After the Iran/US truce, Trump put a blockade on vessels going to Iran for oil. This resulted in Iran not opening the Strait of Hormuz as they had originally intended.
At first the blockade was not very effective, but it appears to have tightened and is now stopping most oil export from Iran. It appears that it will take over 2 months for oil storage to fill up.
There are two suppositions here, on the US part:
1) Iran needs the money;
2) Iran can’t shut down oil production without harming its oil fields in the long run.
Iran does, of course, need the money, but it isn’t completely reliant on shipping oil for income and it seems likely it can get enough to keep the key parts of the government and the military running.
This analysis suggests that the U.S. blockade of Iran’s oil exports will not cause catastrophic, or even very serious, damage to its upstream oil industry. If and when the blockade is relaxed, Iran will probably be able to resume production promptly at about 70 percent and regain most of its pre-war capacity within a few months.
It’s also worth noting that Iran does have a military option. While the US blockade is widespread, for it to be effective some ships have to be in range of Iran’s missiles and drones. It wouldn’t be all that hard to deplete the on-ship stocks of missile interceptors and force a withdrawal, and it’s quite possible Iran could sink some ships if they attacked with enough drones and missiles to overwhelm defenses.
Iran has, historically, been unwilling to start hostilities. It has always absorbed the first hit. Will it continue to do so? Is it willing to end the cease-fire? The new leader is far more hawkish than the old one, and while Iran still has “moderates” in some positions of power, hard liners are far more powerful than they were under the previous supreme leader.
What we have is an endurance race. Can the US withstand high priced oil longer than Iran can survive without significant oil exports?
If Iran breaks first, the question is whether it will offer the US a better peace deal, or if it will go back to the military option.
Under the old leadership the smart bet would have been concessions. Under the new leadership? I don’t know. If it were my decision, I’d go kinetic. There’s no deal Trump is willing to give while he thinks he’s winning that will not cripple Iran in the long run.
For Iran to win, Trump has to believe America has lost. And right now he thinks America is winning.
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edwin
I don’t know enough about the rail link – but that may also be an option for Iran.
Mark Pontin
Ian W: ‘Can the US withstand high priced oil longer than Iran can survive without significant oil exports?’
[1] There’s this thing called the Caspian Sea, the world’s largest inland body of water —
https://en.wikipedia.org/wiki/Caspian_Sea
Look at all the countries having coastlines on it, beside Russia and Iran. Not one real US ally or vassal there —
https://en.wikipedia.org/wiki/Caspian_Sea#/media/File:CaspianSeaDrainage_v1.png
[2] There’s historical precedent in living memory (just) for turning the Caspian Sea into a giant channel for wartime resource transport: the Persian Corridor, to create which the UK and USSR, as WW2 allies, took over Iran. Note the photos of train and truck convoys, and the Indian Army soldiers with Brit officers —
https://en.wikipedia.org/wiki/Persian_Corridor
‘…in June 1941 … Britain and the Soviet Union saw the newly opened Trans-Iranian Railway as an attractive route to transport supplies from the Persian Gulf to the Soviet Union … In August 1941, because Reza Shah refused to expel all German nationals and come down clearly on the Allied side, Britain and the Soviet Union invaded Iran, arrested the monarch, sent him into exile to South Africa and took control of Iran’s communications and the coveted railway.
‘In 1942 the U.S., now an ally of Britain and the Soviet Union in World War II, sent a military force to Iran …. The British and Soviet authorities allowed Reza Shah’s system of government to collapse and limited the constitutional government interfaces. They installed Reza Shah’s son, Mohammad Reza Pahlavi, onto the Iranian/Persian throne….’
[3] As for the US blockade in 2026, it’s 12+ vessels far from the US with support from US military ports and bases in the region substantially reduced, as compared with a real blockade like the US blockade of Cuba in 1963 which employed 180 odd vessels in the US backyard. By general consensus, a minimum of 34 tankers have gotten by the US interdiction. Then, what’s the US going to do if a Chinese or Russian tanker rocks on up, accompanied by warships and aircraft? For that matter, if Iran or others were seriously intent on going kinetic, 12+ vessels can be sunk in one or two days.
[4] HOWEVER, as you say, the US can’t just give up and go home. It’s not just Trump; simply the Iranians pulling this off and taking tolls on tankers in yuan is a big chunk taken out of US dollar dominance going forward. Right now, the dollar’s share of global forex reserves has fallen to 56.77% (and yes, the dollar is getting a slight rush-for-safety bump for now) and it can only get worse. After all —
-$39 trillion in total debt
-$9–10 trillion rolling over every single year, so the government is perpetually at the mercy of bond market sentiment
-The dollar has depreciated~40% in just 20 years.
That last is important. In the long term, if the dollar’s a depreciating asset, the only reason to hold it or do dollar-denominated money creation given that drawback has been the immense size of the dollar capital markets, reliability and ease of exchange mechanisms, blah,blah, blah. The dollar gets down to a share of global forex transactions closer to 40%, and it’s f**cked.
The reality is that this isn’t the US’s Suez Crisis, it’s worse. In many ways, the UK was in better shape after Suez in 1957 — it still had a relatively strong industrial economy then, lots else going for it — that the US, which is hollowed-out, does not in 2026.