I have just read an article on the current Iran/US tensions by Karim Sadjadpour of the Carnegie Endowment for International Peace which was published by The Atlantic yesterday.
In my opinion this article sums up the differences between Iran's Supreme Leader, Ayatollah Ali Khamenai, and US President Donald Trump perfectly (perhaps especially in describing the latter as "a variation on the prototypical fox; he does not know many things as much as he says many things").
The one point I would have added in conclusion of the analysis is that Ayatollah Khamenei's "one big thing" not only makes it very difficult for him to contemplate coming to the table with the US generally, but also nigh on impossible, in my view, as long as Mr Trump is in the Oval Office. Or at least until after the outcome of the 4 November 2020 US election is known. If a Democrat were to prevail, anyone among the present known candidates would almost certainly have a better chance of engaging with Tehran in negotiations. Not least since Mr Trump's recent actions have almost certainly emboldened the hardliners there, as Mr Sadjadpour's article argues.
On the other hand, if Mr Trump does secure a second term, by then Iran's economic situation may force the regime to the table. But one would be unwise to bet on that as a surefire thing...and especially not if Ayatollah Khamenei's age and/or poor health have not got the better of him in the meantime.
So, the big question remains as to whether a serious escalation can be avoided for at least another 18 months.
Against this backdrop, I consider the reaction of the oil market this week to have been remarkably restrained. Brent at around USD65pb hardly reflects serious concern of the sort war-driven significant drop in supply which is certainly not impossible given the importance of this seaway to maritime flows. This may be correct (for now at least). But it may also be driven in part by continuing concern over China/US trade, which was dominating investor thinking last week and may again next with the Trump/Xi Jinping meeting imminent and assuming nothing particularly bad happens in the Gulf in the meantime.
Or maybe investors are just as confused by Mr Trump's contradictory signals (and, to be fair to him, he said along along in his 2016 campaign that he wanted US foreign policy to be less predictable, an objective which has been achieved tactically at least) as the rest of us; and they are therefore trying to ignore them as far as is reasonably possible.