Tehran is losing its grip on Hormuz, and with it all its leverage
All the noise around Iran’s supposed stranglehold on oil supplies transiting through the Strait of Hormuz is missing the point.
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The reality is that the combination of Operations Midnight Hammer and Epic Fury upended the regime’s hopes of turning Hormuz into a permanent hostage.
Its ruling clerics will now pay the price for activating a blockade without their most important insurance cards — perhaps sooner than they think.
Had the regime in Tehran followed late Iranian Supreme Leader Ali Khamenei’s plan — weaponized its nuclear program, built an arsenal of thousands of ballistic missiles and drones and assembled its regional proxies into an even more formidable force — then its blockade of Hormuz would likely be permanent.
That kind of potency would have deterred American and Israeli action and rebuilt Iran’s economy into a formidable global energy power.
Instead, after several months of airstrikes by the US and Israel, Iran’s nuclear and missile programs are badly damaged, and its economy is collapsing from a blockade and sanctions.
Flowing elsewhere
Its terrorist allies around the region, from the Houthis in Yemen to Hezbollah in Lebanon, are no longer the threat that they were on Oct. 7, 2023 — the day of the deadly invasion of Israel by Iran-backed Hamas.
Simply put, a weakened Iran played its Hormuz card too soon.
Each day that goes by leaves its regime more vulnerable to punishing military and economic pressure.
The results are already becoming visible.
According to US Energy Secretary Chris Wright, an average of 9 million barrels of oil are passing through Hormuz daily, while between 5 million to 7 million barrels are reaching consumers through “newly upgraded pipelines and export facilities.”
Wright’s figures have been disputed by oil industry analysts and other commentators, who.
Many of them insist that the true number of barrels is much lower, arguing as well that the febrile situation in Hormuz means that oil exports will continue at a trickle instead of a flood.
But what that ignores is that the many ships moving covertly through Hormuz with US assistance, going uncounted by analysts who rely solely on open-source data.
It also ignores the spectacular transformation of the oil export route that’s currently underway.
The United Arab Emirates is fast-tracking a new west-east pipeline to Fujairah, which will allow exports to bypass Hormuz at minimal cost lies outside the strait.
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The Abu Dhabi National Oil Company announced in May that construction was about 50% complete, with operations expected to launch next year.
This means that the UAE can soon bypass Hormuz at minimal cost.
The Saudis are moving in a similar direction, seeking to add 1 million to 2 million barrels per day of capacity to their east-west network running to the Red Sea.
The United States should now actively work with its Gulf allies to eclipse Iran even further.
The US Development Finance Corporation, which possesses $205 billion in investment capacity, is uniquely capable of facilitating export routes that avoid Hormuz.
It can also demand a significant share of the equity in this burgeoning consortium, with the benefits passed on to American US taxpayers.
Stay the course
The situation further afield works to America’s favor too, as well with the United States continues to set records for oil and gas production and exports.
Venezuela’s oil exports reached approximately some 1.16 million barrels per day in July, with roughly 786,000 of those heading to the US — the highest US-bound volume in seven years.
As in the Gulf, further investment here could increase production considerably.
The real loser here is not the United States but China, which relies on Middle Eastern oil far more than the US does.
Alternative routes out of the region coupled with non-Middle Eastern oil will bolster US dominance of energy markets while reducing the leverage of both China and Iran.
What’s shaping up, therefore, is not merely a victory over Iran.
If seen through to completion, these developments will set the stage for a new American century in which the flow of energy — both oil and liquefied natural gas — will be liberated from the manipulation of rogue states like Iran’s regime.
This is the direction in which we are heading, but we’re not at our destination yet.
That’s why President Trump needs to double down and resist the temptation to cut a deal with Iran that legitimizes its control over Hormuz.
Better to focus on marginalizing Iran so that its threats are empty ones.
That will truly be a legacy for future generations.
Mark Dubowitz is chief executive of the Foundation for Defense of Democracies, where Richard Goldberg is a senior adviser.
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