Pakistan Says Hormuz Deal Is Close; eToro CEO Sees 'Untapped' US Market

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This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead, with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Massar and Tim Stenovec on Bloomberg Radio.

**Kristine Aquino** (0:31)
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**Tim Stenovec** (0:52)
Well, Pakistan's Defense Minister said the US and Iran are, quote, close to some sort of arrangement over the Strait of Hormuz, even after both sides appeared to harden their positions in the long deadlocked negotiations. Meantime, Iran says the Strait will remain shut until Iran's conditions are met. Just a reminder, the president said yesterday in the Oval Office that the Strait is open now, quote, the US is the only one that has control of Hormuz, and, quote, we control the Strait 100 percent. Noam Rayden is Senior Fellow at the Washington Institute for Near East Policy. He joins us from Washington, DC. Noam, I just want you to fact check this comment from the president yesterday. Does the US control the Strait 100 percent?

**Noam Rayden** (1:35)
Hello there, I'm very happy to join both of you. First of all, let me give you a quick overview of what's going on in the Strait of Hormuz.

**Kristine Aquino** (1:43)
Okay, please.

**Noam Rayden** (1:44)
Throughout this war, Iran has established a new navigational order. What I mean by that is the following.
It is unlikely that we're gonna go back to the maritime arrangement that existed in the Strait of Hormuz before the Iran War. Iran has gained immense influence in the Strait. It will not let go of this leverage it has obtained easily. And my prediction is the following. Iran wants to build a new maritime arrangement in the Strait of Hormuz. The return to the old routes that were being used by commercial vessels. And by that, I mean the inbound, outbound lanes in the center of the Strait of Hormuz. It is unlikely that we're going to return back to those lanes. Iran right now wants to control traffic, meaning it wants to control who enters the Strait via the Persian Gulf, excuse me, via the Strait of Hormuz, and who leaves the region. This is where we are. It hasn't changed much since March.

**Tim Stenovec** (2:45)
So no, the US does not control the Strait 100%?

**Noam Rayden** (2:50)
What we know is that Iran remains in control of traffic in the Strait of Hormuz, and this has led to new ways of trading in the region, so that regional oil and gas producers and exporters can continue to move their energy products out of the region.

**Kristine Aquino** (3:08)
Now, very interesting, because what markets are really waiting for at the moment is a return to how it was before the conflict started in the US and Iran. But what you're saying is essentially it's unlikely that we will go back to the way that shipping routes were working in the Strait of Hormuz prior to that. So how do you envision kind of the new normal for shipping in that lane? And what should investors be looking out for as a sign that, OK, we're actually making progress here?

**Noam Rayden** (3:36)
This is an excellent question.
As I said, we have a new navigational order. What Iran has managed to achieve is the following. They caused immense disruption. What Iran now is trying to do is convert this wartime disruption into a lasting advantage. And this is the reason why Iran is holding talks with Oman and making it so difficult to reach an arrangement for a future government of the Strait of Hormuz. Why? Because Iran does not want to be included in any discussions where it does not play a central role. Meaning Iran wants to be the dominant voice right now with respect to how the Strait of Hormuz will be managed in the future.
With respect to what I mentioned earlier, I mentioned the old routes. I'm referring specifically to the traffic separation scheme. This one was adopted by the International Maritime Organization in 1968
Iran does not want to return to those routes. And those routes right now are reportedly containing mines, excuse me. They are reportedly containing mines. In June, the assessment was that there were around 80 mines. And that getting rid of those mines was going to take a long time. And by the way, this is according to an international association of tankers owners. That was the assessment in June. And up until now, we don't have a clear idea about the mines in those lanes. Again, the lanes we refer to as the old inbound and outbound lanes that are not being navigated right now because of the uncertainty surrounding mines. My prediction is the following. Iran will not even make it an easy mission to completely clear those mines from the old lanes. Why? Because this means that we're going to go back to the old and traditional routes. Iran does not want that to happen. Right now, Iran wants to take advantage of this new maritime arrangement or order it has created throughout the war in order to create a lasting influence in the region. Last point is the following. Iran has always used the maritime domain in the region as a theater of operations, meaning it has always went after commercial vessels in order to retaliate against US sanctions and even Israel. We've seen Iran since at least 2019 using the maritime domain in order to retaliate against its adversaries. During this war, it has cemented this influence on the maritime domain. And finally, this is why I don't expect Iran to let go of this leverage. It has built throughout conflict.