Iran has been winning its economic game of chicken with President Donald Trump.
Trump’s extraordinary blockade of the Strait of Hormuz this week shows the United States isn’t backing down just yet. But America’s significant new step adds substantial risk – to more than just the economy.
If it lasts, the blockade could inflict severe damage to both the Iranian and the US economies. It’s a kind of mutually assured economic pain that the United States, with its $31 trillion economy, is betting it can better withstand.
But the blockade will require serious military power to enforce, putting US troops in harm’s way – a consequence the US has largely avoided so far by conducting the majority of its attack from the air. Putting boots on enemy ships and taking control of dangerous waters threatens to increase the US death toll
Americans are already largely opposed to the war, and the blockade risks two outcomes they have demonstrated no tolerance of: even higher gas prices and troop casualties. Trump is betting Iran will blink first, but Iran has withstood severe economic pain before, and there’s little evidence it is prepared to back down from this existential fight
“Oil’s game of chicken continues to escalate,” said Helima Croft, global head of commodity strategy at RBC Capital Market and a former CIA analyst. “I’m not sure either side is prepared to swerve
The blockade could remove from the global market the 1.8 million barrels of crude Iran has been exporting each day during the war. That’s about 2% of the world’s daily demand – not a ton of oil, but when 12 million barrels a day have been blocked by Iran’s effective closure of the strait, every drop counts
The global oil market has already shown what could happen if the blockade lasts: Crude prices rose by as much as 8% Monday. That could send gas prices, already at a 4-year high, even higher. Prices surged by the most since 2022 last month, and inflation-wary Americans are demonstrating zero tolerance for more cost-of-living pain
Trump on Fox Business Monday acknowledged that high gas prices could last through the November midterm elections
It could be, it could be the same, or maybe a little bit higher, but it should be around the same,” Trump said to Fox’s Maria Bartiromo
But a successful blockade could be significantly more devastating for Iran
The blockade will throttle Iran’s oil exports, cutting off its primary revenue source, noted Dan Pickering, founder and chief investment officer at Pickering Energy Partners. Iran’s single pipeline route — to a port on the Gulf of Oman — has just 200,000 barrels per day of realistic export capacity, and the US Navy could also try to blockade that
“Iran will certainly be hurt by this, and it will be hurt severely,” said Adnan Mazarei, senior fellow of Middle Eastern affairs at the Peterson Institute for International Economics.
Still, Iran is well-accustomed to sanctions and economic pain, and it has the resources to hold out for quite some time. After the US lifted sanctions on Iranian oil last month, the country’s crude output surged. Total Iranian crude volumes on water — including floating storage and cargoes in transit – reached approximately 190 million barrels this week, according to Johannes Rauball, senior crude research analyst at Kpler
The US Navy could intercept some of that, but stopping all that crude would be tricky
The current measures are unlikely to materially disrupt Iran in the near term,” he said
Iran also has developed some tricks to evade sanctions in the past. It has a history of mixing its oil with Iraq’s or smuggling fuel through Pakistan, noted Hasan Alhasan, a senior fellow for the Middle East Policy at the International Institute for Strategic Studies in Bahrain.
With its blockade, the United States is effectively taking on a punishing task: wresting control of the Strait of Hormuz from Iran
The Trump administration said more than a month ago the Navy would escort oil tankers through the strait. But that never happened, in part because of the danger to troops from navigating narrow waters while fending off Iranian mines and attack vessels. The complicated logistics made the plan a low priority for the Navy, which focused instead on eliminating Iran’s offensive capabilities
Trump’s blockade is functionally the same as the escort plan, only the objective has changed: Navy ships will be tasked with intercepting and commandeering enemy vessels to prevent Iran from getting its oil onto the ocean.
It’s a serious escalation in the war: Trump on Monday said the US will sink any Iranian ships that come near the US blockade. A senior Iranian lawmaker responded that any Navy vessels attempting to block Iran’s ports will be “sent to the bottom of the sea.” It’s not an idle threat: Even with a depleted Navy, Iran has proven capable of targeting vessels in the strait with small speed boats and inexpensive drones.
The blockade also risks spreading the war beyond its current confines. Iran has already retaliated against previous US and Israeli attacks by blowing up crucial energy infrastructure in Qatar and Saudi Arabia, and Croft said she expects Tehran would increase attacks on regional energy facilities if Trump backs his threat with action
Iran’s proxies, including the Houthis and Iranian-backed militias in Iraq, could also enter the conflict more broadly than they already have, Croft warned. They have already begun harassing ships in the Red Sea and apparently attacked a pipeline in Saudi Arabia
#MegadropLista #LISTAAirdrop #PresidentialDebate #quickfarm #ZAIBOTIO