Cancelled Travel Plans
No, this time not because of the impending jet fuel crisis threatening continental travel as we discussed yesterday. Instead, I’m referring to the grounding of Vice President Vance whose trip to Islamabad, Pakistan was cancelled on Tuesday to avoid embarrassment. The Vice President was expected to travel on Tuesday to resume talks with Iran on a permanent peace plan. However, it rapidly became clear he wouldn’t be met at the negotiating table by an Iranian delegation.
Wanting to avoid embarrassment the US administration cancelled the trip with no clear time scale to resume these key talks. President Trump had proposed a Wednesday deadline for the talks to resume at least in principle in order to uphold a ceasefire agreement entered into on April 7. It was reported by a White House Press Secretary that there was now no strict deadline in place for the US to receive a de-escalation proposal from Iran. This follows Trump’s truth social post justifying this extension based upon what he sees as a lack of government within Iran following military activities.
Most, however, will be questioning this logic with gas prices hitting record highs and hurting US consumers. Stalemates will continue to create uncertainty and push realised and implied volatility higher. Both sides now hold the other’s impasse of the Strait of Hormuz as the sticking point to negotiations on a permanent peace deal. Supply constraints on near-dated futures contracts including Brent are allowing front-month contracts to rise with prices heavily backwardated.
Discussion and Analysis by Charles Porter
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