The Escalating Crisis: Trump's Iran Strategy and the Global Energy Threat

Donald Trump claims to be a master of the 'art of the deal.' However, his style does not include patient negotiation. Following failed peace talks with Iran late last week, the U.S. has decided to escalate the conflict, announcing a blockade of the Strait of Hormuz.

Trump's latest strategy is likely to be counterproductive. When Iran effectively closed the Strait of Hormuz, global fuel prices spiked. The U.S.-led blockade is now driving oil and gas prices even higher, increasing the risk that Iran will target energy infrastructure in the Gulf region.

Iranians believe time is on their side in this conflict, and they may be right. The longer the disruption in Hormuz persists, the greater the pressure on the U.S. and its allies, strengthening Iran's position in future peace negotiations.

Fatih Birol, head of the International Energy Agency (IEA), has already stated that the loss of 20 percent of global energy supply is the 'greatest energy security threat in history.' He further noted that the current crisis could have a greater overall impact than the oil crisis of the 1970s, which led to years of inflation, recession, and energy rationing.

Petrol prices at pumps have begun to rise. Air travel is set to be affected by jet fuel shortages, which will negatively impact tourist arrivals during the peak tourism season in Europe.

Oil and gas tankers that were already at sea before Israel and the U.S. began attacking Iran on February 28 are now slowly reaching their destinations. Their remaining shipments have prevented the immediate, full-scale impact of the ongoing war. However, the effects of the tightening and closure of the Strait of Hormuz, along with Iranian attacks on Gulf energy infrastructure, are now beginning to show.

Petrol prices at pumps have begun to rise. Air travel is set to be affected by jet fuel shortages, which will negatively impact tourist arrivals during the peak tourism season in Europe. A shortage of helium produced in Qatar could halt semiconductor production. Fertilizer shortages are expected to have a major impact on food production. The Asian Development Bank recently projected that economic growth in developing Asian countries will decline by more than 1 percent.

Donald Trump still hopes that the economic pressure imposed through the blockade of Hormuz will bring Iran to its knees. But the Iranian regime is not what he thinks; it is resource-rich and ruthlessly prepared for a fight for survival. By selling oil at high prices, Iran has secured itself financially to some extent, and there is a high possibility of earning additional income through pipeline exports in the coming days.

If Trump's blockade fails to bend Iran, the U.S. will face a very uncomfortable situation. Trump has already floated the idea of destroying Iran's infrastructure or using military action to open the Hormuz route.

If the U.S. decides to further escalate the war by targeting Iran's energy production centers and 'water desalination' plants, as Trump has threatened, Iran will not remain silent.

But the truth is even harsher. If the options Trump has put forward were viable or effective, they would have been tried already. Even if the U.S. used force to escort some warships through Hormuz, it would not guarantee the safety of commercial shipping. Iran does not need to stop or sink every ship or tanker. Even a small number of attacks using drones or 'speed boats' would make it impossible to insure tankers, potentially causing them to refuse to travel.

If the U.S. decides to further escalate the war by targeting Iran's energy production centers and 'water desalination' plants, as Trump has threatened, Iran will not remain silent. Iranians have already threatened to attack similar infrastructure in the Gulf region. Without pure water processed from 'desalination plants,' life in the UAE and Saudi Arabia would become impossible.

Oil pipelines in Saudi Arabia are built to connect to the Red Sea. They can serve as a limited alternative to Hormuz. Iran has already targeted the infrastructure that could support such alternatives and can easily attack them in the future. Saudi oil wells near the coast are at risk of attack. Additionally, the Houthi group, an Iranian partner, could disrupt exports from the Red Sea by targeting ships passing through the Bab el-Mandeb.

Even before the U.S. announced the blockade of Hormuz, many firms in the oil industry appeared quietly prepared to pay fees to Iran.

The negative political and strategic consequences of the ongoing war will not be limited to the Middle East. Ireland has already seen major protests over rising fuel prices. Last week, the protests brought the country to a standstill. The government had to deploy the military to clear ports and highways blocked by the protests. It also had to announce a 505 million euro fuel subsidy.

Ireland is only the first country forced to face such protests. The chain of unrest is not going to stop there. Asian and European governments already facing financial difficulties are not in a position to appease protesters in the Irish style. France is already under debt pressure and has a history of major protests over fuel price hikes. Furthermore, France is holding a presidential election next year.

Even before the U.S. announced the blockade of Hormuz, many firms in the oil industry appeared quietly prepared to pay fees to Iran. A fee of $1 per barrel has already been mentioned.

The Trump administration insists that the fee system Iran has begun to impose is unacceptable. The U.S. position on this matter is correct. The Hormuz fee system not only affects the guarantee of free maritime movement worldwide but will also have a profound impact on the balance of power in the Middle East.

Having a single country, Iran, in control of global oil and gas supplies creates a situation stronger than the cartel of oil-producing nations in 'OPEC.' Iran could use the income from its control and fees in Hormuz to rebuild its 'proxies' and develop its nuclear program.

The way out of the current situation is not easy. Ending the war and the resulting energy crisis requires discussion and negotiation. It requires strategic vision, patience, and understanding to weigh the pros and cons of various options and maintain a reliable group of partners. Trump lacks these qualities. In fact, we are stuck in chaos.

(From Financial Times)