I told Sky (UAE), clearly the Hormuz is now “a game of chicken” … who can wait the longest and bear the most pain. I try to look objectively at the two sides.
a) On the Iran side, their oil exports are reportedly zero since about 15 July. None of their oil ships seem to have left Hormuz. A massive accumulation of Iranian oil cargo sits on ships towards Malaysia and Singapore, while perhaps 53 loaded ships are stuck in the Gulf due to the US Navy blockade. For a petrostate, this is devastating. In addition, all Iranian ports are blocked form exporting or importing anything. What oil can perhaps leave by train to China, say 70,000 barrels taking two weeks, is painfully small and costly. Trump had declared a big increase in blocking payments and financial transfers to and from Iran, but if no one is selling anything in either direction, there will be less and less financial flows to block. This is dire. It does not mean Iran will surrender, or even talk, but it is clearly devastating.
b) on the other side, the world is of course suffering too from the decrease in exports of crude oil, refined oil products, LNG, fertilizers, LPG, and much more. However, taking the oil flow as an example, claims that the USA Navy is constantly further eroding Iran’s capacities to enforce its blockade are advancing. It is credibly claimed (see by previous blog post at GlobalBarrel.com for references, fuller argument) that 8-9 million barrels per night are being escorted out of the Gulf by the US Navy. In fact, allies are reportedly scrambling to buy ships, driving up international prices for tankers (FT, 20aug26. link). That is, Gulf states’ oil firms are reportedly mostly using their own ships for the high risk escorted trips out via the Straight. These ships then transfer their cargoes to regular oil tankers waiting beyond, at sea.
I told Sky that, together with about 6.5 million barrels per day (mbd) coming out via detour pipelines from the UAE (1.6 mbd) and Saudi Arabia (5 mbd), this adds up to about 14.5 mbd getting out, but only about 15 mbd were flowing before the Iranian blockade. So, the crude blockade is essentially neutralized. The US Navy, as I discussed earlier, is apparently not only using “direct” escorts to protect ships running the Iranian blockade from drones, missiles and mini-subs, it is likely honing its new “6th Generation Warfare” methods, via the control group of the 82 Airborne running this in the theatre, which includes electronic methods, satellites, AI and such.
So,, considering these very readily available stories in the press and from officials, which have been largely verified or supported by expert analysis in the press, on balance, it seems, as I predicted earlier, the Iranian “nuclear weapon” of closing Hormuz diminishes in its hands. It will become less and less important. Perhaps not “irrelevant” as Sec. Bessent stated with his characteristic hyperbole, but indeed its value and effectiveness is eroding day-by-dat.
So, while economic pressure, albeit very extreme, will not likely alone bring Iran to the table in a serious way, ready to relinquish its hold on Hormuz and capacities to project power in the Region, it’s forceful-kinetic “nuclear weapon” over the global trade via Hormuz is eroding, and it will soon have to do something.
It might try escalating militarily with what missiles and drones it still has hidden, but, fundamentally, this will be a limited “solution” to compensating for the continued erosion of its capacity to close Hormuz to shipping.
Meanwhile, while the world from especially higher refined-oil products prices and some shortages, from especially fertilizer shortage, and from LNG decreases, there is plenty of crude oil, quite a good supply of natural gas and LNG and the Americans, as I have shown before, have a fairly good situation in which to take their time before having to consider a major kinetic and high-risk assault on Hormuz, perhaps to occupy its shores, in an effort to rapidly resolve the crisis.
But, nothing is for sure in war. I am focusing here on the MATERIAL trends-to-date, which determine outcomes.
Tom O’D. — I am available for talks, keynotes, commissioned analysis, consults, and on-air interviews. tomod.com(at)gmail.com. https://GlobalBarrel.com
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