US and Iran Face off Again in the Gulf of Hormuz
There seems to be a great gulf between their understandings of their own agreement.
The big news of the day is that Iran attacked three ships transiting the Gulf of Hormuz via a route along the Oman shore that is used and protected by the US Navy. In response, the US terminated the reprieve it had given Iran on oil sanctions and launched a counterattack on Iran.
The strait never has made it back to fully open. Iranian ships have, of course, been allowed free passage. Some others made it through, but today Iran started firing at them again. At best, the strait made it back to about a third the normal traffic going through for a few days. Now it is effectively closed again:
The Joint Maritime Information Center raised the threat level in the Strait of Hormuz to “severe” due to renewed Iranian attacks on ships this week….
The Joint Maritime Information Center cautioned mariners that “deliberate hostile action” by Iran is “likely under current conditions.” The center, headquartered in Bahrain, coordinates between allied navies and merchant ships in the Middle East.
Iran’s IRGC warned that any ship not using Iran’s approved route along its own shore will face an “immediate and powerful” response. While Iran agreed to safe passage through Hormuz under the MoU it signed with the U.S., it has subsequently launched sporadic attacks on ships going through the strait if they were not approved by Iran.
“There is obviously a battle for control, because obviously the only leverage Iran has is control of Hormuz,” said Michelle Wiese Bockmann, a London-based senior maritime intelligence analyst at Windward….
Iran’s military has warned it will target ships that do not use a northern route approved by Tehran. Vessels are avoiding the traditional route through the middle of Hormuz that Iran mined.
“This is part of this sporadic targeted campaign by Iran to destabilize that southern corridor and send a message to Gulf State producers that are not sending their oil via that northern corridor,” Bockmann said….
While Trump has said the US controls the strait and that it has ended Iran’s ability to stop traffic through the strait, that is clearly not so.
“The strait remains far from fully functioning,” Bockmann said.
In retaliation, the US delivered its own immediate and powerful response against Iran:
“U.S. Central Command forces have begun launching a series of powerful strikes against Iran to impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway,” CENTCOM said.
Oil traders had their own immediate response. Speculators—whom I’ve said have been ludicrously sanguine about the risks of the strait not opening ever since prices dropped—drove prices back up today:
At one point in the day, Brent crude spiked above $76/bbl, having touched a low of $70.19 on July 2nd.
So, we are back, for the day anyway, to eye-for-an-eye bombardments:
“Iran will only reap benefits if they exhibit good behavior,” a U.S. official told CNBC, speaking on condition of anonymity to talk about private discussions. “Iran’s actions in the Strait were wholly unacceptable to the United States and will be met with consequences.”
With ship traffic back to nil for now, the one thing that is steaming full speed ahead is the United States’ race to empty oil reserves.
All of this action came after Trump pulled out his old familiar strong-arming rhetoric on Monday:
“We’re either going to make a deal or we’re going to finish the job,” Trump told reporters in the Oval Office on July 6. “And it won’t be tough to finish the job. I’d rather make a deal, because I don’t want to affect 91 million people….”
“We can knock down their bridges in one hour, we can knock out their energy supply,” he said, adding that Iran “doesn’t have any money now” and that Washington had not provided Tehran with funds.
Iran responded defiantly. Mohammad Bagher Zolghadr, secretary of Iran’s Supreme National Security Council, warned that Tehran would respond “in another language” unless Trump spoke to the Iranian people “with respect.”
“I say to the delusional president of the United States, who today threatened 91 million Iranians: Speak to the Iranian people with respect, or we will respond to you in another language,” Zolghadr said in remarks carried by Iranian state media.
Maybe today’s action was Iran’s response in another language.
Thank you to the couple of free subscribers who transitioned to paid subscribers after my last plea. Every individual helps keep the lights on at this little publication.
For paying subscribers …
A video in the headlines that follow describes how AI is doomed to sweeping deaths of corporate investments because none of the AI developers have come forward with a model for making revenue that can even offset their energy/operating costs, much less their development costs.
Bank of America just issued a major warning that stocks are going to lose all their gains for this year in a sudden snap. That is particularly going to be seen in AI stocks, they say, due to the lack of profits.
Blackstone is trying to sweep billions of dollars in bad private debt away by pulling an old trick out of the 2008 Great Financial Crisis handbook.
And just look at the digital monetary reset Blackrock along with more than 140 other major corporations have teamed up on to put forward this week as well as a video about how the next monetary reset will actually play out.
