FinTwits by Hovda retweetledi
It wouldn’t be the worst-case scenario, at least in the sense it achieves the same effect without needing to land ground forces on Kharg Island, thus avoiding unnecessary bloodshed on the ground.
That is not to say, however this is a positive development. There will be four major repercussions:
1) It will cut off ~2mb/d of Iranian crude exports—the only flow that persisted even during the conflict—from the global supply.
2) By declaring a "blockade on vessels that paid illegal tolls to Iran," even the few remaining tankers will find passage through the SoH impossible. While they may not have literally paid $2 million, the US declaration effectively terminates any possibility of transit negotiations with Iran.
3) If Iranians can no longer export their own oil, their incentive to keep the SoH open vanishes entirely. There is no way they will sit back and watch GCC tankers pass while their own taps are dry.
4) Although the talks in Islamabad have already collapsed, this hardline stance effectively slams the door on any future diplomatic channels.
Trump may expect this economic strangulation to force Iran into making concessions at the negotiating table, but the probability of that is remarkably low.
Iran will certainly suffer a massive blow. However it is impossible to completely starve out a country has open land borders in every direction and is connected to Russia via the Caspian Sea.
One must remember that Iran has already survived as a state during the pandemic, when exports plummeted to ~500kb/d amidst incredibly low oil prices. That was only a few years ago.
Finally as the blockade is enforced, the likelihood of an unforeseen, direct military clash between the US Navy and the IRGC near the Strait will increase significantly.
If the goal is purely to inflict pain on Iran, it will work well. But if the goal is to force a surrender, that simply will not happen.
In the end Iran is more likely to turn toward further extremism. As for the impact on oil prices? I think you already know the answer to that.
#oott #iran
Not Jerome Powell@alifarhat79
Trump just posted this
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