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War On Iran: It Is Cheaper To Pay For Hormuz Passage Than To Wage War
U.S. President Donald Trump is reportedly ready to give up on the Persian Gulf passage:
Trump Tells Aides He’s Willing to End War Without Reopening Hormuz (archived) – WSJ
In recent days, Trump and his aides assessed that a mission to pry open the chokepoint would push the conflict beyond his timeline of four to six weeks. He decided that the U.S. should achieve its main goals of hobbling Iran’s navy and its missile stocks and wind down current hostilities while pressuring Tehran diplomatically to resume the free flow of trade. If that fails, Washington would press allies in Europe and the Gulf to take the lead on reopening the strait, the officials said.
There are also military options the president could decide on, but they are not his immediate priority, they said.
Trump is considering to give up because he has no ability to reopen the Gulf by military or other means. The U.S. Navy is lacking the basic equipment to reopen sea passages – de-mining vessels – and it is lacking the arsenal depth needed to defend against the onslaught of missile, drones and torpedoes that would slaughter its ships should they try to pass through the Strait.
Iran controls 270 degrees of the bent of the passage. Its coast is mountainous with many hide outs from where weapons can be released. To reopen the passage by force, a 100,000+ strong army would need to invade, take and hold the Iranian coastline. There is no such forces as no country is willing to commit its soldiers to such a suicide mission.
Trump is now searching for other he can push into opening the closure he himself with war on Iran has caused:
All of those countries that can’t get jet fuel because of the Strait of Hormuz, like the United Kingdom, which refused to get involved in the decapitation of Iran, I have a suggestion for you: Number 1, buy from the U.S., we have plenty, and Number 2, build up some delayed courage, go to the Strait, and just TAKE IT. You’ll have to start learning how to fight for yourself, the U.S.A. won’t be there to help you anymore, just like you weren’t there for us. Iran has been, essentially, decimated. The hard part is done. Go get your own oil! President DJT
(TS: 31 Mar 07:11 ET)
After 32 days of Trump’s “My war, your Hormuz problem …” has gone through many phases:
Cont. reading: War On Iran: It Is Cheaper To Pay For Hormuz Passage Than To Wage War
War On Iran: “And then? What?”
Trump’s latest outburst, intended to cool the market, issued about an hour ago:
The United States of America is in serious discussions with A NEW, AND MORE REASONABLE, REGIME to end our Military Operations in Iran. Great progress has been made but, if for any reason a deal is not shortly reached, which it probably will be, and if the Hormuz Strait is not immediately “Open for Business,” we will conclude our lovely “stay” in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalinization plants!), which we have purposefully not yet “touched.” This will be in retribution for our many soldiers, and others, that Iran has butchered and killed over the old Regime’s 47 year “Reign of Terror.” Thank you for your attention to this matter.
President DONALD J. TRUMP
Fitting:
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Cartoon via Rob CampbellA relevant and revealing response to any of Trump’s proposed actions is: “And then? What?”
From the latest War Update by Hamidreza Azizi:
Iranian planning is no longer centered on absorbing strikes but on shaping the battlefield in advance. A concept described as “preemptive destruction” is emerging, involving continuous targeting of U.S. bases, logistics hubs, and staging areas in countries such as Kuwait and Bahrain to disrupt any potential ground or heliborne operation before it can be executed.
On The Failure Of Shock And Awe In Iran
One Sergey Poletaev (quoted here) writes in RT about the Shock and Awe doctrine:
Russia also succumbed to the idea of the shock and awe doctrine.
After the war with Georgia in 2008, the Russian military was restructured to carry out rapid and destructive military interventions. However, Russia was the first to stumble on this doctrine. In spring 2022, it faced a critical choice: Either fight a serious, bloody war of attrition or settle for a disgraceful peace. Moscow chose war, and the Ukraine conflict has now entered its fifth year.
Trump now finds himself at a similar crossroads: Fight or to concede defeat. The problem is that the entire Western military-industrial complex has spent decades adapting to the shock and awe doctrine; NATO and the US possess unparalleled and exorbitantly expensive airstrike capabilities, but don’t have many other resources. If a targeted nation can withstand the initial air assaults, time will be on its side – unlike Russia, the West lacks the resources for a prolonged military campaign.
This explains the ‘gestures of goodwill’ Trump is currently making toward Iran. Just like Putin in spring 2022, he needs to buy time and figure out his next move: Continue fighting, launch a highly risky landing operation, or settle for a humiliating peace. The first option could spell disaster for Trump in the upcoming midterm elections, while the second could bring the US the most significant strategic defeat since Vietnam.
MoA commentator English Outsider replies to it: (Please read his use of “we” in scare quotes. It obviously does not include MoA readers 😉
Cont. reading: On The Failure Of Shock And Awe In Iran
War On Iran: Exorbitant Munition Spending + Lack Of Success = Iran Is Winning
There are a few new numbers out on munitions availability on either side of the conflict.
The Washington Post says (archived) that the U.S. has fired some 850 Tomahawk cruise missiles onto Iran. The total available stock of Tomahawks is somewhere between 3,000 and 4,000.
But the limit for the use of these long reach weapons is elsewhere. The missiles are usually fired from U.S. Navy vessels. They have limited loads of up to 72 Tomahawks each. When those are expended the vessels need to leave the scene to go to a friendly harbor for reloading. (Reloading large missiles at sea has been tested by is still in its infancy.)
The 16 or so destroyers and submarines the U.S. has around the Gulf are by now mostly ‘Winchester’, i.e. out of Tomahawk missiles to fire. But they can no leave the scene yet as their air-defense capabilities are still needed to take on Iranian missiles.
Air-defense missiles are also lacking. As the British Royal United Service Institute (RUSI) reported three days ago:
[O]ver a dozen munition types have been expended by the coalition at a rate that appears to be unsustainable. Already, Rheinmetall CEO Armin Papperger noted on 19 March that global stockpiles are ‘empty or nearly empty’ and that if the war continues another month ‘we nearly have no missiles available’.
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Given that Iran has damaged at least a dozen US and allied radars and satellite terminals, the efficiency of interception decreases; using 10 or 11 interceptors for one missile or 8 patriot missiles for one drone becomes unsustainable.
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[T]he US military is approximately a month, or less, away from running out of ATACMS/PrSM ground-attack missiles and THAAD interceptors. Israel is in an even more precarious spot, with its Arrow interceptor missiles likely to be completely expended by the end of March. While the war could proceed with other munitions, this implies accepting greater risk for aircraft and tolerating more missile and drone ‘leakers’ damaging forces and infrastructure.
RUSI provides some tables and background on the industry difficulties to replenish the stockpiles.
On the other side of the equation is the damage the USraeli campaign has done to Iran. Over 10,000 ‘targets’ have been hit but the main aim of defeating Iran’s ballistic missile capabilities is, despite President Trump’s claims, still far from being reached:
Cont. reading: War On Iran: Exorbitant Munition Spending + Lack Of Success = Iran Is Winning
War on Iran: – Just A Few Links …
Trump has set mid May as the new date for his visit in Beijing. He seems to assume that his war on Iran is over by then. I doubt that.
—I do expect some U.S. operation on this Friday after the financial markets have closed. What is planned is a PR stunt – some spectacular, low-risk, high-visibility operation. Some seizure of some small island would fit this – probably in conjunction with second operation in form of an in-out raid. There simply aren’t enough troops in the area for any bigger sustained action.
—Cont. reading: War on Iran: – Just A Few Links …
War On Iran: – U.S.-Iranian None-Talks – The Battle Continues – Bad U.S. Options – Proxy War Escalation
When President trump TACOed out from his threat to bomb Iran’s infrastructure he asserted that there had been “good and productive conversations” with Iran. I suspected that there had been no talks at all with Iran.
This turned out to be correct. There had only been a third party which had delivered a U.S. request for talks:
Pakistan’s army chief, Field Marshal Syed Asim Munir, has emerged as the key interlocutor between the United States and Iran, with Egypt and Turkey encouraging the Iranians to engage constructively, the officials added. Field Marshal Munir is believed to maintain close ties to Iran’s Islamic Revolution Guards Corps, putting him in a position to pass messages between the warring sides, they said.
He recently reached out to Mohammad Bagher Ghalibaf, the speaker of Iran’s Parliament and a former Revolutionary Guards commander, proposing that Pakistan host talks between Iran and the United States, said an Iranian official and a Pakistani official, who spoke on condition of anonymity to discuss the sensitive communications.
According to Israeli media the U.S. administration conveyed 15 conditions to Iran as its terms for ending the current war. The conditions repeat the demands the U.S. made before the war started – nothing nuclear, no missiles, no proxies – and in return offer the relief of only some of the sanctions imposed on Iran:
12. Iran would receive a full lifting of sanctions imposed by the international community.
What about U.S. imposed sanctions? The paper does not mentioned them …
This is not an offer but a demand to surrender. Iran has of course rejected these and repeated its own conditions for ending the war:
- A complete halt to “aggression and assassinations” by the enemy.
- The establishment of concrete mechanisms to ensure that the war is not reimposed on the Islamic Republic.
- Guaranteed and clearly defined payment of war damages and reparations.
- The conclusion of the war across all fronts and for all resistance groups involved throughout the region
- Iran’s exercise of sovereignty over the Strait of Hormuz is and will remain Iran’s natural and legal right, and it constitutes a guarantee for the implementation of the other party’s commitments, and must be recognized.
—As the economic troubles caused by the war continue to deepen, especially in Asia but also in the U.S. and Europe ( archived), time is on the Iranian side: Cont. reading: War On Iran: – U.S.-Iranian None-Talks – The Battle Continues – Bad U.S. Options – Proxy War Escalation
War On Iran: – Trump Cashes Out – Social Unrest – Arabs Joining The War – Iran Invasion
Yesterday, just minutes before President Trump’s most recent TACO, insiders placed bets on rising stocks and lower oil prices. They made a killing:
Traders placed $580mn in oil bets ahead of Donald Trump’s social media post on Iran talks (archived) – FT
Traders made bets worth half a billion dollars in the oil market about 15 minutes before Donald Trump’s post touting “productive” talks with Iran sent the price of crude tumbling and ignited volatility in other assets.
Roughly 6,200 Brent and West Texas Intermediate futures contracts changed hands between 6.49am and 6.50am New York time on Monday, just a quarter of an hour ahead of the US president’s post on Truth Social that there had in recent days been “productive conversations” with Tehran to end the war in Iran. The notional value of those trades was $580mn, according to FT calculations based on Bloomberg data.
Trading volumes for Brent and WTI leapt at the same time, 27 seconds before 6.50am. Futures tracking the S&P 500 share index jumped in price moments after the oil trade, with volumes also rising significantly during that timeframe.
It was not known whether one entity or several entities were behind Monday’s trades.
Trump’s next threat to Iran – re-open the Strait of Hormuz to traffic or else – will most likely come on Friday, after the markets have close. It would not be beyond Trump to again play this week’s game and to offer another TACO shortly before next Monday’s opening.
In between the conflict continues. The U.S. continues to bomb Iran. As does Israel. Barrages of Iranian missile continue to strike the Zionist entity. There are vague reports that energy infrastructure in Iran has been hit. If that has indeed happened expect Iran to hit back at infrastructure in Arab Gulf region.
—Oil prices are creeping up again. The conflict has not been defused by Trump’s TACO but threatens to intensify. The market interruptions it causes will be lengthy. I have warned that this will lead to public unrest first and foremost in those Asian states which have the biggest dependencies on Middle East oil. Here are the first signs of it:
Philippines Declares National Emergency Over High Fuel Prices (archived) – NY Times
Earlier on Tuesday, the Philippines’ Department of Energy said it had enough gasoline in reserve to last 53 days, enough diesel for 46 days and enough jet fuel for about 39 days. Diesel prices have doubled since the war began, surpassing 120 pesos, or $2, per liter.
Many government offices have switched to a four-day workweek to save energy, and Mr. Marcos has called on the public to car pool. The government has also been handing out 5,000 pesos each to tens of thousands of autorickshaw and jeepney drivers around Manila who are suffering from the higher prices.
Mr. Marcos is under intense pressure to deal with the situation. A coalition of transportation workers has called for mass protests around Manila, the capital, on Thursday and Friday about the price spike and what they consider inadequate measures by the government. On Tuesday, the Philippine Daily Inquirer, a major newspaper, published a column with the headline, “Nation on brink: This oil crisis may destroy everything we built.”
—There are again reports about Arab Gulf States allegedly pushing Trump to extend the war. Other reports claim that the Gulf states are ready to join with their own forces. I recommend to take such reports with a boatload of salt.
Saudi Prince Is Said to Push Trump to Continue Iran War in Recent Calls – NY Times
Gulf States Edge Toward Joining Fight Against Iran (archived) – WSJ
Saudi Arabia and the United Arab Emirates get tougher on basing and finances
The U.S. would love to see the Arabs to join the fight. They would have to buy lots of expensive weapons and take the damage. This while the U.S. could skip out of the conflict (see Ukraine).
Saudi Arabia and other Gulf states are sitting in glass-houses. Their existences depends on a few hard to defend desalination plants, electricity generation facilities and energy export outlets. They are in range of short range missiles of which Iran has plenty. There are also the Houthi… . If the Arab states were to actively join the bombing of Iran it would be their end.
—The U.S. has ordered two Marine Expeditionary Units into the Gulf region. There are also alarms out for the 82nd Airborne Division, an ‘Immediate Response Force’ of some 3,000 soldiers which would add the the 1,600 Marines ground forces in the MEUs.
Pentagon Officials Weigh Deployment of Airborne Troops for Iran War (archived) – NY Times
Given the circumstances these are paltry forces usable only for very limited purposes. But it may well be the advance party of a much larger force that will take months to build.
There are still talks about taking Iran’s Kharg island, the main export station for Iranian oil. I did explain two weeks ago why that is no option. There are also three small islands in the middle of the Strait, Abu Musa and the Greater and Lesser Tunb, which are held by Iran but claimed by the Emirates:
Due to the depth of sea, oil tankers and big ships have to pass between Abu Musa and Greater and Lesser Tunbs, which makes these islands some of the most strategic points in the Persian Gulf.
These islands could be taken but, despite the above Wikipedia claim, their strategic value in this conflict is limited. Iranian reconnaissance drones, long range radar and anti-ship missiles have eroded their roles as interdiction stations. Taking those islands may have some PR value. But it would not lift the blockade of the Strait and the cost of holding them would soon become prohibitive.
Another potential target for an incursion into Iran could be its south-eastern city of Chabahar. It has a deep sea port and would be a good staring point for a larger invasion force. But Chabahar, with some 100,000 inhabitants, is a too big city to take with a mere 5,000 strong raiding force. Chabahar borders the Baluchistan region of Pakistan which makes any incursion of it politically complicate.
War On Iran: Trump Chickens Out – Who Lobbied For War – The Energy Dominance Aim
On Saturday U.S. president Donald Trump threatened to attack Iran’s electricity network and other infrastructure within 48 hours should it not reopen the Strait of Hormuz for all shipping:
“If Iran doesn’t FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!” Trump posted on social media around 7:45 p.m. EDT (2345 GMT) on Saturday.
Iran responded by threatening retaliation against the infrastructure of U.S. client states in the Gulf. Any such attack would have devastating consequences:
“If Iran’s fuel and energy infrastructure is attacked by the enemy, all energy infrastructure, as well as information technology…and water desalination facilities, belonging to the US and the regime in the region will be targeted pursuant to previous warnings,” Iranian military spokesman Ebrahim Zolfaqari said, according to state media.
On early Monday morning the markets reacted nervously. Treasuries, stocks and gold were all down.
As the markets threatened to tank, and shortly before the deadline Trump had given to Iran, he chickened out:
biggerI suspect, and Iranian sources confirm, that there have been no talks with Iran. Trump is inventing these talks to save himself from the catastrophic consequences any attempt to fulfill his threat would have entailed.
In five days, after the markets have closed for the week, Trump may well renew his threat.
—I had warned that, even if peace would happen today, it would still take many months to recover from oil and gas supply slumps. The Economist has made some calculations on how long it will it take for the oil and gas market to normalize:
Even the best-case scenario for energy markets is disastrous (archived)
Even if Donald Trump and Iran reached a deal to stop fighting tomorrow, it would thus be another four months before markets regained some semblance of normality. Producers elsewhere cannot crank up output fast enough to recover past losses. The result is to shave off some 3% of planned global oil production this year. Every month Ras Laffan stays shut, the world loses around 7m tonnes of lng—nearly 2% of projected annual supply. And full capacity will, owing to the latest strikes, be lower than before. The upshot is that production will fall 4% short of demand this year even if Qatar started pumping what it can today.
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Oil and gas traders are still banking on a spring miracle. The world is praying for one. But even if Mr Trump and Iran’s ayatollahs grant this wish, the logistics of oil and gas will not be easily appeased. Energy markets will be living with the war’s fallout well into northern winter.
My hunch is that these estimates are on the optimistic side of things.
—While crying crocodile tears over alleged innocent people sitting in jail in Iran the U.S. has been attacking prisons in Iran:
The Iranian Prisons Where Bombs Are Threatening Dissidents and Americans (archived) – WSJ
Airstrikes have damaged complexes used to hold political detainees, according to a Wall Street Journal visual investigation—putting their lives in danger
—A few more background pieces on how the war on Iran unfolded are coming out. It is hard to say how much these are myth-building or reality. Anyway – here is the gists of they are spreading:
Israel Thought It Could Spur Rebellion Inside Iran. That Hasn’t Happened. (archived) – NY Times
President Trump’s hopes that an Israeli plan to ignite an internal uprising against Iran’s theocratic government could bring the war to a swift end have so far been dashed.
Within days of the war’s beginning, said David Barnea, the Mossad chief, his service would likely be able to galvanize the Iranian opposition — igniting riots and other acts of rebellion that could even lead to the collapse of Iran’s government. Mr. Barnea also presented the proposal to senior Trump administration officials during a visit to Washington in mid-January.
Mr. Netanyahu adopted the plan. Despite doubts about its viability among senior American officials and some officials in other Israeli intelligence agencies, both he and President Trump seemed to embrace an optimistic outlook. Killing Iran’s leaders at the outset of the conflict, followed by a series of intelligence operations intended to encourage regime change, they thought, could lead to a mass uprising that might bring about a swift end to the war.
“Take over your government: It will be yours to take,” Mr. Trump told Iranians in his initial address at the war’s start, after saying they should first seek shelter from the bombing.
Three weeks into the war, an Iranian uprising has not yet materialized.
Trump’s Iran War Drive Exposes Limits of ‘Yes Sir’ Cabinet (archived) – Bloomberg
Those privately pressing Trump to strike Iran included Israeli Prime Minister Benjamin Netanyahu, media mogul Rupert Murdoch and some conservative commentators, according to people familiar with the matter who spoke on the condition of anonymity to discuss private conversations. The News Corp. founder communicated with Trump several times as he urged the president to take on Tehran, according to one person briefed on their interactions.
Meanwhile, some of Trump’s closest advisers were more muted about the prospect of an armed conflict, including Vice President JD Vance, Secretary of State Marco Rubio and White House Chief of Staff Susie Wiles, the people said.
Few, if any, told him directly it was an ill-conceived idea. Wiles tried to ensure the president understood his options, the people said, while Vance urged top officials to speak candidly to the president and about the possibility of war. In private meetings before the attacks, Vance asked questions about how any war would work.
The above ‘blame Netanyahoo’ pieces are missing the big picture view. This war fits a long term U.S. strategy and thus had to happen:
America is Achieving Full-Spectrum Energy Dominance — And Nobody is Paying Attention
I have said it many times, and I will say it again: the United States does not lose wars. If it did, it would stop waging them. Whether Afghanistan, Syria, Iraq, or Libya — failed states are not failures of Empire. They are the victories of Empire. And Empire is on a roll.
Now the same chorus rises over Iran. Left and right, the refrain is identical: this will be a disaster, America is overreaching, Iran will be its graveyard. The same voices. The same blindness. The same century-old script.
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Medhurst argues that the United States, far from stumbling into another disastrous West Asian quagmire, is executing a calculated seizure of the planet’s energy supply — and that the wars on Syria, Venezuela, Ukraine, and now Iran are not separate blunders but sequential steps toward a single goal: total energy dominance.
While energy dominance may be the over-arching aim Washington has there are doubts that it is achievable:
How the Iran war is turning America’s energy dominance into a mirage – The National
There are non-fossil energy alternatives coming up and penetrating the markets. Any attempt to monopolize fossil fuels and to ramp up its prices will increase the adoption of non-fossil alternatives and thereby defeat itself.
War on Iran: – Longer Range Missiles Threats – Fake Oil Release – Murray: “Seeing Trump Clearly”
Iran has fired two ballistic missiles at the U.S. base on the island Diego Garcia in the Indian Ocean. The distance between Iran and Diego Garcia is about 4,000 kilometer. Officially Iran has been committed to not possess missiles with a range of more than 2,000 kilometer. Did it deceive the global public about their range?
No. In October 2025, after USrael had attacked Iran in the 12 day war, the Supreme Leader Ayatollah Ali Khamenei had lifted the missiles restriction he had previously imposed. Iran’s longest distance missile, the Khorramshahr-4, has a range of about 2,000 kilometer when fitted with its regular 1.8 metric ton warhead. But, like any missile, it will fly further if one reduces its payload. Fitted with a 500 kg warhead a range of 4,000 kilometer becomes possible. Its effect on a target will however become less severe which in the end defeats its purpose.
Of the two missiles Iran fired against Diego Garcia one is said to have failed in mid flight while a second one was claimed to have been shut down by a U.S. Navy SM-3 air defense missile. That a U.S. Navy vessel near Diego Garcia was on alarm and ready to fire its air defenses tells us that the U.S. was already expecting such long range shots.
With the demonstration of a 4,000 range launch from Iran many other U.S. and U.S. allies’ bases are now on notice that they can become Iran’s targets. The launch against Diego Garcia was likely made to send that message.
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The U.S. Treasury has now indeed, as previously hinted, lifted sanction on Iranian oil in floating storage. The Treasury had claimed that Iran had 140 million barrels of crude available that could be released to sooth the markets. Iran however says that it no oil in storage. The Treasury waver will thus not lead to the release of any additional oil. Some future traders may well have fallen for the Treasury’s trickery but the real market squeeze will continue.
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Former ambassador for the UK Craig Murray is onto something when he asserts that Trump’s plan is, and was all along, to utterly destroy and defeat Iran:
Cont. reading: War on Iran: – Longer Range Missiles Threats – Fake Oil Release – Murray: “Seeing Trump Clearly”
War On Iran: – U.S. Losses – Strait Opening – Oil Price Dilemma – Expanding The War
The losses the U.S. military currently incurs in its war on Iran continue to accumulate.
ABC News confirms that Iran has managed to destroy at least 10 radar installation in the Middle East. Most of these were U.S. owned while the rest were supplied to U.S. allies. The loss of early warning radar lets more Iranian missile slip through the U.S. missile defense curtain. It will cause more losses in other installations especially in Israel.
The U.S. Central Command confirmed yesterday that Iranian air defenses managed to hit at least one of its F-35 ‘stealth’ fighter jets. Reportedly the pilot was injured and the plane made a ‘hard landing’ – which likely means that the pilot ejected before the jet crashed down.
This should finally destroy the Lockheed marketing nonsense claim of ‘invisibility’ of its war planes. It also destroys the myth that Iran has lost control over its airspace and that the U.S. has achieve air superiority. In consequence the U.S. will have to continue to use expensive, and exceedingly rare, stand-off weapons to hit targets within Iran instead of doing much cheaper gravity bombing.
The U.S. aircraft carrier Ford had to leave the Middle East for repairs after a ‘laundry fire’ destroyed some 600 berth on board. The Ford carrier was already notorious for its constantly clogged toilets. I strongly suspect that it will have to go back to the U.S. for a long period of overhaul.
The second carrier in the region has been withdrawn to the southern Arab Sea for fear of being attacked by Iranian forces. The long distance from Iran will necessitates the time consuming aerial fueling of its plane when they are launched for sorties against that country.
At least three F-15 fighter jets have been destroyed by alleged ‘friendly fire’ near Kuwait.
Of the 100 MQ-9 Reaper drones the U.S. military had acquired some 10 have been lost in recent reconnaissance missions over Iran.
Some five U.S. KC-135 refueling aircraft were hit during an Iranian strike on Saudi Arabia. An additional one was lost and another damaged during an in-air collision.
All the above isn’t ‘much’ when one considers the total size of U.S. forces but we are only in day 21 of this war and the losses will continue to accumulate.
—Cont. reading: War On Iran: – U.S. Losses – Strait Opening – Oil Price Dilemma – Expanding The War
War On Iran: – Refineries Hit – Oil Passage Toll To Pay For Iranian Damage
Iran has, as promised yesterday, responded to the USraeli attack on its energy installations by hitting refineries and gas facilities in several Persian Gulf countries.
Qatar spoke of ‘extensive damage’ to its gas liquefaction facilities caused by an Iranian attack. Saudi Arabia claimed that the attack was defeated but that a drone had hit its SAMREF refinery near Yanbu on its western coast. Kuwait reported fires at two of its three refineries, Bahrain and the UAE did not comment but people living there report of explosions, fires and damage.
Several missiles and drones hit Israel. It has by now come under a sustained attack with air alarms going off nearly every hour. This afternoon the BAZAN oil refinery in Haifa got hit.
The damage from the continuing U.S. and Israeli bombing campaign in Iran is also quite considerable. The Israeli plan is to destroy all of Iran’s capabilities to the extend that rebuilding will become excessively expensive.
But Iran has already planned for this. It has found a way to pay for rebuilding its state. As it is, and will likely stay, in control of the Strait of Hormuz it can ask for payments in exchange for providing safe passage.
Lloyd’s List reports:
Iran establishes ‘safe’ shipping corridor for approved and paid for transits
AT LEAST one tanker operator is understood to have paid a fee to Iran to transit the Strait of Hormuz while several other tankers have passed following Iranian vetting and diplomatic interventions, according to several well-placed sources with direct knowledge of the transits.
Multiple governments including India, Pakistan, Iraq, Malaysia and China are all understood to be discussing vessel transit plans directly with Tehran, where officials within the Islamic Revolutionary Guard Corps have established a nascent ship registration system for “approved” vessels to agree safe passage.
At least nine ships have now exited the strait via the “safe” corridor that routes ships through Iranian territorial waters via Iran’s Larak Island, which is used by the IRGC Navy and port authority to assess visual confirmation of the vessels.
biggerThe picture on the left shows the normal traffic route through the Strait while the picture on the right shows (except for the purple ship) the passing on the controlled route north of Larak Island.
Without the war and without the blockade of the Strait crude oil prices would hover around $60 bbl instead of the current $100-120 bbl (soon to be $200 bbl). When Iran will finally agree to an end of the war – months if not years from now – one of its conditions might be a surcharge of $10 bbl for any tanker passing the Strait. This would come, for a limited time, on top of the $60 bbl peace-level market price. A moderate toll when one considers the cost of today’s barrels. This while providing a significant income of some $50-100 million per day for Iran. It would help to recuperated the money needed to repair any war damage.
The U.S., if it will have any say in this, might well agree to that condition.
Currently Iran has some 140 million barrels of crude oil sitting in floating storage – i.e. on old rented tankers anchoring somewhere. That oil was hard to sell as it was under U.S. sanctions.
The U.S. is currently considering to lift those sanctions to provide more oil to the global markets and to thereby lower its price. As U.S. Treasury Secretary Scott Bessent announced:
In the coming days, we may unsanction the Iranian oil that’s on the water. It’s about 140 million barrels, so depending how you count it, that’s 10 days to 2 weeks of supply, that the Iranians had been pushing out, that would have all gone to China. In essence, we’d be using the Iranian barrels against the Iranians to keep the price down for the next 10 or 14 days, as we continue this campaign. So, we have lots of levers.
The U.S. wasn’t willing to lift those sanctions during peace talks with Iran. But seeing the the dearth of oil under war conditions and high prices it suddenly allows that to happen.
How that would be ‘against the Iranians’ when they can sell their parked oil at $100 bbl exceeds my understanding.
Added:
The U.S. seems to have run out of stand-off ammunition. F-35 fighters were ordered into Iranian air space and at least one got damaged. This confirms that air superiority over Iran has not been achieved (yet).
War On Iran: Energy War Moves From Disruption To Destruction
The war on Iran continues to be the most important issue currently moving the world.
Israel and the U.S. are continuing their assassination campaign of Iranian officials. It was confirmed today that Ali Larijani, the head of Iran’s Supreme National Security Council, was killed by an Israeli airstrike on the house of his daughter. The strike caused several dozens of additional casualties. Larijani was a highly capable pragmatist, not a hardliner. His death is a loss for everyone who seeks peace in the Middle East.
Two of the leaders of the Iran’s voluntary Basji militia were also killed in Israeli airstrikes as was Iran’s Minister for Intelligence, Esmaeil Khatib.
None of these deaths will lower Iran’s will or capability to resist. It knows that it has is able to throttle the global economy via its control of the Strait of Hormuz and thus has the upper hand in any long term conflict. A some point the U.S. will have to agree (archived) with Iran’s end-of war conditions:
Iran’s strategic objective now is to impose such high costs on the United States and the Gulf states that Trump will opt for a cease-fire that includes a restriction on future Israeli actions. In essence, Iran wants to force him to choose between Israel’s security interests and the stability of global markets. The bottom line is that the war Trump started has no good ending.
Yet Israel today does not feel bound by any restrictions. It has just launched an attack, with U.S. backing, on Iran’s major South Pars gas field and other Iranian energy installations:
Israel has just bombed Iran’s largest natural gas processing facility in Bushehr Province. Israel stated that it conducted this attack in full coordination with the United States.
The attack is consistent with Israel’s strategy of aiming to destroy not only Iran’s military and military industries, but also its industrial base and its economy. Israel’s objective is not regime change but state collapse.
In this particular case there is I believe an additional motivation behind the Israeli attack. Iran has repeatedly indicated that if its energy infrastructure is attacked, this crosses a bright red line and that it will retaliate with attacks on energy infrastructure throughout the Persian Gulf.
If Iran does indeed respond in this manner, the prospects of direct participation in this war by Gulf Cooperation Council (GCC) states increases significantly. This is exactly what Israel would like to see, and would also explain why the US, which previously counseled against such attacks, now supports them and participates in their execution.
This attack is not only a demonstration of US-Israeli capabilities, but also of US-Israeli strategic failure and arguably of growing desperation as well.
Iran’s gas production is mostly used domestically. Its electricity production largely depends on its gas infrastructure. The strike is also a hit against Turkey which receives 15% of its gas consumption from Iran. Iraq will be hit hard too as its electricity production also depends on Iranian gas. A spokesman of the Foreign Ministry of Qatar condemned the attack.
The most rational response for Iran will be to hit Israel’s energy infrastructure. Strikes on Haifa and Israeli gas facilities will come too but Iran’s immediate response, as promised, were evacuation orders for five energy installation in its neighboring Persian Gulf countries:
🔸SAMREF Refinery – Saudi Arabia
🔸Al Hosn Gas Field – UAE
🔸Jubail Petrochemical Complex – Saudi Arabia
🔸Mesaieed Petrochemical Complex & Mesaieed Holding (Chevron-affiliated) – Qatar
🔸Ras Laffan Refinery (Phases 1 & 2) – Qatar.
According to Bloomberg the facilities are being evacuated. Energy prices in the commodity future market have risen in consequence of the strikes even though they are, due to manipulations, still much lower than real world prices (archived):
The growing disruption to supplies has driven a number of regional price benchmarks to all-time highs, even as global marker Brent has fallen back to just above $100 a barrel after jumping to nearly $120 in the early stages of the Iran war.
…
The price of a barrel of oil in Oman — which exports from ports outside the Strait of Hormuz — soared to nearly $154 on Tuesday, driven by intense competition for the small volumes still leaving the Middle East.
…
“Right now it feels like the paper and the physical market has dislocated,” said Ole Hansen, head of commodity strategy at Saxo Bank. “[This is] the biggest disruption since the 1970s and Brent can barely hold above $100.”
The $100bbl is for light sweet crude while the market needs heavier variants as well as processed products:
Current spot prices for gasoline, diesel, and jet fuel on the West Coast appear unhinged at $147/bbl; $162-$170/bbl; and $186/bbl until one considers that refiners in China, India, Japan and South Korea face physical crude costs that top $150-$155/bbl.
The strike on energy facilities in Iran has opened another level on the economic front of the war.
Blocking ship from passing Hormuz is disruptive. Striking energy facilities is destructive.
It will take a long time to repair the damage.
War On Iran – Czech cruiser ‘Krteček’ – Larijani’s Martyrdom – Kent’s Resignation
From a Wall Street Journal piece I quoted yesterday:
> The Trump administration as soon as this week plans to announce that multiple countries have agreed to form a coalition that will escort ships through the waterway, which runs along the Iranian coast, U.S. officials said. The U.S. and potential coalition countries are still discussing whether those operations would begin before or after the war ends. <
I commented:
What is the use of escorting ships through the Strait “after the war ends”?
So far there are no takers of Trump’s call for allies. I doubt that there will be any.
No European country and no Asia ‘ally’ has offered to help him to reopen the Strait of Hormuz. Nor does the U.S. Navy.
So for once I was right – nearly right:
Czech Prime Minister Andrej Babiš has decided to dispatch the Czech cruiser ‘Krteček’ to the Persian Gulf, making the Czech Republic the sole EU nation to join the US-led coalition. 💪🇨🇿🇺🇸
Czech what? Some twitteratis fell for the joke. But Czechia is a landlocked country with no navy. Krteček though (also Krtek) is a famous Czech personality. I’ll leave it to you color his cruiser.
biggerIn other news the Israelis claim to have killed Ali Larijani last night. Sayed Larinjani led Iran’s Supreme National Security Council. He was a capable pragmatic politician with good relations to all power centers – IRGC, clerics, Bazaari – within the Iranian state.
Cont. reading: War On Iran – Czech cruiser ‘Krteček’ – Larijani’s Martyrdom – Kent’s Resignation
War On Iran: – (Not-) Destroyed Missile Launchers – Seeking Ground War Allies
War propaganda doesn’t change, whoever a conflict is fought with:
Professed success is promoted by doing a countdown towards victory:
The recent war follows the scheme of ever rising enemy losses:
At some point however delusion creeps in:
People start to ask questions:
After Trump’s original plans did not survive contact with the enemy, the media are preparing the public for an escalation towards a ground war:
Cont. reading: War On Iran: – (Not-) Destroyed Missile Launchers – Seeking Ground War Allies
War On Iran: The Saudis’ Alternative Crude Export Outlet Is Also A Trap
Saudi Arabia is trying to avoid damage from the war on Iran by diverting oil exports from the Persian Gulf to the Red Sea through its East-West pipeline. This scheme however will fail at least as long as it takes part in that war.
During the 1980s the rulers of Saudi Arabia feared that another war between Iran and Iraq would close the Strait of Hormuz. In normal times Saudi Arabia would export between 6 to 8 million barrels of crude oil per day through its Persian Gulf side harbors. The closure of the Strait would have threatened all oil export capabilities for Saudi crude.
biggerA pipeline system was built to allow for the divergence of crude from the Saudi east coast in the Persian Gulf to its west coast at the Red Sea. The system consisted of two strings – one for crude, the other for natural gas liquids. The capacity of the pipeline is about 5 million barrels per day for crude plus an additional 2 million barrels if the natural gas pipeline is converted to crude and used too.
The East-West pipeline, also known as Petroline, ends at the Read Sea harbor city of Yanbu where several refineries convert a share of the crude to products that are locally used. The crude oil export capacity of Yanbu is estimated to be between 3 to 5 million barrels per day.
Due to the recent USraeli war on Iran the Strait of Hormuz was closed. Saudi Arabia immediately reacted by diverting crude from its eastern ports through the East-West pipeline towards Yanbu.
According to Windward:
Cont. reading: War On Iran: The Saudis’ Alternative Crude Export Outlet Is Also A Trap
War On Iran: – No Planning – No Hiding Officials – Suicide Mission In Hormuz
On January 28 I had warned that Iran Is No Easy Target:
Iran however is also ready. It has increased its missile forces. It has promised to use it against U.S. positions in the Middle East and against Israel in retaliation to any attack. It has also promised to close the Strait of Hormuz. A large part of the global oil supply is flowing through it. A selective closure, which would for example allow tankers destined for China to pass, is also a possibility. But even a partial prolonged closure would suddenly increase oil and gas prices all over the world. Republican chances to win in the mid-term elections would decrease.
…
The arising conflict is unlikely to be as short as the recent 12 day campaign. It could easily escalate into attritional warfare. Unlike Iran Israel has nukes and may be willing to use them. But given Iran’s size and large population it is likely to end up severely damaged, but as a winner.
We are now in the midst of what I had foreseen. It was easy to predict this development and the Pentagon should be asked why it has failed to do so:
The Pentagon and National Security Council significantly underestimated Iran’s willingness to close the Strait of Hormuz in response to US military strikes while planning the ongoing operation, according to multiple sources familiar with the matter.
President Donald Trump’s national security team failed to fully account for the potential consequences of what some officials have described as a worst-case scenario now facing the administration, the sources said.
While key officials from the Departments of Energy and Treasury were present for some of the official planning meetings about the operation before it started, sources said, the agency analysis and forecasts that would be integral elements of the decision-making process in past administrations were secondary considerations.
Trump should fire his National Security Advisor, Marco Rubio, and his Secretary of Defense for providing stupid advice to him. He then should look at a mirror …
—U.S. Secretary of Defense Pete Hegseth (vid):
Cont. reading: War On Iran: – No Planning – No Hiding Officials – Suicide Mission In Hormuz
War On Iran: (Just a few links)
Quote of the day:
Alireza Tangsiri, Commander of the IRGC Navy:
We guarantee the security of any oil tanker, under any flag, that can convince an American destroyer to escort it through the Strait of Hormuz.
A few links:
Mearsheimer with Glenn Diesen includes some interesting words on Europe (transcribed here):
The new Supreme Leader of the Islamic Republic has made his first public statement. He did not announce any new policies.
War On Iran: Bank Attacks – Mine Fakes – Price Manipulation – More THAAD To Destroy
Last night Israel and U.S. fighter jets destroyed Bank Sepah’s data center in Tehran. Bank Sepah does the salaries payment for Iran’s military personal.
Following the strike Iran announced that it would target U.S. and Israeli banks in the region. Citibank and HSBC instructed staff in Dubai and other Gulf countries to evacuate their offices.
This is another step in the retreat of the U.S. from the Middle East.
—While the Strait of Hormuz remains closed for most tankers, Iran’s export of crude oil, mainly to China, has increased:
Since the war began, around 15 ships have crossed the strait with most being dark-fleet vessels moving Iranian oil to China and India, according to Lloyds List Intelligence. Many are small Chinese tankers that make their presence and origin known to the Revolutionary Guard through loudspeakers and shortwave radio.
The U.S. has claimed, without evidence, that Iran has started to lay mines in the Strait of Hormuz. I do regard that as fake-news and unlikely to happen. Mines are a last resort as they do not discriminate between a ship’s nationality. They would also hit Iranian and Chinese tankers.
The U.S bombed some 16 random boats along the Iranian cost of Hormuz claiming that they were used to lay mines. But any boat with a $50 metal rack in rear, a mine technician and a map can be used to lay mines. (The mine technician and map are optional). Iran also has land based MLRS rocket launchers which can be used to remotely mine the Strait.
Mines can not be removed while a war is ongoing. Minesweepers are not armed and unprotected against attacks. In perfect timing the last four U.S. minesweepers stationed in the Gulf for the last 35 years and built for that purpose just arrived in Texas to be dismantled. They were replaced by three Little Crappy Ships (LCS) with mine sweeping equipment. LCS have never been tested in that role.
Iran has many other means beyond mines, like missiles or fast boats, to prevent ships it does not want to pass from using the Strait.
The U.S. Navy knows this. That is why it has rejected all requests to escort ships through the Strait.
—Cont. reading: War On Iran: Bank Attacks – Mine Fakes – Price Manipulation – More THAAD To Destroy
War On Iran – No. Taking Kharg Island Is Not An Option.
When serious export of Iranian oil started it was soon met by a problem. Iran’s coast is relatively shallow. Big tankers have a lot of draft. It was thus troublesome for Iran’s oil industry to deliver large loads of crude oil to big ships.
Luckily there was an island near to deep water some 15 miles off the Iranian coast. Pipes were laid from the oil producing mainland of Iran to the island and piers were built to be able to load very large crude oil carrying vessels. The name of the island is Kharg. Today its is with 90% of all product the main export terminal for oil produced in Iran.
biggerFor decades dimwit U.S. amateur politicians have dreamed of fetching Kharg to thereby get control over Iran’s oil production:
In an interview with a British newspaper back in 1988, an up-and-coming New York property mogul named Donald Trump was asked about his plans for the future. True to form, he had plenty to say, boasting that he might one day run for president and vowing to win back “respect” for America on the world stage. He also had stern words for Iran’s Islamic Republic, already a sworn enemy of America in the wake of the 1979 US hostage crisis.
“They’ve been beating us psychologically, making us look a bunch of fools,” Trump told The Guardian. “One bullet shot at one of our men or ships, and I’d do a number on Kharg Island. I’d go in and take it.”
Several figures of the current Trump administration have likewise opined that the taking of Kharg would give the U.S. a hold over all Iranian oil exports – now and in future:
“What we want to do is to get such massive oil reserves in Iran out of the hands of terrorists,” said Jarrod Agen, a White House adviser, in an interview over the weekend with Fox Business, which hinted that Kharg is a central part of the rationale for Epic Fury.
Kharg is a relatively flat island 4 miles long and 2 miles wide with little features. It is difficult to defend it.
The U.S recently canceled an Army exercise (archived) of the 82nd Airborne Division which could be the prime unit for a U.S. operation to take Kharg.
But there are two problems with this.
The first one is to take and hold an island very near to Iran:
Cont. reading: War On Iran – No. Taking Kharg Island Is Not An Option.
War On Iran – Oil Prices Lag Supply Deficit – Arab’s Won’t Fight Iran – Khamenei Son Succeeds Father
Iraq has shut down some oil wells. As have Kuwait, Qatar, Bahrain, the Emirates and Saudi Arabia.
Qatar has also shut down is gas wells and the process ‘trains’ needed to liquefy natural gas.
All this because of the virtual closure of the Strait of Hormuz and because of potential missile and drone attacks on the fragile production installations.
While oil and LPG prices have increased the global markets have not yet recognized the length and severity of the supply crunch these shut downs will cause. Prices, currently in the high $90/bl, will need to get much higher ($150+/bl) to cause an equivalent demand destruction.
Even if the war on Iran would stop tomorrow and if the Strait would reopen immediately it would take many weeks until the supplies would be back to normal levels.
Oil wells, once shut down, often require rework to open them up again. The bore of an unused the well may close up, sediments may block the oil flow, valves start to fail. It means that drilling rigs will need to be setup at each of the wells with days of rework needed to re-establish its outflow. There are thousands of wells that have been shut down.
Qatar’s liquefaction of natural gas is a special problem as the process to create Liquefied Petroleum Gas is quite complex:
Cont. reading: War On Iran – Oil Prices Lag Supply Deficit – Arab’s Won’t Fight Iran – Khamenei Son Succeeds Father
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