The United States’s future plans for the war with Iran are likely to be decided by a number of factors, including the rising cost of hydrocarbon-related fuels, according to the 16th annual Eye on the Market Energy Paper: Fighting Words, published by J.P. Morgan on Monday.
The cost of US crude oil, wholesale gasoline, naphtha, shipping fuel, and certain petrochemicals has increased over the past year, in some cases reaching price increases higher than in Europe and Asia, in large part due to the closure of the Strait of Hormuz. US jet fuel prices have also risen by around two-thirds of international increases.
Bloomberg Middle East Economist Dina Esfandiary published, “Iran probably did not expect its Hormuz strategy to be this successful…the lesson Iran has learned from this war is that holding the global economy hostage is cheaper and easier than anticipated."
The financial ramifications of the strait’s closure has led Iran to propose charging 100-130 vessels per day $2 mm each for crossing, which would amount to USD 70-90 billion per year in revenues, the report noted, adding that if the fee were charged only to the estimated 2,000-3,000 commercial vessels now stranded in the Gulf, the regime would be able to gain USD 4-6 billion.
Making the issue of freeing the aforementioned ships more complicated is the shortage of US naval warships and mine-hunting vessels, as the current stock is lower now than it was in the 1980s.
The 113 frigates the US once held in 1986 were replaced with the unsuitable littoral combat ships, the report highlighted. Plans to purchase the Italian-designed frigate fell through over the mounting cost of modifying the vessels, and the current four mine-hunting vessels are due to be retired without properly tested replacements ready.
Compounding the cost of continuing the war, the US military has exhausted four years' worth of supplies of Tomahawk missiles at the projectile’s current production rate.
As US President Donald Trump has begun pushing ceasefire proposals, the report noted that many have theorized that the Trump administration has been looking to leave the conflict and force another party to find a solution for the Strait.
US next move could include seizing Kharg, Qeshm Islands
Theories as to the US’s next move have also included plans to seize enriched uranium supplies, seize the Kharg Island, and/or seize the Qeshm Island. The US’s ability to carry out some of these plans is highly dependent on temperatures and timelines, the report noted, as temperatures in the Gulf can make some of the theorized operations significantly harder to carry out.
Temperatures are expected to reach 126⁰ F in June, meaning exposed metal could reach 160⁰ F and vehicle interiors 176⁰ F. In August, the temperature is anticipated to climb to a peak at 140⁰ F. These weather conditions could lead to personnel and equipment issues, the report stressed.