Global Strategy: Hormuz update: Still not plain Versaille-ing

A 14-point US-Iran Memorandum of Understanding has reopened Hormuz earlier than we had expected and is now the basis for 60-days of discussions between the two sides.  We underline four major areas of disagreement, with perhaps unbridgeable gaps on two.  As talks in Switzerland go on, there are therefore only three logical outcomes: a US retreat; an Iranian ‘opening up’; or renewed tensions leading to more military action.  Failing key developments on Hezbollah and uranium, the greater likelihood (so our base case) is the latter of those outcomes, albeit with uncertain timing – not until after the US midterms at the very least.