US-Iran deal: Can the Strait of Hormuz get the world moving again?

**Michelle Fleury** (0:00)
Rahul, have you ever signed a deal, and it's taken ages for it to kick in?

**Rahul Tandon** (0:04)
Well, you won't be surprised about this, Michelle, but I do like deals, not just cinema deals, but yeah, when I bought my house, I got so excited, then it took me months to actually get in it. So I had to live with my parents, which I didn't mind so much, but I have to say, if you ask my wife about it, you might get a slightly different answer to it.

**Michelle Fleury** (0:20)
All right, well, we're not talking about domestic deals here, we're talking about something a little bit bigger. The US and Iran are due to sign a big deal on Friday, and it involves the Strait of Hormuz. And when it closed, you may recall one fifth of the world's oil stopped moving. The world immediately felt it. So how quickly can everything go back to normal? That's on today's episode of Business Daily.
I'm Michelle Fleury in New York.

**Rahul Tandon** (0:50)
I'm Rahul Tandon here in the UK. Normally, I would have William Bain sat next to me, but Michelle, he's deserted. He's gone off to watch some cricket instead, which I think is a bit rude of him.

**Michelle Fleury** (1:02)
I thought you were going to say he'd hot-footed it to Mexico or something to watch one of the host countries in the World Cup.

**Rahul Tandon** (1:07)
No, no, no, no, no, no, no, no. He's gone to watch the cricket, but I think we've got a better replacer. We've got someone who's even better than him, haven't we?

**Michelle Fleury** (1:15)
Yes, we have. We have a very special guest, the BBC's economic editor, Faisal Islam is with us. Welcome to the show.

**Faisal Islam** (1:21)
Hi, Michelle. Hi, Rahul.

**Michelle Fleury** (1:22)
Let's get to the Strait of Hormuz. Where is it? What's going on, Faisal?

**Faisal Islam** (1:27)
Well, I mean, how can anyone not know what it is now? It may have been forgiven about three or four months ago, but clearly, it is the small 21-mile body of the narrowest point essentially between the southern coast of Iran and the north coast of essentially a part of Oman.
It's the narrowest point obviously controlling entry into and out of, critically, the Persian Gulf. It has been and still remains, although not quite just now, the main artery for not just energy but the economy and not just oil, these days increasingly gas, which gets pumped and drilled and taken out of the ground, whoever gets taken out of the ground, and then put on ships. If it's gas, it gets frozen and then shipped en masse nonstop, 365 days a year out of the Gulf and onto world markets until, of course, what occurred roughly three months ago.

**Rahul Tandon** (2:35)
Yeah, and there's a lot of it, isn't it? If we go back to 2025, there were 20 million barrels of oil and oil products that were passing through the Straits of Hormuz. We've got 20% of the world's LNG that goes through there. And a lot of it particularly goes to those big countries like China and India and Asia. And they've really, really struggled since this has been closed, which was around the 28th of February.

**Faisal Islam** (2:59)
And so you have this twin impact that has hit the world economy hard, which is the physical supply of oil, gas, and then a whole lot of other things as well, which we'll get on to. But then also the price impact, the anticipation that this will last for some time to come, and therefore that has sort of yanked up prices in such a way that the kind of ripple effect from the Gulf and from the Strait of Hormuz has been felt instantly in the gas stations, the petrol stations, on people's bills all around the world.

**Michelle Fleury** (3:32)
Yeah, and that impact I think is worth pointing out, as you say, leading to kind of estimates from the UN that 32 million people could be plunged into poverty. Look, Rahul, this has got me thinking in many ways, I know you like to talk about films. Here on Power Players, we talk a lot about the main actors. In this particular case, that would be the politicians, the presidents, the state leaders.
But it's the background cast, the anonymous fleets, the crews, the logistics, the unseen supply chains here, that are really the central piece of this week's story, right? It's the invisible stuff, which you don't notice until essentially it goes wrong.

**Rahul Tandon** (4:13)
Yeah, I think that is the case as well. And also, I suppose we have, and I've been talking to a lot of people on our programs here on the World Service, shipping companies, people involved inside the industry. And it seems like good news, doesn't it? Hey, you know, the Straits are open again, the world goes back to normal. But the word that's being used with me all the time, and I'll be interested to hear what Faisal's got to say about, this is uncertainty. You know, I was speaking to the big German container company, Hapag-Lloyd, they were saying, yes, look, this is good news, but we're not sure when we're going to be going through the Strait of Hormuz again. And there's lots of guarantees, there's lots of things that shipping companies need. And they need to start moving, don't they Faisal? If we want to get the global economy or parts of it moving again.