So the Iranians would not give up their uranium enrichment or dismantle their enrichment facilities. Or hand in their already enriched uranium. So President Trump turned the tables, applied some Trumpian Jiu-Jitsu and placed a US naval blockade in the Strait of Hormuz, which will be enforced in the Gulf of Oman.
I’m not sure if anyone knows yet how this will all play out, but at least as of today, this is what US Central Command said: “Any vessel entering or leaving the blockaded area without authorization is subject to interception, diversion, and capture. The blockade will not impede neutral passage through the Strait of Hormuz to or from non-Iranian destinations.”
To my way of thinking, this means that the ships of anyone doing business with Iran will be blocked. And if the Iranian motorboats attack our navy, we will destroy them, just like we did with all those Venezuelan drug boats. To a large extent, Mr. Trump has adopted the Venezuela model. Iran doesn’t sell oil, doesn’t make money and therefore can’t distribute money it doesn’t have, and America takes de facto control of the entire Persian Gulf region.
The president had to say about all this, “It’s all in and all out.” He added: “We think a lot of countries will help us with this too, but we’re putting on a complete blockade. We’re not going to let Iran make money by selling oil to people they like and not to people they don’t like or whatever it is. It’s going to be all or nothing,” and “I predict they’ll come back and give us everything we want.”
Former US Special Envoy to Ukraine, General Keith Kellogg, discusses how the US-Iran conflict is affecting China and Russia as a US naval blockade of the Strait of Hormuz takes effect on ‘Kudlow’.
I say good. Then there is the question of when will Iran go completely bankrupt? Some quick numbers from various sources, including TIPP Insights and Foundation for Defense of Democracies. More than 90 percent of Iran’s nearly $110 billion in annual trade passes through the Persian Gulf, with crude oil alone earning $139 million a day before the war began. Petrochemicals earn another $54 million a day.
So for a loss of $435 million per day in revenue, that equates to $159 billion over a year. That $159 billion revenue loss is roughly 50 percent more than Iran’s entire budget, which is about $100 billion. At what point does bankruptcy come into the picture? I honestly don’t know yet.
According to sources, onshore oil storage in Iran will begin to peak in about 13 days. This means that closing the infrastructure will cause permanent damage. Whether this economic destruction will bring Iran back to the negotiating table remains to be seen.
There are a couple of crazies from Iran’s Islamic Revolutionary Guard Corps who seem to be leaders at the moment, Mojtaba Vehedi and Mohammad-Bagher Ghalibaf. So I wouldn’t be so sure about a benevolent regime change. The big question is: how long will it take for them to starve?
