This is an existential war for Iran. It is a proud nation with a history going back to over 5000 years. On top of it you have the Shia muslim effect with talks of an end of time battle. For the Iranians this is the end of time. They understand that the US and Israel want to totally destroy them, destroy their country, steal what they can, destroy everything including their identity. This is existential for them. They understood this decades ago and they started planning for it and they’ve planned and planned. They are not stupid.
There is this tendency in the West to see the rest of the world as lacking agency, as stupid. It is a tendency based on 500 years of Western domination of the planet. That archetype has lead the US into a very very stupid war that has the potential to be the most disastrous war in American history. They’ve committed now instead of walking away. Iran’s current strategy is to deplete US anti missile munitions and then bring out the big missiles. If this plays out Israel will be massively bombed which will force the two countries to do something massively foolish like either carpet bomb Tehran or nuke it. Will Iran give in? I do not think so. This will end up in chaos in the middle eastern countries as restive populations get angry and force their countries to do something. Pressure on Trump but he’s an idiot.
What’s Russia and China’s role in it? I think they knew part of the plan and have helped the Iranians. For China it’s critical that the US does not defeat Iran because this would mean the US now controls most of the major oil in the world apart from Russia. They can squeeze China, use the leverage to get better deals and impose their will on China. This could end up being existential for China and could end up in war with China similar to how Japan ended up declaring war on the US. For Russia they understand that this is also existential because the West would love to smash Russia into pieces. My take is that they are playing a waiting game. They expect the war to get out of control and break out into a major war pitting the Europeans/Israelis/US vs Iran and maybe Yemen. Any invasion would have to involve bombarding which would kill lots of civilians and cause an outcry that would 'force' Russia and China to step in either as mediators or worst case, as participants
We do not know what the Iranians have planned but we know they’ve had many years to plan for it and they are not stupid and they intend to punch a massive blow that will change the Middle East forever. They must have done this simulations, thought through this possible situations. I suspect that Russia, China and Iran may have led the US into a trap in order to force a new worldwide magna carta to avoid WW3. It’s obvious that the current rules are not working and without some limit on the powers of the US, this world will end up in a world war. A major nation cannot be going around toppling other countries, kidnapping leaders, assassinating leaders at will. There has to be some major crisis that forces the world leaders to sit down and work out a code of conduct else WW3 becomes a very strong possibility
For the US this is a race for the continuation of world domination. If they can crush Iran and impose their will on it they’ll get extra leverage against China who will now be their next target to try and topple. China will be a different matter especially if they get a breakthrough in chip manufacturing. The US has gone into an existential war either by luck or by a genius cunning. They will be forced to go all out on Iran because their ego cannot let them back down. Iran is now the US's new Vietnam and this time, there's the internet and social media for the world to see and record for posterity.
This is also a fight between Shia and Sunni Islam and Sunni Islam is reeling and will be bleeding for a long time. Muslim youth all over and especially in the Middle East and Europe will be seeing a Shia spiritual leader who martyred himself for a greater cause. On the other hand there's no Sunni equivalent, just filthy rich Sunni leaders who lead a wasteful decadent life while claiming to be pious. I would not be suprised if the Shia faith grows in the coming years, the growth made worse by Sunni leaders fighting the inevitable the only way they know how; violence.
Why would it be existential for China? How will the US replenish all those missiles they’re expending without rare earth minerals? Or how will the data center and AI chip industry prop up the US economy if those same minerals get diverted to missles? Seems to me they could just withhold a few shipments here and there and truly mess up the supply chain.
A ground war in the western mountains of Iran in the age of drones would be a disaster for US armed forces, no? Russia is learning this lessons by getting brutalized on their front door. The US has to fight this war 6000 miles away.
If the US were to win this war and install a puppet regime in Iran they'd control most of the world's oil supply as all the middle east countries would be now under their control including the other major oil country, Venezuela. The US would be able to squeeze China using oil in order to get better concessions including access to refined rare earths. China could get oil from Russia but that wouldn't be enough for their needs if access to the middle east and Venezuela oil was cut off. China is the biggest oil importer so their economy is sensitive to oil disruptions.
“The US and Israel want to totally destroy them, destroy their country, steal what they can, destroy everything including their identity”. If you believe that’s the reason for this conflict I sincerely urge you to read more wildly. I promise it won’t take you long to discover alternative explanations that don’t involve a desire for to destroy Iranian identity.
The US and Israel did not just openly kill the leader of a sovereign nation and murder his wife and grandkids because they want well for his country. This operation is about the destruction and control of Iran hereby controlling most of the worlds oil and having their foot on the necks of middle eastern nations. This is a power play, the stakes are very high for all parties involved
Israel DOES want Iran completely eradicated as they do all the surrounding Arab nations. When 90% of a population are supporting this war and believe that it is their right to all the land in the Middle East because “God gave they land to them” it’s very good bet this is not about energy or oil. Like their current war in Gaza, it’s far more likely to be another war of genocide because as far as most Israelis are concerned Muslims and Arabs don’t deserve to live anywhere near them!
Iran has vowed to destroy Israel many times, armed its enemies, sent proxies to attack it, and directly attacked it with ballistic missiles, all while pursuing a nuclear missiles program.
Israel doesn’t want to destroy Iran, it just want Iran to stop trying to destroy Israel.
Israel has murdered Iranian scientists. It has attacked without any provocation and in the middle of negotiations not once but twice. It has murdered Iran's leader including his wife and grandkids. It has bombed a children's school and murdered over 150 kids not accidentally but intentionally. It has pushed the US to attack Iran and involved it in an unwinnable war.
In negotiations prior to the attack, Iran committed to never having nuclear material that would create a bomb. They committed to zero stockpiling of nuclear material, they were willing to give up all nuclear material and also allow IAEA inspectors to verify so. A day later Israel attacked Iran and murdered it's leader. The same Israel that has nuclear weapons and does not allow IAEA inspectors to verify their nuclear program. Israel is not a country that desires peace with its neighbors especially Iran. Their actions have proved it time and time again. They want war and now they've gotten what they've always wanted, a war with the US against Iran
Iran has not murdered Israeli nuclear scientists. Iran has not instigated direct attacks on Israel not once but twice. Iran has not murdered any Israeli leader. Israel has done all that including deliberately targeting Iranian school children, a war crime. Israel's actions shows that it has absolutely no interest in peace with Iran
That is called lack of ability. Iran has instigated attacks on Israel multiple times and shot ballistic missiles at it directly before any direct attack from Israel.
Israel didn't deliberately targeted an Iranian school, or there would have been more.
Israel doesn't want an Iran dedicated to its destruction armed with Nuclear weapons.
Could you show me any evidence that Iran has instigated and shot any missiles directly at Israel without any prior attack from Israel?
Two missiles were lobbed into the Iranian school, the second one came 40 minutes after the first one in order to target emergency responders. That's something Israel has been known to do multiple times in Gaza. They were definitely targeting the school.
The disruption in the medium sour crude flows to the Southeast Asian refineries is already threatening New Zealand's energy security.
As you rightly note this is moving beyond being just a shipping logistics issue in the Strait of Hormuz, to becoming a structural issue as refineries and pipelines are attacked. The timelines are all extending by months with each passing day.
The world is far more interconnected than it was in the 70's. This complexity makes things far more fragile. The implications of energy flows becoming severely restricted will manifest in ways we cannot imagine let alone respond to in a coherent manner.
As a net exporter, doesn't this advantage US oil producers? Not US or global consumers. Whereas OPEC controls prices via self-regulation. The US can control prices by regulating other producers.
Many of our briefs about the geopolitical order probably need to start changing faster.
Vertically integrated oil companies like Exxon, Chevron - yes, they will probably report record profits. But that kind of volatility makes long-term planning and business much more difficult.
You imply that this war, while it may have terrible outcomes was one of choice. You point out the deep theological roots and martyrdom mentality. But then you ignore the implications of their rapidly rebuilding and expanding missle stocks and their unwillingness to stop further enriched uranium production. They were and are seeking not only complete effective control of all the oil and gas production you worry about. If they get nuclear bombs why would you expect they wouldn’t use them.
Real leaders have to make real and difficult choices without being sure of the outcome. Not making the choice to attack now was making a much worse choice.
Offhand, I'd say reasons no nukes yet would include technology procurement issues due to sanctions, UN oversight and monitoring of known programs forcing smaller clandestine operations (vs desired large scale), and possibly deaths of scientists (I believe assassinations have taken place). I do not think it's lack of trying on Iran's part that they do not have nukes today.
Offhand, they have centrifuges. Having two subcritical pieces of U235 and designing charge that pushes them together is 1940 technology. Let’s try again.
You asked why they are taking longer than other nations have in the past; I provided possible reasons. I have no direct insight why they stopped at 60% which has very limited non-weapons production applications.
Why do you think they have enriched so much to a level with no practical civilian application in Iran today?
Because they have (or had) an openly declared policy of being a nuclear threshold state. One not possessing nuclear weapons (and thus a threat to its neighbours) but one capable of producing nuclear weapons if they were ever attacked by nuclear weapons, (held by US and Israel). Israel has just assassinated the man who pronounced nuclear weapons were “haram” (un-Islamic).
Spot on analysis. Energy shipments through Hormuz is the crux of this conflict. Regime change via air campaign seems like a pipe dream. I'm no fan of Trump, but if the Iranians dropped a bomb on the White House, I don't think my first reaction would be to overthrow the government.
Why are you talking about regime change? The President said specifically no national building. We are exerting tremendous violent power in our interest, for a specific goal: drawing the teeth of an inveterate enemy. The President suggested that if the Iranian opposition wants regime change, this might be a good chance to grab it. The details matter.
1. You assert that there is no chance of prying open the SOH. I am no expert, but every other article I've read on the subject (which seem to be written by experts) asserts that it can be done, it is only matter of how long it will take and what the collateral cost will be
2. Even if the US walks away today, the damage done to the Iranian military and their economic and physical ability to rebuild is immense and a "victory." Certainly, it will be even more so, but the time the US might need to back down. It would be great if we could get a regime change and a longer-term solution to the problem, but kicking the can down the road is also a benefit
Thanks for pointing that out. I would be very interested to see an article which explains how it can be done realistically. It seems prohibitively expensive at every level.
I don't think that weakening the country is a win, but on the other hand nobody has defined how a "win" looks like, as I've pointed out - one of the weaknesses of the whole campaign.
I spent too much time during working hours trying to find my sources; unfortunately, I have not found them at this moment. Much of my perspective comes from https://www.investorvillage.com/, which has numerous posters who live the energy industry and have a very good perspective into these issues
One thing they note is that China is the biggest loser from the closure of SOH. They have probably more influence on Iran that any other country, and Iran likely can't last long without their support. The second biggest losers are the ME oil exporting countries. Iran is banking on that they will pressure the US to stop the war. That could happen, but I think it is more likely that they will get involved as active combatants against Iran
Agree much is at stake for China. But Iran domination is much more in their interest than US domination of SOH, that's why they (and Russia) supply Iran with target coordinates for missiles (Iran has done more damage to US assets than any other conflict ever, maybe except WWII).
Huh? Iran has had some success in damaging valuable radar stations, and Kuwait shot down three F-15Es. That is real damage, but you closing statement seems totally out of proportion with reality. Can you clarify what you mean?
Agreed. We shall see can they lay mines with fleet reportedly sunk and western navy in the vicinity. And are those shore weapons to fire on ships still operational (time will tell).
Thanks for sharing. I don't think this is convincing. Military capabilities in the 1980s of Iran were very different from today. Iranian military advisers were the first personnel to enter Iraq after the 2003 war for an assessment of US missile warfare. The country spent the last 20 years fortifying its coast with hidden launch bases. Can they be destroyed? Sure. But the effort will be prohibitively expensive and take many months if not years. By that time the world economy will have collapsed. Time is running out more quickly than the US can destroy missile bases.
Unfortunately missile technology has advanced tremendously, and the U.S. does not have enough ships. It could be a turkey shoot for Iran. Look at what the Houthis did to the Suez canal traffic. The U.S. had to declare victory, get an Israeli ceasefire, and retreat.
This USraeli regime-change operation against Iran has already become a regional war involving GCC countries in less than a week. One may wonder what kind of intel Trump and Bibi were fed with. In any case, this is going to be a long war. Iran isn't Kuwait. Moreover Iran has no intention to negotiate. Instead, it's waiting for the US allies, i.e. GCC countries and the EU, to put pressure on Trump and beg him to stop this conflict that puts their own regimes in danger.
Major oil, air, sea, global logistics and passengers hubs in the area were shut down at the very start of the conflict. Meanwhile key infrastructures are being destroyed. That makes the situation bad for both Asia and Europe which are now partially disconneted from energy supplies and consumer markets. A liter of gas is getting close to 2 euros in some European countries. This is only the beginning. Think covid 6 years back, except it's worse, a lot worse.
Iran warned its immediate neighbours to remain neutral, or else missiles and drones will start fallimg. Turkey, a NATO member, is currently the only air corridor between Europe and Asia since Russia and Middle-East airspaces are now no-fly zones. Azerbaijan has common borders with both Iran and Russia. Meanwhile, Macron threatens Putin, Zelensky menaces Orbán. Is NATO getting ready to attack Russia, or at least send troops in Ukraine? If positive, then the Middle-East and Ukraine wars will merge into a continental conflict with a frontline stretching from Finland to the Arabian Gulf.
Last, the UN are now dead since the new world order is dictated by raw power, hypersonic missiles, access to energy supplies and a dozen of psychopaths.
You have it largely correct but there are a few things very few people are putting together:
Iran clearly stated that they would close Hormuz if attacked on numerous occasions, so the excuse that they would keep it open to maintain “good relations” with their sworn religious enemies and proxy opponents in Yemen is laughable.
China will be a huge winner in this conflict and they have clearly gamed this out. If they were actually threatened by the destruction of the gulf energy infrastructure they would have worked to put Iran under their nuclear umbrella, threatened rare earth embargo, whatever it took to stop the attack from happening. But they did not (and neither did Russia). They prepared an ambush for the US that will see the end of the US military presence in the region and the likely fall of gulf monarchies if Israel and the US fall into the escalators trap that has been meticulously prepared for them.
China has a massive SPR and probably undeclared reserves as well (remember the difference between their states gold reserves and actual purchasing behavior). Europe and other energy-importing manufacturers are beyond fucked because they have zero reserves and are hopelessly exposed when oil goes to $200. China is sitting on hard currency reserves that are not tied up in derivative schemes the way that the west is leveraged. When the economy crashes, who will be in the best position to benefit? China. Buy when blood flows in the streets. China will emerge from this conflict with an even more towering advantage than they have today. Russia already threatened to cut Europe off completely from all energy supplies. Why would they do that? Because they have a buyer in China who won’t use those supplies to manufacture munitions to kill Russians with.
Russia is the other huge winner here. If all ME energy infra is destroyed, which it absolutely will be if Israel and the US fail to extricate themselves from the trap, and the US, Israel, and gulf monarchies expend their entire AD stocks, Ukraine will fall with even less of a whimper, leaving Russia with full control of historic Black Sea ports. There will be no concessions necessary to the empire, oil will be $200 for 10 years, and the US MIC will be busy reloading and will not have the capacity to service the gulf so Russia arms industry will be the largest in the world. If Iran somehow falls into the thrall of the west they will have a problem but the likelihood of that is clearly zero, or they would have extended their nuclear umbrella over Iran.
The so called military planners and geopolitical analysts of the west are fucking retards. They used AI to pick targets in Iran, which means they have been planning this for about 3 weeks. Iran has been planning for this war since 2003 when Bibi’s obsession with Iraq led Cheney and Rumsfeld to destroy Iraq instead of Iran. They watched what the coalition did and learned. They went underground and learned how to build hypersonic missiles. They planned their targets and distributed decision making capability into cells, creating a dead hand like system that can’t be stopped through military means. They have planned the escalation ladder. If their energy infrastructure is hit, they will hit gulf energy infrastructure. If they are nuked, they will raze Israel to the ground indiscriminately, hit Dimona, or since the US killed the man who held back the Iranians from building a nuke in the first place, which would have spared them this trial btw, maybe they nuke back.
This is a trap planned by Russia, China, and Iran. They played into Trump and Bibi’s egos and led them down the garden path.
Winner: “The U.S. energy industry becomes the only global low-risk super producer.”
How do you know this wasn’t the goal in the first place? It certainly fits with the Trump National Defense Strategy, will likely drive up gold prices (and facilitate a monetization of the Fed balance sheet),and poke a stick in the eyes of possible adversaries.
To be honest, creating a crisis that creates a favorable geopolitical outcome isn’t a bad strategy.
Gut decisions, that is choosing intuitively, often leads others as well as the person making the decision to see the choice as authentic or reflective of personal commitment. In contrast, deliberative choices are seen as more calculated or logical. And just as wrong.
Say what you want, but most of the Gulf states trust Trump in a way they never did Biden or Obama.
Not likely because such a scenario is “less bad for US” means it’s still bad for the US. Petroleum industry is 6% of GDP. So lots of others get negatively impacted and POTUS is not a long term thinker.
POTUS is just there to tweet and assemble rallies. The advisors dictating policy have very long-term horizons. And I expect there's likely a tactical rationale for the parallel timing of the war in Iran (Hormuz disruption, probably Red Sea next when the Houthis get going) and the escalating belligerence against Europe. US LNG is now the European energy lifeline. Same as after the Suez crisis with oil. That isn't just the 6% petroleum proportion of GDP, it's foreign reserves and geopolitical leverage.
Adam - there are multiple pieces to the puzzle moving in real time. China was just escorted out of Panama (and mgmt of the Canal) a week ago. Cuba has an oil embargo and is expected to be next to fall. The U.S. is currently negotiating a bilateral trade agreement with Mexico. In the expected inflationary environment which Alisdair described, Canada has no gold - zero and will be under financial pressure. By the end of 2026, the U.S. will exert strategic dominance over virtually all of North America. Europe is expected to increase remaining burden sharing and or buy UST’s during the upcoming refi period. The outlook for the remainder of Trump’s term is going to,be tectonic grinding as the order changes. If we just watch Iran, we miss the bigger game.
Completely agree, and didn't mean to show tunnel vision. The moves in the Western hemisphere have been more well-considered and intelligible than the latest salvo in the Middle East. And the Trump corollary to the Monroe Doctrine, as the administration frames it, can also be made to fit into the narrative of partial American isolationism supported by MAGA. Intervention in Iran is decidedly reminiscent of the forever wars that have elicited such visceral objections from much of the country on both sides of the aisle. It also complicates the initiatives you reference (Panama canal, Venezuela, Cuba, etc.) to bog down resources in the Gulf. The central objective - containment of China - remains comprehensible with respect to regime change and energy displacement from Iran; but overextension to accomplish it and mistiming the moment risk unwinding successes elsewhere.
Personally, I think this is a tale of two stories. Israel, on the one hand, wants safety, security and regime change in Iran. The U.S. wants to address its financial problems … picking a fight with Iran in a way to goad a desired response (Hormuz closure) is ideal. Oil is priced in dollars. What we are seeing is a stronger dollar that ultimately, gets recycled into refi’d UST’s and higher inflation and correspondences higher gold prices. And it shoves a stick into China’s eye and forces Europe to choose.
Frankly, I can’t think of a better opportunity to rearrange the game board than this. What other U.S. president would have done this? I can’t think of one.
With the Strait of Hormuz closed can they not take a longer slower route? This of course still adds cost and creates a dip in supply but won't that balance out with some time. The extra cost will remain but the supply is still there.
The Hormuz point is critical, but the decisive variable may be duration rather than disruption.
Short-term closure can trigger extreme price spikes, but energy systems historically adapt faster than expected through rerouting, strategic reserves, demand destruction and alternative supply ramp-ups. The real strategic question is whether Iran can sustain pressure on the Strait long enough for the economic shock to translate into political leverage.
In other words, Hormuz is powerful as a time-buying mechanism, but its coercive value depends on how long the disruption can actually be maintained.
Exactly. That's why the blockade took effect immediately, and not as part of a longer-term escalation chain. But any adjustment mechanism of global energy will be very painful (when your house burns down, and you live in a tent for the next couple 'years, that's kind of an adjustment but not really helpful). So it's a question who can tolerate the pain and damage for longer. Iran sees the war as existential, and to quote Mark Twain, "reports of [regime] death are greatly exaggerated".
What’s striking here is that the Strait doesn’t have to be “physically closed” for the global system to behave as if it is. The first real shutdown mechanism is often the financial one: war-risk insurance, P&I cover/reinsurance capacity, trade finance requirements, and port/charterer constraints. When that layer reprices sharply—or coverage becomes unavailable—the traffic pause can happen even before the physical supply picture fully registers.
That’s why the DFC/escort idea is so telling: it’s effectively the state stepping in to replace private underwriting when risk becomes unpriceable. But even with a backstop, the operational question becomes whether insurers, owners, and charterers treat “guaranteed losses” + convoy risk as bankable/insurable at scale.
On the price side, I’m sympathetic to the “regime shift” framing, though I’d be careful with straight 1970s analogies—today’s transmission channels (insurance/freight, LNG benchmarks, inventory policy, financial flows) can amplify or dampen differently than embargo-era supply shocks. The key variable may be less “oil exists” and more “can the system clear the risk so cargo actually moves.”
This is a great article. The historical parallels to the 50s are underappreciated. Xi as Nasser and BRICS as the pan-Arabic coalition, with Iran and the ME again a proxy for what is effectively East vs West realpolitik fought around control of energy flows.
One question on the following quote, though: "Iran first became a pawn of geopolitical interests in 1953, when Iranian Prime Minister Mohammad Mosaddegh nationalized the Iranian oil industry." How exactly was Iran not *more so* a geopolitical pawn throughout the earlier period of the Anglo-Iranian (now BP) concession?
Well, there are legitimate business connections, and then there's bullying around. Britain helped out the Shah who was constantly broke due to his excessive lifestyle, and in return the Shah signed a concession to develop Iran's oil reserves in the early 1900s. Quite a fascinating story of an adventurer, William Knox D'Arcy, who himself almost went broke before he found the Masjid-i-Suleiman spring in 1908, the Middle East's first oil well.
All the 'oil exporter pawns' in the Middle East made it across the board to become queens by the 1960s 🤣 Western Europe has a congenital tendency to propel the industrial development of its future foes (rendering itself vulnerable and dependent in the meantime) in the interest of a fast buck. Same playbook with Chinese factory offshoring; all a mechanism for Treasury supports, from petrodollars to yen carry. Very possible the Strait of Hormuz will be to the US empire as the catastrophic Suez intervention was to the British.
This is an existential war for Iran. It is a proud nation with a history going back to over 5000 years. On top of it you have the Shia muslim effect with talks of an end of time battle. For the Iranians this is the end of time. They understand that the US and Israel want to totally destroy them, destroy their country, steal what they can, destroy everything including their identity. This is existential for them. They understood this decades ago and they started planning for it and they’ve planned and planned. They are not stupid.
There is this tendency in the West to see the rest of the world as lacking agency, as stupid. It is a tendency based on 500 years of Western domination of the planet. That archetype has lead the US into a very very stupid war that has the potential to be the most disastrous war in American history. They’ve committed now instead of walking away. Iran’s current strategy is to deplete US anti missile munitions and then bring out the big missiles. If this plays out Israel will be massively bombed which will force the two countries to do something massively foolish like either carpet bomb Tehran or nuke it. Will Iran give in? I do not think so. This will end up in chaos in the middle eastern countries as restive populations get angry and force their countries to do something. Pressure on Trump but he’s an idiot.
What’s Russia and China’s role in it? I think they knew part of the plan and have helped the Iranians. For China it’s critical that the US does not defeat Iran because this would mean the US now controls most of the major oil in the world apart from Russia. They can squeeze China, use the leverage to get better deals and impose their will on China. This could end up being existential for China and could end up in war with China similar to how Japan ended up declaring war on the US. For Russia they understand that this is also existential because the West would love to smash Russia into pieces. My take is that they are playing a waiting game. They expect the war to get out of control and break out into a major war pitting the Europeans/Israelis/US vs Iran and maybe Yemen. Any invasion would have to involve bombarding which would kill lots of civilians and cause an outcry that would 'force' Russia and China to step in either as mediators or worst case, as participants
We do not know what the Iranians have planned but we know they’ve had many years to plan for it and they are not stupid and they intend to punch a massive blow that will change the Middle East forever. They must have done this simulations, thought through this possible situations. I suspect that Russia, China and Iran may have led the US into a trap in order to force a new worldwide magna carta to avoid WW3. It’s obvious that the current rules are not working and without some limit on the powers of the US, this world will end up in a world war. A major nation cannot be going around toppling other countries, kidnapping leaders, assassinating leaders at will. There has to be some major crisis that forces the world leaders to sit down and work out a code of conduct else WW3 becomes a very strong possibility
For the US this is a race for the continuation of world domination. If they can crush Iran and impose their will on it they’ll get extra leverage against China who will now be their next target to try and topple. China will be a different matter especially if they get a breakthrough in chip manufacturing. The US has gone into an existential war either by luck or by a genius cunning. They will be forced to go all out on Iran because their ego cannot let them back down. Iran is now the US's new Vietnam and this time, there's the internet and social media for the world to see and record for posterity.
This is also a fight between Shia and Sunni Islam and Sunni Islam is reeling and will be bleeding for a long time. Muslim youth all over and especially in the Middle East and Europe will be seeing a Shia spiritual leader who martyred himself for a greater cause. On the other hand there's no Sunni equivalent, just filthy rich Sunni leaders who lead a wasteful decadent life while claiming to be pious. I would not be suprised if the Shia faith grows in the coming years, the growth made worse by Sunni leaders fighting the inevitable the only way they know how; violence.
Excellent take, many thanks for adding. I'll follow up with additional pieces, starting with Iran's n-weapons programs (yes? no?). Stay in touch.
Why would it be existential for China? How will the US replenish all those missiles they’re expending without rare earth minerals? Or how will the data center and AI chip industry prop up the US economy if those same minerals get diverted to missles? Seems to me they could just withhold a few shipments here and there and truly mess up the supply chain.
A ground war in the western mountains of Iran in the age of drones would be a disaster for US armed forces, no? Russia is learning this lessons by getting brutalized on their front door. The US has to fight this war 6000 miles away.
If the US were to win this war and install a puppet regime in Iran they'd control most of the world's oil supply as all the middle east countries would be now under their control including the other major oil country, Venezuela. The US would be able to squeeze China using oil in order to get better concessions including access to refined rare earths. China could get oil from Russia but that wouldn't be enough for their needs if access to the middle east and Venezuela oil was cut off. China is the biggest oil importer so their economy is sensitive to oil disruptions.
“The US and Israel want to totally destroy them, destroy their country, steal what they can, destroy everything including their identity”. If you believe that’s the reason for this conflict I sincerely urge you to read more wildly. I promise it won’t take you long to discover alternative explanations that don’t involve a desire for to destroy Iranian identity.
The US and Israel did not just openly kill the leader of a sovereign nation and murder his wife and grandkids because they want well for his country. This operation is about the destruction and control of Iran hereby controlling most of the worlds oil and having their foot on the necks of middle eastern nations. This is a power play, the stakes are very high for all parties involved
Well at least you’ve moved off of it being a desire to eradicate their identity, my work is done!
Israel DOES want Iran completely eradicated as they do all the surrounding Arab nations. When 90% of a population are supporting this war and believe that it is their right to all the land in the Middle East because “God gave they land to them” it’s very good bet this is not about energy or oil. Like their current war in Gaza, it’s far more likely to be another war of genocide because as far as most Israelis are concerned Muslims and Arabs don’t deserve to live anywhere near them!
I don’t think you know anything at all about this issue.
Iran has vowed to destroy Israel many times, armed its enemies, sent proxies to attack it, and directly attacked it with ballistic missiles, all while pursuing a nuclear missiles program.
Israel doesn’t want to destroy Iran, it just want Iran to stop trying to destroy Israel.
Israel has murdered Iranian scientists. It has attacked without any provocation and in the middle of negotiations not once but twice. It has murdered Iran's leader including his wife and grandkids. It has bombed a children's school and murdered over 150 kids not accidentally but intentionally. It has pushed the US to attack Iran and involved it in an unwinnable war.
In negotiations prior to the attack, Iran committed to never having nuclear material that would create a bomb. They committed to zero stockpiling of nuclear material, they were willing to give up all nuclear material and also allow IAEA inspectors to verify so. A day later Israel attacked Iran and murdered it's leader. The same Israel that has nuclear weapons and does not allow IAEA inspectors to verify their nuclear program. Israel is not a country that desires peace with its neighbors especially Iran. Their actions have proved it time and time again. They want war and now they've gotten what they've always wanted, a war with the US against Iran
Iran armed Hizballah and directed Terror attacks against Israel and Jewish targets for a very long time.
here is an example:
https://en.wikipedia.org/wiki/AMIA_bombing
Those scientists were working on nuclear weapons.
Israel used to be Iran's ally, until the Ayatullha took over and vowed to destroy Israel.
Iran has not murdered Israeli nuclear scientists. Iran has not instigated direct attacks on Israel not once but twice. Iran has not murdered any Israeli leader. Israel has done all that including deliberately targeting Iranian school children, a war crime. Israel's actions shows that it has absolutely no interest in peace with Iran
That is called lack of ability. Iran has instigated attacks on Israel multiple times and shot ballistic missiles at it directly before any direct attack from Israel.
Israel didn't deliberately targeted an Iranian school, or there would have been more.
Israel doesn't want an Iran dedicated to its destruction armed with Nuclear weapons.
Could you show me any evidence that Iran has instigated and shot any missiles directly at Israel without any prior attack from Israel?
Two missiles were lobbed into the Iranian school, the second one came 40 minutes after the first one in order to target emergency responders. That's something Israel has been known to do multiple times in Gaza. They were definitely targeting the school.
On the contrary, you deny agency to all except the Americans.
Essential reading thanks John.
The disruption in the medium sour crude flows to the Southeast Asian refineries is already threatening New Zealand's energy security.
As you rightly note this is moving beyond being just a shipping logistics issue in the Strait of Hormuz, to becoming a structural issue as refineries and pipelines are attacked. The timelines are all extending by months with each passing day.
The world is far more interconnected than it was in the 70's. This complexity makes things far more fragile. The implications of energy flows becoming severely restricted will manifest in ways we cannot imagine let alone respond to in a coherent manner.
Thanks for adding your thoughts - and I agree, the potential disruption is unimaginable.
As a net exporter, doesn't this advantage US oil producers? Not US or global consumers. Whereas OPEC controls prices via self-regulation. The US can control prices by regulating other producers.
Many of our briefs about the geopolitical order probably need to start changing faster.
Vertically integrated oil companies like Exxon, Chevron - yes, they will probably report record profits. But that kind of volatility makes long-term planning and business much more difficult.
You imply that this war, while it may have terrible outcomes was one of choice. You point out the deep theological roots and martyrdom mentality. But then you ignore the implications of their rapidly rebuilding and expanding missle stocks and their unwillingness to stop further enriched uranium production. They were and are seeking not only complete effective control of all the oil and gas production you worry about. If they get nuclear bombs why would you expect they wouldn’t use them.
Real leaders have to make real and difficult choices without being sure of the outcome. Not making the choice to attack now was making a much worse choice.
Thanks for commenting. I'm working on a more specific analysis about the weapons programs which should provide a framework for thinking about it.
Would you mind explaining why they haven’t done so in 47 years? US did it in 4, Israel in 7-8. Technology is well understood, yet they didn’t. So why?
The straightforward answer is that Khameini issued a fatwa forbidding the building of nukes. And we murdered him. Dumb.
You have touching faith in a man who just last month killed thousands in just a weekend.
And most in the West have the same touching faith in America. You think my government is trustworthy? I don’t.
Offhand, I'd say reasons no nukes yet would include technology procurement issues due to sanctions, UN oversight and monitoring of known programs forcing smaller clandestine operations (vs desired large scale), and possibly deaths of scientists (I believe assassinations have taken place). I do not think it's lack of trying on Iran's part that they do not have nukes today.
Offhand, they have centrifuges. Having two subcritical pieces of U235 and designing charge that pushes them together is 1940 technology. Let’s try again.
You asked why they are taking longer than other nations have in the past; I provided possible reasons. I have no direct insight why they stopped at 60% which has very limited non-weapons production applications.
Why do you think they have enriched so much to a level with no practical civilian application in Iran today?
Because they have (or had) an openly declared policy of being a nuclear threshold state. One not possessing nuclear weapons (and thus a threat to its neighbours) but one capable of producing nuclear weapons if they were ever attacked by nuclear weapons, (held by US and Israel). Israel has just assassinated the man who pronounced nuclear weapons were “haram” (un-Islamic).
It could have something to do with Israel constantly sabotaging their nuclear program and assassinating their nuclear scientists.
Spot on analysis. Energy shipments through Hormuz is the crux of this conflict. Regime change via air campaign seems like a pipe dream. I'm no fan of Trump, but if the Iranians dropped a bomb on the White House, I don't think my first reaction would be to overthrow the government.
Why are you talking about regime change? The President said specifically no national building. We are exerting tremendous violent power in our interest, for a specific goal: drawing the teeth of an inveterate enemy. The President suggested that if the Iranian opposition wants regime change, this might be a good chance to grab it. The details matter.
But the Biden inflation, the asylum seekers!!!! We had no choice but Trump!
The war’s been going on for 47 years.
Longer really.
1. You assert that there is no chance of prying open the SOH. I am no expert, but every other article I've read on the subject (which seem to be written by experts) asserts that it can be done, it is only matter of how long it will take and what the collateral cost will be
2. Even if the US walks away today, the damage done to the Iranian military and their economic and physical ability to rebuild is immense and a "victory." Certainly, it will be even more so, but the time the US might need to back down. It would be great if we could get a regime change and a longer-term solution to the problem, but kicking the can down the road is also a benefit
Thanks for pointing that out. I would be very interested to see an article which explains how it can be done realistically. It seems prohibitively expensive at every level.
I don't think that weakening the country is a win, but on the other hand nobody has defined how a "win" looks like, as I've pointed out - one of the weaknesses of the whole campaign.
I spent too much time during working hours trying to find my sources; unfortunately, I have not found them at this moment. Much of my perspective comes from https://www.investorvillage.com/, which has numerous posters who live the energy industry and have a very good perspective into these issues
One thing they note is that China is the biggest loser from the closure of SOH. They have probably more influence on Iran that any other country, and Iran likely can't last long without their support. The second biggest losers are the ME oil exporting countries. Iran is banking on that they will pressure the US to stop the war. That could happen, but I think it is more likely that they will get involved as active combatants against Iran
Agree much is at stake for China. But Iran domination is much more in their interest than US domination of SOH, that's why they (and Russia) supply Iran with target coordinates for missiles (Iran has done more damage to US assets than any other conflict ever, maybe except WWII).
Huh? Iran has had some success in damaging valuable radar stations, and Kuwait shot down three F-15Es. That is real damage, but you closing statement seems totally out of proportion with reality. Can you clarify what you mean?
Mining SOH and sinking ships in the narrow passageway will make it very difficult to traverse. This is existential for Iran, and it is not bluffing.
Agreed. We shall see can they lay mines with fleet reportedly sunk and western navy in the vicinity. And are those shore weapons to fire on ships still operational (time will tell).
Here is another source https://www.thefp.com/p/how-to-reopen-the-strait-of-hormuz
Try this https://spencerguard.substack.com/p/can-the-united-states-and-israel
Thanks for sharing. I don't think this is convincing. Military capabilities in the 1980s of Iran were very different from today. Iranian military advisers were the first personnel to enter Iraq after the 2003 war for an assessment of US missile warfare. The country spent the last 20 years fortifying its coast with hidden launch bases. Can they be destroyed? Sure. But the effort will be prohibitively expensive and take many months if not years. By that time the world economy will have collapsed. Time is running out more quickly than the US can destroy missile bases.
"it is only matter of how long it will take and what the collateral cost will be"
Anything is possible with enough time, money and bodies.
Unfortunately missile technology has advanced tremendously, and the U.S. does not have enough ships. It could be a turkey shoot for Iran. Look at what the Houthis did to the Suez canal traffic. The U.S. had to declare victory, get an Israeli ceasefire, and retreat.
Missiles need men to fire them and an intact chain of command and control.
So close to 1m armed IRGC, Basij and the government forces isn't enough men?
John
I think you may be too pessimistic. Imagine a peace in the Middle East with a westernized Iran. Only time will tell.
Gary
I hope I’m too pessimistic. I still think it makes sense to map out scenarios.
This USraeli regime-change operation against Iran has already become a regional war involving GCC countries in less than a week. One may wonder what kind of intel Trump and Bibi were fed with. In any case, this is going to be a long war. Iran isn't Kuwait. Moreover Iran has no intention to negotiate. Instead, it's waiting for the US allies, i.e. GCC countries and the EU, to put pressure on Trump and beg him to stop this conflict that puts their own regimes in danger.
Major oil, air, sea, global logistics and passengers hubs in the area were shut down at the very start of the conflict. Meanwhile key infrastructures are being destroyed. That makes the situation bad for both Asia and Europe which are now partially disconneted from energy supplies and consumer markets. A liter of gas is getting close to 2 euros in some European countries. This is only the beginning. Think covid 6 years back, except it's worse, a lot worse.
Iran warned its immediate neighbours to remain neutral, or else missiles and drones will start fallimg. Turkey, a NATO member, is currently the only air corridor between Europe and Asia since Russia and Middle-East airspaces are now no-fly zones. Azerbaijan has common borders with both Iran and Russia. Meanwhile, Macron threatens Putin, Zelensky menaces Orbán. Is NATO getting ready to attack Russia, or at least send troops in Ukraine? If positive, then the Middle-East and Ukraine wars will merge into a continental conflict with a frontline stretching from Finland to the Arabian Gulf.
Last, the UN are now dead since the new world order is dictated by raw power, hypersonic missiles, access to energy supplies and a dozen of psychopaths.
You have it largely correct but there are a few things very few people are putting together:
Iran clearly stated that they would close Hormuz if attacked on numerous occasions, so the excuse that they would keep it open to maintain “good relations” with their sworn religious enemies and proxy opponents in Yemen is laughable.
China will be a huge winner in this conflict and they have clearly gamed this out. If they were actually threatened by the destruction of the gulf energy infrastructure they would have worked to put Iran under their nuclear umbrella, threatened rare earth embargo, whatever it took to stop the attack from happening. But they did not (and neither did Russia). They prepared an ambush for the US that will see the end of the US military presence in the region and the likely fall of gulf monarchies if Israel and the US fall into the escalators trap that has been meticulously prepared for them.
China has a massive SPR and probably undeclared reserves as well (remember the difference between their states gold reserves and actual purchasing behavior). Europe and other energy-importing manufacturers are beyond fucked because they have zero reserves and are hopelessly exposed when oil goes to $200. China is sitting on hard currency reserves that are not tied up in derivative schemes the way that the west is leveraged. When the economy crashes, who will be in the best position to benefit? China. Buy when blood flows in the streets. China will emerge from this conflict with an even more towering advantage than they have today. Russia already threatened to cut Europe off completely from all energy supplies. Why would they do that? Because they have a buyer in China who won’t use those supplies to manufacture munitions to kill Russians with.
Russia is the other huge winner here. If all ME energy infra is destroyed, which it absolutely will be if Israel and the US fail to extricate themselves from the trap, and the US, Israel, and gulf monarchies expend their entire AD stocks, Ukraine will fall with even less of a whimper, leaving Russia with full control of historic Black Sea ports. There will be no concessions necessary to the empire, oil will be $200 for 10 years, and the US MIC will be busy reloading and will not have the capacity to service the gulf so Russia arms industry will be the largest in the world. If Iran somehow falls into the thrall of the west they will have a problem but the likelihood of that is clearly zero, or they would have extended their nuclear umbrella over Iran.
The so called military planners and geopolitical analysts of the west are fucking retards. They used AI to pick targets in Iran, which means they have been planning this for about 3 weeks. Iran has been planning for this war since 2003 when Bibi’s obsession with Iraq led Cheney and Rumsfeld to destroy Iraq instead of Iran. They watched what the coalition did and learned. They went underground and learned how to build hypersonic missiles. They planned their targets and distributed decision making capability into cells, creating a dead hand like system that can’t be stopped through military means. They have planned the escalation ladder. If their energy infrastructure is hit, they will hit gulf energy infrastructure. If they are nuked, they will raze Israel to the ground indiscriminately, hit Dimona, or since the US killed the man who held back the Iranians from building a nuke in the first place, which would have spared them this trial btw, maybe they nuke back.
This is a trap planned by Russia, China, and Iran. They played into Trump and Bibi’s egos and led them down the garden path.
Excellent take, thanks a lot for commenting! I’m planning a follow-up piece on the nuclear program, curious to hear your thoughts when I post it.
Winner: “The U.S. energy industry becomes the only global low-risk super producer.”
How do you know this wasn’t the goal in the first place? It certainly fits with the Trump National Defense Strategy, will likely drive up gold prices (and facilitate a monetization of the Fed balance sheet),and poke a stick in the eyes of possible adversaries.
To be honest, creating a crisis that creates a favorable geopolitical outcome isn’t a bad strategy.
Unfortunately, POTUS is not there just to do rallies. He does not delegate. He does not plan. He does not do 6D chess. He just makes gut decisions.
Gut decisions, that is choosing intuitively, often leads others as well as the person making the decision to see the choice as authentic or reflective of personal commitment. In contrast, deliberative choices are seen as more calculated or logical. And just as wrong.
Say what you want, but most of the Gulf states trust Trump in a way they never did Biden or Obama.
Not likely because such a scenario is “less bad for US” means it’s still bad for the US. Petroleum industry is 6% of GDP. So lots of others get negatively impacted and POTUS is not a long term thinker.
POTUS is just there to tweet and assemble rallies. The advisors dictating policy have very long-term horizons. And I expect there's likely a tactical rationale for the parallel timing of the war in Iran (Hormuz disruption, probably Red Sea next when the Houthis get going) and the escalating belligerence against Europe. US LNG is now the European energy lifeline. Same as after the Suez crisis with oil. That isn't just the 6% petroleum proportion of GDP, it's foreign reserves and geopolitical leverage.
Adam - there are multiple pieces to the puzzle moving in real time. China was just escorted out of Panama (and mgmt of the Canal) a week ago. Cuba has an oil embargo and is expected to be next to fall. The U.S. is currently negotiating a bilateral trade agreement with Mexico. In the expected inflationary environment which Alisdair described, Canada has no gold - zero and will be under financial pressure. By the end of 2026, the U.S. will exert strategic dominance over virtually all of North America. Europe is expected to increase remaining burden sharing and or buy UST’s during the upcoming refi period. The outlook for the remainder of Trump’s term is going to,be tectonic grinding as the order changes. If we just watch Iran, we miss the bigger game.
Completely agree, and didn't mean to show tunnel vision. The moves in the Western hemisphere have been more well-considered and intelligible than the latest salvo in the Middle East. And the Trump corollary to the Monroe Doctrine, as the administration frames it, can also be made to fit into the narrative of partial American isolationism supported by MAGA. Intervention in Iran is decidedly reminiscent of the forever wars that have elicited such visceral objections from much of the country on both sides of the aisle. It also complicates the initiatives you reference (Panama canal, Venezuela, Cuba, etc.) to bog down resources in the Gulf. The central objective - containment of China - remains comprehensible with respect to regime change and energy displacement from Iran; but overextension to accomplish it and mistiming the moment risk unwinding successes elsewhere.
I don’t disagree. The t is a testament to just how bad the decision instincts were at Obama/Biden.
Personally, I think this is a tale of two stories. Israel, on the one hand, wants safety, security and regime change in Iran. The U.S. wants to address its financial problems … picking a fight with Iran in a way to goad a desired response (Hormuz closure) is ideal. Oil is priced in dollars. What we are seeing is a stronger dollar that ultimately, gets recycled into refi’d UST’s and higher inflation and correspondences higher gold prices. And it shoves a stick into China’s eye and forces Europe to choose.
Frankly, I can’t think of a better opportunity to rearrange the game board than this. What other U.S. president would have done this? I can’t think of one.
Thanks very informative.
With the Strait of Hormuz closed can they not take a longer slower route? This of course still adds cost and creates a dip in supply but won't that balance out with some time. The extra cost will remain but the supply is still there.
Unfortunately it’s the only exit from the Persian Gulf.
The Hormuz point is critical, but the decisive variable may be duration rather than disruption.
Short-term closure can trigger extreme price spikes, but energy systems historically adapt faster than expected through rerouting, strategic reserves, demand destruction and alternative supply ramp-ups. The real strategic question is whether Iran can sustain pressure on the Strait long enough for the economic shock to translate into political leverage.
In other words, Hormuz is powerful as a time-buying mechanism, but its coercive value depends on how long the disruption can actually be maintained.
Exactly. That's why the blockade took effect immediately, and not as part of a longer-term escalation chain. But any adjustment mechanism of global energy will be very painful (when your house burns down, and you live in a tent for the next couple 'years, that's kind of an adjustment but not really helpful). So it's a question who can tolerate the pain and damage for longer. Iran sees the war as existential, and to quote Mark Twain, "reports of [regime] death are greatly exaggerated".
What’s striking here is that the Strait doesn’t have to be “physically closed” for the global system to behave as if it is. The first real shutdown mechanism is often the financial one: war-risk insurance, P&I cover/reinsurance capacity, trade finance requirements, and port/charterer constraints. When that layer reprices sharply—or coverage becomes unavailable—the traffic pause can happen even before the physical supply picture fully registers.
That’s why the DFC/escort idea is so telling: it’s effectively the state stepping in to replace private underwriting when risk becomes unpriceable. But even with a backstop, the operational question becomes whether insurers, owners, and charterers treat “guaranteed losses” + convoy risk as bankable/insurable at scale.
On the price side, I’m sympathetic to the “regime shift” framing, though I’d be careful with straight 1970s analogies—today’s transmission channels (insurance/freight, LNG benchmarks, inventory policy, financial flows) can amplify or dampen differently than embargo-era supply shocks. The key variable may be less “oil exists” and more “can the system clear the risk so cargo actually moves.”
That was a terrific piece of writing…really enjoyed it….kudos to you…and I’m hoping things transpire as per your content….
Many thanks, appreciate your comment!
Why?
This is a great article. The historical parallels to the 50s are underappreciated. Xi as Nasser and BRICS as the pan-Arabic coalition, with Iran and the ME again a proxy for what is effectively East vs West realpolitik fought around control of energy flows.
One question on the following quote, though: "Iran first became a pawn of geopolitical interests in 1953, when Iranian Prime Minister Mohammad Mosaddegh nationalized the Iranian oil industry." How exactly was Iran not *more so* a geopolitical pawn throughout the earlier period of the Anglo-Iranian (now BP) concession?
Well, there are legitimate business connections, and then there's bullying around. Britain helped out the Shah who was constantly broke due to his excessive lifestyle, and in return the Shah signed a concession to develop Iran's oil reserves in the early 1900s. Quite a fascinating story of an adventurer, William Knox D'Arcy, who himself almost went broke before he found the Masjid-i-Suleiman spring in 1908, the Middle East's first oil well.
All the 'oil exporter pawns' in the Middle East made it across the board to become queens by the 1960s 🤣 Western Europe has a congenital tendency to propel the industrial development of its future foes (rendering itself vulnerable and dependent in the meantime) in the interest of a fast buck. Same playbook with Chinese factory offshoring; all a mechanism for Treasury supports, from petrodollars to yen carry. Very possible the Strait of Hormuz will be to the US empire as the catastrophic Suez intervention was to the British.