Patrick Wintour writes:

The price of oil is the key metric for Iran’s success, along with its remaining supply of missile launchers. As a result, 95% of traffic through the strait of Hormuz remains blocked, depriving the markets of 10-13m barrels of oil each day. Such is Iran’s stranglehold even Trump describes Iran allowing ships through as a “present” to the US.

Trump admits he is surprised the price of oil is not higher. Jason Bordoff, the founding director at the Center on Global Energy Policy, agrees. “At some point, the physical reality of the loss of that much oil per day has to catch up with the paper markets, the trading expectations,” he says. “There is no policy intervention that can cope with a disruption that large.”

For Iran, oil trading anything above $100 a barrel is pitched high enough to destroy demand and disrupt the world economy. But it is not just oil. The strait provides passage for chemicals, helium, metals and fertilisers. As during the Covid pandemic, the world is discovering something new about the inter-connectedness of supply chains and how geography has blessed Iran with a unique chance to break these chains.

Mary I supposedly said: “When I am dead and opened, you shall find ‘Calais’ lying in my heart” – a reference to the painful English loss of Calais to the French in January 1558. For Trump, the word may be Hormuz, the waterway where his presidency ran aground. For it is hard to find a serious commentator, of any nationality or expertise, who thinks the advantage in this war currently lies with the US.

Sir Alex Younger, the former head of MI6, told the Economist that – much as it pained him – it was Iran, his old adversary, that had the upper hand. “The reality is the US underestimated the task and I think, as about two weeks ago, lost the initiative to Iran. In practice, the Iranian regime has been more resilient than anyone would have expected. They took some good decisions as early as last June about dispersing their weapons and delegating authority for using those weapons which has given them extra resilience. Through the strait they have globalised not internationalised the conflict. They have played a weak hand pretty well.”

Mairav Zonszein, a senior analyst on Israel at the International Crisis Group, says: “It is becoming painfully clear that not only the United States and Israel are losing this war, but that this is one of the biggest strategic failures of the west, with the most significant consequences for regional geopolitics and the global economy since world war two.” She said the US was nowhere near meeting its original strategic goals and had only created new problems. [Continue reading…]