The 39-day long conflict between America and Iran has now come to a ceasefire. Both Washington and Tehran are recording this deal as ‘profit’ in their respective balance sheets. US President Donald Trump is calling it a diplomatic and military victory because international trade has reopened. But, if this entire situation is analyzed from the perspective of global economy, then the story presents a different picture. A war that eliminated Iran’s top leadership and caused huge damage to its infrastructure, the same war has increased Iran’s bargaining power manifold in the global supply chain and the world oil market. Let us understand in detail how Iran has transformed this geopolitical crisis into a new ‘revenue model’.
Iran will become rich from the Strait of Hormuz
In the global oil market, the Strait of Hormuz has the status of the world’s most important ‘logistics artery’. About 20 percent of the world’s crude oil passes through this narrow sea route. during the war iran When India blocked this route, its direct impact was visible on the global markets. There was a huge surge in the prices of crude oil and the supply chain around the world was completely disrupted. In a way, Iran has shown that it has the ‘switch’ of the world economy. This huge pressure of energy crisis forced America and the international community to come to the table of an agreement as soon as possible.
Iran’s new ‘toll tax’ model
The biggest and shocking outcome of this war is Iran’s new control over the Strait of Hormuz. The route which till now was considered a completely free international waterway, is now turning into a ‘toll plaza’ for Iran and Oman. According to a news in Economics Times, under the new agreement, commercial ships passing through here may now have to pay toll fees.
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Iran has demanded that this fee should be decided on the basis of the nature and size of the cargo. This simply means that Iran has made an important part of maritime trade a source of its permanent revenue. Iran will use this money to compensate and rebuild the war damages. Additionally, due to the threat of sea mines, ships must undergo coordination with the Iranian military, which technically makes Iran the ‘regulator’ of this trade route.
The entire mathematics of logistics cost may change.
If we understand from the business point of view, the impact of this new ‘toll tax’ on sea will not be limited to shipping companies only. Whenever logistics cost (transportation cost) increases on any important trade route, it has a direct impact on commodity prices. For countries like India, which are largely dependent on imports for their energy needs, costlier freight means pressure on petrol and diesel prices and, as a result, increase in inflation in the domestic market.
Iran gets the key to the global oil market
America This deal is an ‘operational success’ because it has removed the biggest bottleneck in the global supply chain and the flow of oil has started again. But from Iran’s perspective this is a ‘structural success’. Despite losing its supreme leader Ayatollah Ali Khamenei on the battlefield and the destruction of military bases, Iran has built a business asset that will give it economic strength in the future.
This ceasefire will certainly bring immediate relief to global markets, but in the long term, Iran’s new ‘regulatory control’ on the Strait of Hormuz adds a new risk premium to international trade. That is, Iran has hedged its short-term loss into a long-term profitable asset.
Also read- Iran-America Ceasefire: 10 conditions of Iran which if Trump accepted then ceasefire happened.