Is The Iran-US Deal Actually Done?! with Andreas Steno | Macro Mondays

**Andreas Steno** (0:06)
Hello, everyone, and welcome to Macro Mondays here at Real Vision. I'm Andreas Steno, and I'm all by myself this week as my co-host Mikkel is on vacation in Italy. And the Wi-Fi is not super strong in Tuscany where he is right now, so we'll try and make it without him this week, even though it's a big geopolitical week with the deal between the US and Iran. Remember that this is our sneak peek into our Macro research at Real Vision.
This is our weekly free show out every Monday, but we also publish both a Macro editorial every Monday, a geopolitical editorial every Redden's Day, and a portfolio editorial every Friday. And I doubled down on my risk positive tilt in the portfolio last week, but if you want to check the exact single names in the portfolio, you need a pro subscription at Real Vision. It's been a great year for the stock portfolio, and well, the stocks are flying again today with this deal between the US and Iran. It was a very, very eventful weekend, to say the least, given this deal that at some point during Sunday looked like it was ready to be signed already yesterday. We now know that the signing ceremony is planned for later this week in Switzerland. But let's see whether there will be any hiccups between now and then. On Sunday, we obviously had an Israeli attempt to sort of derail this signing ceremony that was otherwise probably going ahead yesterday with an attack at Lebanon. And we obviously don't know whether we will see hiccups before this signing ceremony. We've obviously heard that the deal is done before, but the big change this time around is that all parties agree. So I consider it more or less a done deal. But what's actually in the deal? Maybe we should start with a discussion on that. What we do know in terms of this memorandum of understanding between the parties is that it covers the next 60 days. So the intention is to reopen the Strait of Hormuz, to allow the shipping transit to resume.
And on top of that, also allow Iran to sell its oil globally without sanctions, at least for the next 60 days. What happens after those 60 days is dependent on how the negotiations they unfold from here. Let me put it like that. We do not have a clear understanding between the parties on the uranium question yet.
We do have a phrase, as far as I'm concerned, surrounding nuclear weapons, but the enriched uranium is still up in the air. And whether the US will be able to get it out is one of the questions that we still do not know the full details around. We've seen a few of the hawks within the US administration citing some concerns around this. Linsey Graham is one example of it.
He explicitly refers to JD Vans and his negotiation team. And he wants them to ask Congress when they settle on the deal surrounding the enriched uranium. So therefore, I mean, we do have some clarity for the next 60 days, but we do not have clarity years ahead. If you ever get that in the Middle East, that is. But in my opinion, this is another example of what I've earlier labeled sequential progress in this question. I actually think that from a market standpoint, we've basically been past the peak of this crisis since the first week of April.
I explicitly stated that the crisis was over from an investment perspective in the first week of April, which proved to be incredibly correct. The question is now whether we could see any hiccups in oil space now that we're at least on a path towards reopening the Strait of Hormuz again. So let's look at the details of the current oil market and whether we're actually in a surplus from a demand, sorry, supply to demand perspective, which in my opinion is the case now. And I've actually held that view for a while. If you look at the chart on page four here on the decomposition of the oil flows out of the region since the crisis started, out of the 20 million barrels that typically left the region on a daily basis, roughly say 11.5 of those were replaced by alternative measures. Another couple of million barrels, as you can see from the right hand bar, were replaced by extraordinary exports from the US, both from the SPR but also from other commercial reserves. And then maybe most importantly in light green, China has been on a bias strike basically since the latter parts of March, importing, say between France, five and a half million barrels less a day, which is a lot. So China and the US in cooperation have managed to roughly balance the market. And on top of that, which is basically the news since last week, the US administration is now bragging that they've managed to sneak out roughly 3 million barrels a day from the Persian Gulf via this Operation Freedom that was launched, I think it was in the first week of May. Peter Hexett said that more than 125 million barrels had left the Strait of Hormuz since the launch of Operation Freedom. And if you calculate the daily flow, that's roughly 3 million barrels, a little bit more than 3 million barrels. And those were roughly unaccounted for by most of the energy pundits.