Iran’s intermittent strikes on commercial vessels and the United States blockade of Iranian oil exports have left both sides locked in a painful economic standoff, Bloomberg reported in an analysis of the Hormuz campaign.
For Iran, the blockade has snuffed out a key part of its military funding and severely hobbled its 300 billion dollar economy, with only a tiny fraction of the prewar 2 million barrels per day of exports leaving the country via land routes. For the United States, the rising cost of shipping oil through the strait has kept fuel prices high, stirring a political backlash at home with the midterm elections approaching, even though Central Command says almost all Iranian attacks fail or are intercepted.
Traffic still moves. Shipments through the strait are at about 80 percent of prewar levels, tanker owners are earning tens of millions of dollars for transits, and Central Command has said about 95 percent of ships transit without incident. The cost sits in insurance and freight: it was more expensive in early October to hire a supertanker in some parts of the world than to send a rocket into space, Bloomberg noted. The International Maritime Organization estimates 121 incidents in Hormuz and the wider region since the war began, including 24 confirmed seafarer fatalities, and there were at least 28 open source reports of damage to shipping in October alone.
Analysts cited by Bloomberg doubt pain alone ends the campaign. Jim Lamson, a visiting research fellow at King’s College London and a former CIA analyst, said Iran’s stockpile of missile components lets it keep assembling anti ship weapons despite degraded manufacturing, the product of decades of planning for a long asymmetric conflict. Bloomberg Economics chief emerging markets economist Ziad Daoud wrote that a surge in fighting could push oil prices into the 120 to 130 dollar range, and that both sides may prefer a brief conflict to improve their negotiating power. President Donald Trump has previewed renewed attacks on Iran after the November 3 midterm elections.