By Andrew Mills

Gulf Currents is back in Doha this week, where the Qatari capital once again finds itself at the centre of global diplomacy as U.S. and Iranian negotiators gathered on Wednesday in a fresh push to end the war. Iran and the United States are negotiating over the Strait of Hormuz, as both sides seek to translate a fragile interim ceasefire into something more durable. Tehran is pushing for formal international recognition of its control over the strait, including the right to levy fees on passing vessels, while Washington's stated priority is restoring the free flow of shipping. The talks, mediated by Qatar and Pakistan, follow tit-for-tat military strikes late last week that have left the passage only partially and unpredictably open.

This week's Gulf Currents looks beyond the negotiations themselves to ask what the reopening of the Strait of Hormuz has already set in motion. Our analysis examines how the crisis has accelerated a strategic reckoning across the Gulf, with oil producers in Abu Dhabi and Baghdad racing to monetize reserves before the energy transition reshapes demand — and what happens if everyone makes that bet at once. We also have an excerpt from our Global Foreign Policy Editor Samia Nakhoul on why the Israel-Lebanon security framework may be structurally designed to fail.

NEWS BRIEFING

- Iran is demanding lasting international recognition of its control over the Strait of Hormuz, including the right to levy fees on passing ships, and says it will not advance peace talks with Washington until the issue is settled. Several vessels that tried to pass without permission late last week were shot at, underscoring how far Tehran is willing to go.

- Iran's football team departed Tijuana thanking the city for its hospitality after their group-stage elimination from the soccer World Cup, calling Mexico "our second home and our second team." The squad had been forced to base across the border rather than in Arizona due to political tensions with Washington, and used their farewell statement to question whether all teams had competed under equal conditions.

RACING TO PUMP: WHY SOME GULF OIL PRODUCERS DON'T WANT TO WAIT

Across the Gulf, two very different oil producers are faced by the same uncomfortable logic: waiting carries its own cost. The Iran war sharpened that conviction, but it did not create it.

The UAE and Iraq, in very different circumstances, are now acting on that logic simultaneously. The more pointed question for OPEC is whether they will be the last. The quota system was not built for a world where members calculate the cost of staying.

The UAE's departure from OPEC after nearly 60 years was not impulsive. Abu Dhabi has the sovereign wealth, the production capacity and the long-term planning horizon to make this a calculated move. With the energy transition gradually reshaping demand forecasts, quota constraints are simply incompatible with the ambition to maximize the value of reserves while the market remains deep enough to absorb them. It is the exit of a producer that believes it wins more outside the cartel than inside it.

Iraq is making the same underlying bet from a radically different position. With oil accounting for about 88% of government revenues, and Baghdad having been forced by the war to slash daily output from around 4.2 million barrels per day to under 1.5 million bpd in May, this is not strategic patience — it is a fiscal scramble. Fresh multi-billion-dollar commitments from BP, TotalEnergies and ExxonMobil have raised expectations that Iraq might finally convert its vast reserves into sustained revenue. The urgency is real: act now, before a world of structurally weaker oil demand arrives.

But the logic frays if everyone acts on it at once. As Reuters columnist Ron Bousso argued this week, global supply is forecast to rebound by around 8 million bpd in 2027, while demand recovers far more modestly — pointing to a potential surplus that markets may not yet be fully pricing in. More barrels from Abu Dhabi, Baghdad and Tehran hitting the market in the same window could depress the very prices that the UAE and Iraq are racing to capture.

Whether these bets pay off depends on a timing question no producer can answer with confidence: when exactly does the world stop needing what they have?

CHART OF THE WEEK:

Recent data shows traffic picking up again, with dozens of vessels making crossings on some days, although levels remain well below pre-crisis norms and prone to sudden reversals.

That stop-start recovery underscores a key point: the system is not yet functioning normally. Instead, it is being stress-tested in real time by shipowners probing the boundaries of what is safe and commercially viable. Read more from Gavin Maguire.

EXCERPT: ISRAEL-LEBANON DEAL MAY ENTRENCH STALEMATE RATHER THAN END WAR, ANALYSTS SAY

By Samia Nakhoul, Global Foreign Policy Editor

A security deal between Israel and Lebanon risks entrenching a stalemate rather than resolving the underlying conflict, by tying Israel's pullout from southern Lebanon to Hezbollah's disarmament — a condition analysts and politicians say is unattainable.

At its core is a bargain few see as workable: Hezbollah ‌has flatly rejected disarmament, and no Lebanese government has the power to enforce it.

Israeli officials said their country sees the deal as a vital diplomatic step. But with the Iran-backed group unlikely to comply, analysts say Israel has political cover to maintain an open-ended military presence in the south. "This agreement has put all the burden on Lebanon," said Beirut-based analyst Michael Young, adding that it "creates a structure that allows the Israelis to remain indefinitely." Lebanese scholar Fawaz Gerges also said the deal gave Israel greater freedom of action, calling it structurally flawed and "born dead".

For full analysis click here.

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