This story was first featured in the Aftermath newsletter, a series from David Dayen exploring the economic consequences of the war in Iran. To have these stories delivered to your in-box as soon as they are published, sign up for the newsletter here.
Read more The Kleptocrat Nesting Dolls Behind Trump’s Potemkin Gas Stations
Welcome to Aftermath, the ongoing series about the ongoing war in Iran. Sign up to get this into your in-box at prospect.org/aftermath.
We Are Still at War—and It’s Growing
After a monthlong quasi-cease-fire, American and Iranian forces are once again shooting at each other. Iran has hit several shipping vessels and U.S. bases, while America is once more bombing various targets inside Iran specifically. The proximate cause is reportedly Israel’s refusal to stop bombing Lebanon, and fundamental disagreements about the shape of any deal with Iran, on which American negotiators have made no progress whatsoever. But the real cause is that the war gave Iran the opportunity to control the Strait of Hormuz, and the cease-fire agreement institutionalized that control, at least in the eyes of the Iranians.
As soon as Iran attempted to assert its control, the whole agreement broke down, and because of the leverage the strait gives them it’s almost impossible to envision a resolution. Shipping traffic has slowed to a crawl as a result, and oil prices keep going up.
Because of this reality, various parties around the region are laying out more and more serious plans to get around the Hormuz bottleneck. In a rational world, this would be a crazy idea, as it will be dramatically more expensive to build any kind of trucking route, port, or pipeline to move those goods, but unfortunately we live in a world where Donald Trump is president and he fully emboldened Iran to take operational control. Sometimes the only way to fight crazy is with more crazy.
Meanwhile, Iran is attempting to preserve its leverage by pressuring those potential work-arounds, leading Trump and other regional powers to counter those counters, and so on. It’s a cat-and-mouse game that could easily erupt into a broader regional war.
For a Hormuz replacement, the obvious place to start would be with the Red Sea. The Saudis already have an oil pipeline that goes across the Arabian Peninsula to the port at Yanbu, though the port can only offload about four million barrels per day, as compared to the seven million the pipeline can move. With some upgrades to the port and pipeline, most Saudi crude could once more make it to Asia with only a small detour through the Bab-el-Mandeb strait.
Iran is aware of this, of course, and is reportedly considering measures to block the Bab-el-Mandeb through its Houthi allies in Yemen. That is apparently why Saudi dictator Mohammed bin Salman—with Trump’s support—recently ordered a strike on Yemen’s Sanaa airport, just as an Iranian plane with a Houthi delegation was approaching to land. The Houthis retaliated by striking a Saudi airport, and are now threatening to block Saudi access to the Bab al-Mandeb. If the Saudi-Houthi conflict, which has been on ice since 2022, breaks out again, Saudi oil will have to go through the Suez Canal and all the way around Africa to get to Asia.
So the decision to go to war and mess with these delicate dynamics is escalating the war itself onto new fronts that will wreak even more havoc with international shipping. Well done by all.
Read more Trump Administration Routinely Violating Immigrant Children’s Rights
Other nations are considering more cautious options. Chevron is in talks with Iraq’s new prime minister, Ali al-Zaidi, over a plan to invest billions in new oil fields and repair an old pipeline, damaged in the 2003 invasion, that stretches from Kirkuk west across Syria to the eastern Mediterranean. Two more pipelines, one north to Turkey, and one heading southwest through Lebanon, are also on the drawing board. Kuwait is pondering options to tie into the Saudi pipeline network. Dubai is looking at plans to build a new port on the other side of the Musandam Peninsula, allowing it to bypass the Strait of Hormuz.
If even half of those planned projects are built out, oil capacity would be largely replaced, though liquefied natural gas and manufactured products like aluminum would still be stuck. But most of them would also be in range of Iranian attack with drones or missiles. The Iranian government may feel it has no choice but to disrupt those projects to preserve its leverage against a feral Trump regime.
Indeed, Iran is threatening all regional oil infrastructure if the war continues. Any attempt to build an alternative to Hormuz will likely be met with a reaction by the controllers of Hormuz.
Ever since Trump carried out his Pearl Harbor–style sneak attack, prompting Iran’s new hard-liner government to close Hormuz, my best guess has been that the strait is not ever going to be fully open again so long as Trump remains in power. The man is just too belligerent, mercurial, stupid, erratic, and above all untrustworthy to negotiate any kind of lasting détente that would be necessary to get the strait fully open.
Now, that doesn’t mean nothing will ever pass through the strait again. Even during the height of the fighting earlier this year, there have been a handful of vessels going through each week, from Iranian tankers to Greek shippers characteristically throwing caution to the wind and making a run for it. For a while during Trump’s kinda-sorta cease-fire, daily transits got up to roughly half what they were before February 28.
But even if that cease-fire were to remain indefinitely, it would not be remotely enough to restore the prewar status quo. Shippers will always be hesitant about entering a place where they risk being shot at. Almost two years after the Houthis stopped taking potshots at vessels going through the Bab al-Mandeb strait, traffic had still not recovered to its prior level.
It would take a major piece of diplomatic statesmanship to convince Iran and the world that America is willing to make the necessary commitments to open the strait and keep it that way. Trump is not now and never has been a man to keep his promises, particularly with respect to Iran. If we want a realistic chance of restoring peace and trade in the Middle East, he needs to go.
Thanks for reading. If you have tips or ideas for future stories, let us know! You can email us at [email protected].
Read more Jackson Earns Senate Nomination Sweep