The Ticking Clock on the Strait of Hormuz

Another day and the Felon continues to twist on the rope of his own creation as oil prices remain around $100/barrel and oil stockpiles around the world dwindle, Russian oil exports are down as Ukraine continues to hit Russia' oil infrastructure, and the specter of the Red Sea route for Saudi oil exports  being closed continues.  Driving around yesterday, literally every gas station As a piece in The Atlantic lays out, the Felon and his sycophants have few options options, none of which are good: (i) escalate with ground troops, something that would be immensely unpopular on the home front, (ii) continue the status quo ongoing military action with oil and gasoline prices increasing further as stockpiles are fully depleted and causing economic disruptions and even higher gas prices in the USA, or (iii) walk away and concede defeat.  As noted numerous times on this blog, the current quagmire could have been avoided had the Felon listened to experienced intelligence personnel and military commanders rather than the assurances of Netanyahu - which Marco Rubio reportedly described as "bullshit."  A piece in the New York Times describes the Felon's situation this way: "Having entered the conflict with little strategy for victory, he now is struggling for a face-saving way to exit."  Here are excerpts from the piece in The Atlantic:

Back in June, at the closing press conference for the G7 summit in Évian-les-Bains, [the Felon] Donald Trump explained why he had called a halt to hostilities with Iran. Continued bombing would not reopen the Strait of Hormuz, and as long as the war went on, commercial ships would stay away while emergency oil supplies dwindled.

“We run out of reserves in about four weeks,” he warned, conjuring up images of shortages, bedlam, surging prices, and a market collapse on the scale of 1929. Trump told the press that he had studied presidents, and “the one president I did not want to be was the late, great Herbert Hoover.”

Fast-forward to late July. The United States has bombed Iran for nearly two weeks, hitting coastal-surveillance sites and weapons-storage facilities as well as bridges, tunnels, rail lines, airports, and electrical infrastructure. Iran has answered with missiles and drones aimed at American bases in Bahrain, Iraq, Jordan, Kuwait, and Qatar, as well as strikes on oil installations and a desalination plant, and repeated attacks on commercial shipping in and around the strait.

Trump resumed the war despite having already explained why military force could not achieve its most pressing objective. He has not resolved this tension. It may be irresoluble. In the meantime, he is betting that Tehran will buckle before economic pressure forces him to do the same.

To understand where we are, consider how the cease-fire collapsed. Each party believed that it had won the war and that the other should accede to its interpretation of the agreement on the strait. . . . . Tehran read it as permission to manage and control access through the waterway. Consequently, Iran sought to funnel ships through corridors it approved, and attacked or threatened vessels that used other routes.

In doing so, Tehran made a serious error in judgment. If it had laid low, it could have reaped the benefits of economic concessions for 60 days and then gradually introduced a toll. Instead, Trump felt compelled to respond, and the agreement broke down. Amos Hochstein, a senior adviser for energy and investment under President Biden, told me that Iran had thought it could boil the proverbial American frog, but it turned the temperature up too high too fast, and the frog got angry.

If Trump continues with limited strikes, he will face the very problems that he laid out in France last month. Hochstein posted on X that the current escalation in the Strait of Hormuz could be more economically dangerous than the previous one, because Russia, the U.S., and China can no longer buffer world markets as they did: Russia has reduced its diesel exports, U.S. crude and strategic reserves are unusually low, and China is cutting its oil consumption less deeply than before. In his view, markets are already signaling the inflationary risk, leaving Trump with a narrowing window to make a deal before another disruption produces a sharper fuel-price and financial shock, possibly as soon as mid- to late September.

Iran seems to want to keep the conflict at a simmer. It is striking back against the United States but has avoided direct attacks that would bring Saudi Arabia, the United Arab Emirates, or Israel fully into the war, even as it applies pressure indirectly, most dramatically through the Houthis’ campaign against Saudi shipping in the Red Sea. Reuters reported that Iran had previously asked the Houthis to prepare to close the Red Sea route if the United States struck Iranian power infrastructure.

Washington is trying to prevent Iran from becoming a nuclear power, offer new economic and technological commitments to Gulf states, protect two maritime choke points, and fight an open-ended air war, all while the energy reserves and political patience needed to sustain those projects are running down.

Trump may inflict more pain on Iran, but this is unlikely to compel Tehran to abandon its attempt to control the Strait of Hormuz. Perhaps Iran will agree to put its ambitions on hold for 60 days in the hope that the previous agreement can be revived. But if the two sides remain gridlocked, Trump will have to decide whether to pay the economic price for continuing a low-intensity war indefinitely; escalate, with all of the risks that entails; or walk away.