest Europe. Germany has spent the past several years replacing Russian pipeline gas with Norwegian supply and LNG, and Norway is now its largest gas supplier.Discovery & DevelopmentIran says it has discovered more than 7.5 trillion cubic feet of natural gas in southern Fars Province, including an estimated 5.7 trillion cubic feet that can be recovered. Oil Minister Mohsen Paknejad says the recoverable gas is equivalent to roughly 15 years of production from one phase of South Pars, with sweet gas that should require less processing and significant condensate volumes adding to the value of the field. Iran does not lack gas: it already holds the world’s second largest reserves. It lacks the capital and technology to develop them quickly, and the war has made that considerably harder. Iranian gas production was cut by around 230 million cubic meters per day after U.S. and Israeli strikes, while Tehran is still repairing damaged energy infrastructure.Shell has shelved its Aphrodite offshore gas project in Trinidad after failing to agree commercial terms with state-owned National Gas Company. Aphrodite was expected to produce about 100 million cubic feet per day and had already reached a positive final investment decision, but Shell has now released the drilling rig assigned to the project. Trinidad’s problem is upstream supply: falling domestic gas production has left Atlantic LNG operating below capacity and forced petrochemical plants to compete for limited feedstock. The government has been trying to close that gap through new domestic projects and imports from Venezuela, including the Dragon gas development.TotalEnergies is looking for more oil and gas in Norway as Europe works itself into a long-term dependence on Norwegian supply. CEO Patrick Pouyanné says the company is installing a new exploration manager in Stavanger and wants to expand its position on the Norwegian continental shelf, where it already produces about 220,000 boe/d. TotalEnergies’ stance is that Europe will need Norwegian production for longer than previously expected.