Here is what the US-Iran deal looks set to be like after another TACO moment

If Iran’s version of the draft is to be believed as what will be the finalised version of the deal, then it means that the US is the one who has blinked first in the game of chicken. After having said that a deal is very close to being signed for nearly 40 times, it finally looks like Trump is not simply bluffing this time around.

Then again, the moment seems to be coming only after what looks to be another infamous TACO moment on his end.

After months of trying, we’re essentially going back to square one with the US realising that Iran is just every bit as stubborn as them on the war front. And under the circumstances, the US does not have as much leverage as they thought to get Iran to stop threatening the Strait of Hormuz and also on nuclear arrangements.

And so it would seem that Washington has to concede and agree to terms that would favour Tehran instead. As a reminder, these were the four main key red lines preventing a deal in the many weeks before this:

With the US now reportedly set to concede on these positions, we then move forward to the next step. That being another 60 days of negotiations to reach a final agreement on nuclear issues.

So, this is what the deal would entail and what needs to hold for the next 60 days once signed:

• US to make a “commitment” to lift its naval blockade (likely to see a timeframe here, I’m guessing 30 days based on the Hormuz call)
• Iran to reopen the Strait of Hormuz and to allow traffic to get back to pre-war conditions in 30 days
• US to commit to not expand any military presence in the region and/or impose any new sanctions
• Iran oil sanctions to be lifted
• A portion of Iran’s frozen funds to be released before negotiations begin
• The rest are to be released in piecemeal depending on Iran’s compliance to the deal and nuclear arrangements
• A permanent ceasefire to the war on all fronts, including Lebanon
• Iran to reaffirm commitment to not produce any nuclear weapons
• 60 days of negotiations to begin after in reaching a final agreement on nuclear issues – namely the fate of enriched materials and enrichment

Both sides had been stubborn to not want to concede on their key red lines previously. But seeing this, it is pretty much the US being the one to concede on every position just to get Iran to play ball here. And that includes having to keep a leash on Israel it would seem.

The question now is, what happens if there is a breach of any of these in the next 60 days? Or better yet, what if Iran continues to choose to drag things along until they get it all their way just like they did before with the 2015 JCPOA?

Is Trump just going to leave everything alone and get over it? Or will his ego be too hurt that he feels the need to respond and escalate things again?

For markets, what happens with the Strait of Hormuz will be pivotal. And I’m just afraid that the reality of the situation may not play out as per what the optics of this deal may imply. From before:

This article was written by Justin Low at investinglive.com.