Bloomberg reports:

As US President Donald Trump threatens renewed attacks against Iran, Tehran’s intermittent strikes on commercial vessels have left the two sides locked in a painful economic standoff.

For Iran, the US blockade of its oil exports has snuffed out a key part of its military funding and severely hobbled the $300 billion economy, with only a tiny fraction of the prewar 2 million barrels per day are leaving the country via land routes.

And for the US, the rising cost of shipping oil through the Strait of Hormuz — even though US Central Command says almost all Iranian attacks there fail or are intercepted — has kept fuel prices high, stirring a political backlash at home with the midterm elections fast approaching.

Iran doesn’t even need a high tempo of attacks to keep oil prices elevated; although shipments through the strait are at about 80% of prewar levels, the associated risk has inflated insurance costs. It was more expensive in early October to hire a supertanker in some parts of the world than it was to send a rocket into space. [Continue reading…]