Donald Trump declared the US-Iran memorandum finished from Ankara on Wednesday. Oil surged, equities and bonds sold off, and in St Vincent and the Grenadines a 90-day emergency package that was never designed for a second war is now running out.
Business / Analysis
The Peace Is Over. Your Light Bill Is About to Say So.
Donald Trump declared the US-Iran memorandum finished from Ankara on Wednesday. Oil surged, equities and bonds sold off, and in St Vincent and the Grenadines a 90-day emergency package that was never designed for a second war is now running out.
Speaking in Ankara ahead of a NATO summit on Wednesday, President Donald Trump said the memorandum of understanding signed with Iran on 17 June to end the Gulf conflict was finished. He added, of the Iranians, “As far as I’m concerned, it’s just a waste of time dealing with them.” Oil rose more than 5 per cent, global equities fell, and bond prices tumbled as investors ran from risk.
Four and a half months of war, four weeks of something that resembled peace, and now this. For a country that imports every drop of the fuel it burns, the announcement in Ankara is not foreign news. It is a line item.
What actually happened
Three commercial vessels were attacked while transiting the Strait of Hormuz, among them a Qatari LNG carrier and a Saudi oil tanker. US Central Command announced strikes against Iranian coastal targets, saying it was imposing heavy costs for attacks on civilian-crewed shipping in an international waterway. Tehran has not directly claimed the vessel attacks.
The US Treasury then revoked the waiver that had permitted the sale of Iranian oil. That authorisation was to have run until 21 August. Transactions will now be barred after 12:01am EDT on 17 July, and authorisation for new purchases and loadings was rescinded on Tuesday. Iran’s deputy foreign minister, Kazem Gharibabadi, called the revocation a “blatant violation” of the June memorandum and promised decisive action.
Iran says it has since struck 85 US military sites in Bahrain and Kuwait.
Wednesday’s markets
Brent crude: up more than 5 per cent to around $78 a barrel, the sharpest one-day move since late May (Reuters, London)
Earlier Wednesday: Brent $76.54, up 3.2 per cent; US benchmark crude $72.72, up 3.2 per cent (AP, Asian session)
Equities: global stocks lower; steep losses in Tokyo and Seoul; US futures down
Bonds: prices tumbled, injecting fresh inflation risk
Gold: down 2.24 per cent to $4,066.40 an ounce, the safe haven failing to behave like one
Context matters. Brent peaked above $120 after the Strait closed on 4 March. The International Energy Agency has described the disruption caused by this war as the largest in the history of the global oil market. Prices had fallen back to roughly pre-war levels before Wednesday. Nobody should be relieved by $78. The Strait normally carries about one fifth of the world’s traded oil and liquefied natural gas.
Why an island 11,000 kilometres away pays for this
VINLEC burns imported diesel to make most of our electricity. The fuel surcharge on your bill is not a profit line. It is a pass-through, and it has been part of the rate structure for more than forty years. In the utility’s audited accounts for 2024, fuel surcharge recovery came to EC$92.86 million out of total revenue of EC$175.2 million. More than half of what VINLEC collects is simply the cost of oil, handed on.
Which is why the war has already arrived here, twice.
The surcharge, in 2026
- First quarter: the fuel surcharge rose by roughly 29 per cent.
- April bills: $0.6650 per kWh, up from $0.5490, an increase of 11.6 cents. VINLEC cited Middle East conflict directly.
- June bills: $0.7378 per kWh, even after government and utility subsidy. That is a record, surpassing the $0.7259 set in July 2022.
- Diesel: global prices up more than 60 per cent, according to VINLEC chief executive Dr Vaughn Lewis, who has insisted the utility makes no profit on the surcharge.
More than half of VINLEC’s revenue is the price of oil, passed straight to the customer. When Hormuz closes, Kingstown pays. There is no mechanism by which it does not.
The 90 days are almost up
On 27 May, Prime Minister Godwin Friday used a national address to announce a 90-day emergency package. He removed customs service charges and excise taxes on diesel used for electricity generation, forgoing roughly EC$1.65 million in revenue over three months. He required VINLEC to share the load through a matching discount: half the customs service charge returned when the surcharge exceeds EC$0.71 per kWh, all of it above EC$0.77. He froze the freight rates used for customs valuation at January 2026 levels, discounted fertiliser by 30 per cent, subsidised seed, and set a National Cost of Living Task Force to check weekly that merchants were passing savings on.
Friday described it as “a fiscally responsible shield against extraordinary global pressures,” and warned merchants that the relief had to reach people rather than margins.
The shield was designed against a war that was ending. It expires around the end of August. The sanctions waiver dies on 17 July. Between those two dates sits the entire question of what happens to Vincentian household budgets this autumn, and there is currently no public answer to it.
The politics, and a figure that needs checking
The St Vincent Times reported last week that pump prices had climbed in a single month from EC$13.22 to EC$18.31 a gallon for gasoline, and from EC$12.56 to EC$17.53 for diesel, increases of about 39 and 40 per cent. Opposition Leader Ralph Gonsalves said the “cap is not capping” and that prices had risen twice within thirty days of the Prime Minister’s assurance. The opposition is calling for targeted subsidies for minibus and taxi operators.
Vincypowa News has not independently verified those pump figures, and we say so plainly. What is not in dispute is the direction, the fact that the surcharge hit a national record in June even after subsidy, and the fact that Dr Friday’s own utility confirmed there is no cap on the surcharge itself, only thresholds that trigger relief.
That distinction is the whole argument. A threshold is not a ceiling. When the surcharge crosses EC$0.77 per kWh, VINLEC matches the customs service charge in full, and the customs service charge is 6 per cent. Six per cent of a fuel bill is not a shield against a 60 per cent rise in the price of diesel. It is a cushion, and a thin one, and it was costed against a world in which the Strait of Hormuz stayed open.
What to watch
Three dates. 17 July, when Iranian barrels are formally removed from the legal market. Late August, when the emergency package lapses unless Cabinet extends it, at further cost to a treasury the Prime Minister has described as inherited in shambles. And every month in between, when VINLEC publishes a surcharge rate that nobody in this country controls.
There is a longer argument here that both parties have avoided for two decades. Every dollar of the surcharge is a dollar exported. Solar and hydro do not have a fuel surcharge. Dr Friday’s package maintains the tax waiver on photovoltaic systems, which is correct and inadequate. An island nation that generates most of its power from a commodity priced by a war in the Persian Gulf has not made an energy policy. It has made a bet, and this week the bet moved against us again.
Sources: Reuters; Associated Press; Al Jazeera; Fortune; TradingEconomics; VINLEC releases and audited accounts; NBC Radio SVG; Searchlight; the St Vincent Times; Caribbean National Weekly. Market figures moved through Wednesday’s session and are attributed to the time and outlet reporting them. Vincypowa News is an independent Caribbean news outlet based in St Vincent and the Grenadines.