The chances of a U.S.-Iran deal are low and the next two months carry the greatest escalation risks that could derail the recovery of oil flows through the Strait of Hormuz, energy consultancy FGE NexantECA says after the U.S. midterm elections.
“Not only are we not close to a resolution, we are even worse than we were before the June MOU,” FGE NexantECA’s chairman Emeritus, Fereidun Fesharaki, told Bloomberg TV in an interview on Friday.
There is actually a high chance that the U.S. and Israel could strike Iran before January 3, when the new U.S. Congress convenes, according to FGE NexantECA.
“A Democratic House and Senate, as we expected, leaves President Trump a two-month window to strike Iran again, most likely mid-November to mid-December,” FGE said in a note on Thursday.
The consultancy’s analysts believe that Trump’s crushing defeat at the midterms would even embolden Iran to demand bold concessions before or during any potential talks—concessions that the U.S. cannot accept.
FGE’s current base case is a limited strike on Iran before January 3, most likely mid-November to mid-December which could last up to four weeks.
“We expect the President to use the two-month window to strike Iran again, to weaken it further and add pressure towards a deal,” the analysts said.
“The strike is meant to add pressure, not to end the conflict, so the blockade and sanctions stay in place during and after any strike, which we expect to be over by the end of the year.”
In its base case, FGE expects that flows through the Strait of Hormuz will start to gradually recover from March 2027, after talks resume in early 2027.
Meanwhile, Iran’s oil exports are near-zero and “By the end of November, they will be starving because there will be no money coming in,” FGE’s Fesharaki told Bloomberg.
By Tsvetana Paraskova for Oilprice.com
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