Trump needs to eat humble pie and make a deal

For the moment, the Gulf war continues to dominate the headlines. Scarcely a day passes without some new warning of economic apocalypse to come.

With the Strait of Hormuz still closed to shipping – though Donald Trump suggests that may not be the case for much longer – the world economy is running on empty, it is widely said. Without an immediate resumption in supply, it will soon grind to a halt, we are told. But here’s the point: people have been saying this for weeks now and it hasn’t happened yet.

Just you wait, say the doomsters. We are running out of oil, gas, jet fuel, fertilisers and much else besides. This reality will hit the global economy like a 10-tonne truck any day now. Sky-high prices and rationing will be just the half of it.

There is, however, another equally plausible scenario, and it’s the one that markets seem increasingly inclined to believe. This is that Trump desperately wants out and is even prepared to eat some humble pie in attempting to secure such a withdrawal.

Of course, not in a month of Sundays would you find the US president admitting as much. In private, he perhaps accepts what JD Vance, the vice-president, has privately said all along – that the war was a strategic blunder.

However, he’s never going to say so in public. Whatever is finally agreed will be presented as a victory. The trick is to find the right form of words – “constructive ambiguity”, to use the jargon: a sufficiently vague set of commitments that allows both sides to claim that they’ve achieved what they wanted.

The reality – that this was a major error by the United States – doesn’t really matter from Trump’s point of view as long as gasoline prices quickly return to normal and the US economy resumes its strong upwards path. Both these objectives are under serious threat as long as the Strait of Hormuz remains closed.

At the time of writing, we were again said to be close to a deal that would extend the ceasefire for a further 60 days, lift the blockade of the strait and allow for resumption of shipping. In the past month or two, we’ve heard many such claims, only for hopes of a deal to be dashed anew. So it might be unwise to bet on the latest outburst of optimism.

With Trump, it’s always impossible to tell. There’s many a slip ...

In any case, Trump’s White House still has some cards to play. As a major producer of oil and gas, the US is as much a beneficiary of scarcity and high prices as a victim of them. Fossil fuel exports are booming as never before.

What’s more, investment in US fracking is once again surging with the return of elevate