He who controls the Strait controls who goes thru. I would imagine the U.A.E. is planning to pay Iran off.
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The economics of OPEC and the UAE
- Thread starter superrific
- Start date
- Replies: 25
- Views: 362
- Politics
He who controls the Strait controls who goes thru. I would imagine the U.A.E. is planning to pay Iran off.
superrific
Master of the ZZLverse
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There are different types of conflicts. Iran has never closed the strait, has it? And has it ever had conflicts with the UAE?Persistent conflict has been Iran’s MO for the past 47 years. Unless the IRGC has become much more pragmatic, I’d expect Iran to be in persistent conflict with its neighbors for the foreseeable future.
And if you are the UAE, you might want to be cooperating with your Arabian neighbors on ways to get oil to market without Iranian influence. This move seems to be somewhat shortsighted.
I'm guessing the UAE knows a lot more about its long-term strategies than we do. Saying they are being shortsighted seems a bit presumptuous, especially since it appears at least from one angle to be taking a long view.
superrific
Master of the ZZLverse
- Messages
- 13,395
I don't think this is at all correct.He who controls the Strait controls who goes thru. I would imagine the U.A.E. is planning to pay Iran off.
The Strait is Iran's nuke. But it only works if there is traffic. If it starts charging tolls or cutting traffic, then the UAE and others will find different ways of bringing oil to market. And then Iran's nuke is gone.
Moreover, if other countries are bypassing the Strait, then the Strait actually backfires on Iran. It would be like giving the enemy a nuke. Because that would make Iran vulnerable to this blockade. The only reason Iran can continue on this course is their confidence that Trump will cave. That won't happen unless there is lots of traffic on the Strait.
You have to think geopolitically and multiple steps ahead. I know our critical faculties have been dulled by Trump, who makes Custer look like a strategic genius. But few leaders are Trump.
superrific
Master of the ZZLverse
- Messages
- 13,395
Well, ChatGPT agrees with me again.
Selective reopening is not a good economic strategy. It is a medium-term coercive bargaining strategy.
Iran may try selective reopening because it wants leverage, revenue, and de facto control, but if it is thinking strategically about Hormuz’s long-run value, it should want a return to normal traffic as soon as it can get concessions in exchange. A tollbooth Strait is not stable. It tells every importer, insurer, shipowner, and Gulf exporter: “Start pricing permanent Hormuz risk.” That is how Iran damages its own weapon.
Selective reopening can make sense only as a transitional bargaining posture, not as a durable medium-term equilibrium. Something like:
That is different from: “We want to keep the Strait semi-open and taxed for months or years.” The second version is self-defeating for the reason you give. The value of Hormuz depends on people continuing to treat it as the normal route.
The reporting fits that narrower point. Traffic remains far below normal, with Reuters describing only a handful of daily crossings compared with roughly 125–140 daily passages before the conflict; one Japan-linked crude tanker recently crossed, but analysts still expected any return to normal traffic to take months even if the conflict ended quickly. AP also reports that Iran has offered to reopen the Strait if the U.S. lifts its blockade and the war ends, which makes reopening sound like a bargaining chip, not a desired permanent chokehold.
The toll idea is especially corrosive. Reports say Iran floated fees of up to $2 million per vessel, but that kind of toll is less like a stable canal fee and more like a ransom with stationery. If normalized, it does three bad things for Iran: it encourages alternative export routes, accelerates non-oil substitution, and gives outside powers a standing reason to organize naval/legal pressure against Iran. It also hurts Iran’s neighbors, including states Iran may want to split away from the U.S. position.
So your bottom line is the one I’d adopt: Iran’s optimal strategy is probably not to scare traffic away. It is to scare governments, then let traffic come back. The weapon works best if the world believes Iran can close Hormuz, not if the world concludes Hormuz is permanently unusable. The nuke analogy holds only if the weapon remains mostly in the silo. If Iran keeps detonating it, the market starts building shelters elsewhere.
But sure, clown face me. Clown Dookie.
Selective reopening is not a good economic strategy. It is a medium-term coercive bargaining strategy.
Iran may try selective reopening because it wants leverage, revenue, and de facto control, but if it is thinking strategically about Hormuz’s long-run value, it should want a return to normal traffic as soon as it can get concessions in exchange. A tollbooth Strait is not stable. It tells every importer, insurer, shipowner, and Gulf exporter: “Start pricing permanent Hormuz risk.” That is how Iran damages its own weapon.
Selective reopening can make sense only as a transitional bargaining posture, not as a durable medium-term equilibrium. Something like:
“We will allow some traffic now, prove we can regulate the Strait, and use full normalization as the bargaining chip.”
That is different from: “We want to keep the Strait semi-open and taxed for months or years.” The second version is self-defeating for the reason you give. The value of Hormuz depends on people continuing to treat it as the normal route.
The reporting fits that narrower point. Traffic remains far below normal, with Reuters describing only a handful of daily crossings compared with roughly 125–140 daily passages before the conflict; one Japan-linked crude tanker recently crossed, but analysts still expected any return to normal traffic to take months even if the conflict ended quickly. AP also reports that Iran has offered to reopen the Strait if the U.S. lifts its blockade and the war ends, which makes reopening sound like a bargaining chip, not a desired permanent chokehold.
The toll idea is especially corrosive. Reports say Iran floated fees of up to $2 million per vessel, but that kind of toll is less like a stable canal fee and more like a ransom with stationery. If normalized, it does three bad things for Iran: it encourages alternative export routes, accelerates non-oil substitution, and gives outside powers a standing reason to organize naval/legal pressure against Iran. It also hurts Iran’s neighbors, including states Iran may want to split away from the U.S. position.
So your bottom line is the one I’d adopt: Iran’s optimal strategy is probably not to scare traffic away. It is to scare governments, then let traffic come back. The weapon works best if the world believes Iran can close Hormuz, not if the world concludes Hormuz is permanently unusable. The nuke analogy holds only if the weapon remains mostly in the silo. If Iran keeps detonating it, the market starts building shelters elsewhere.
But sure, clown face me. Clown Dookie.
Duke Mu is a clown who has a four year old’s understanding of economics. Don’t pay him any attention.Well, ChatGPT agrees with me again.
Selective reopening is not a good economic strategy. It is a medium-term coercive bargaining strategy.
Iran may try selective reopening because it wants leverage, revenue, and de facto control, but if it is thinking strategically about Hormuz’s long-run value, it should want a return to normal traffic as soon as it can get concessions in exchange. A tollbooth Strait is not stable. It tells every importer, insurer, shipowner, and Gulf exporter: “Start pricing permanent Hormuz risk.” That is how Iran damages its own weapon.
Selective reopening can make sense only as a transitional bargaining posture, not as a durable medium-term equilibrium. Something like:
That is different from: “We want to keep the Strait semi-open and taxed for months or years.” The second version is self-defeating for the reason you give. The value of Hormuz depends on people continuing to treat it as the normal route.
The reporting fits that narrower point. Traffic remains far below normal, with Reuters describing only a handful of daily crossings compared with roughly 125–140 daily passages before the conflict; one Japan-linked crude tanker recently crossed, but analysts still expected any return to normal traffic to take months even if the conflict ended quickly. AP also reports that Iran has offered to reopen the Strait if the U.S. lifts its blockade and the war ends, which makes reopening sound like a bargaining chip, not a desired permanent chokehold.
The toll idea is especially corrosive. Reports say Iran floated fees of up to $2 million per vessel, but that kind of toll is less like a stable canal fee and more like a ransom with stationery. If normalized, it does three bad things for Iran: it encourages alternative export routes, accelerates non-oil substitution, and gives outside powers a standing reason to organize naval/legal pressure against Iran. It also hurts Iran’s neighbors, including states Iran may want to split away from the U.S. position.
So your bottom line is the one I’d adopt: Iran’s optimal strategy is probably not to scare traffic away. It is to scare governments, then let traffic come back. The weapon works best if the world believes Iran can close Hormuz, not if the world concludes Hormuz is permanently unusable. The nuke analogy holds only if the weapon remains mostly in the silo. If Iran keeps detonating it, the market starts building shelters elsewhere.
But sure, clown face me. Clown Dookie.
I don't think this is at all correct.
The Strait is Iran's nuke. But it only works if there is traffic. If it starts charging tolls or cutting traffic, then the UAE and others will find different ways of bringing oil to market. And then Iran's nuke is gone.
Moreover, if other countries are bypassing the Strait, then the Strait actually backfires on Iran. It would be like giving the enemy a nuke. Because that would make Iran vulnerable to this blockade. The only reason Iran can continue on this course is their confidence that Trump will cave. That won't happen unless there is lots of traffic on the Strait.
You have to think geopolitically and multiple steps ahead. I know our critical faculties have been dulled by Trump, who makes Custer look like a strategic genius. But few leaders are Trump.
I am thinking with geography. How is Iraq, Kuwait, and a fair share of the other gulf countries going to get their oil out? Even Saudi Arabi only has a 4.5 million barrel a day capacity at their red sea port. Loading from there puts a shipping tax on any tanker that has to then go to Asia not to mention the Houthis make that unstable.
My guess is that the political situation in Iran is such that its asking a lot of their leadership to be thinking several years out. They got to rebuild. That takes resources. The bonanza of the Strait is going to be tempting. We'll see.
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