Though the Islamic Republic of Iran has established a “sophisticated panoply” to protect itself against the possibility of regime change, its trump card, the Strait of Hormuz, is losing its strategic value and will continue to do so, Thomas O’Donnell, an American energy and geopolitics strategist and a Global Fellow of the Wilson Center, told The Jerusalem Post on Thursday.
With many of the regime’s regional proxies degraded over years of war with Israel and its nuclear ambitions delayed after the 12 Day War in June last year, Tehran only has its rockets, drones, and ability to threaten the Strait of Hormuz left as an insurance policy against attempts to topple the regime, he noted.
These remaining elements will be used to dissuade action while it restores the others, but they are losing the weight they once carried, O’Donnell added.
Though 14 to 15 million barrels of oil traveled through Hormuz per day before the war, he argued that it was very possible to manage without much of that supply.
Saudi Arabia’s East-West Crude Oil Pipeline moves around five million barrels per day for non-domestic use, while the United Arab Emirates moves an average of 1.5 to 1.8m. bpd through its own pipeline, he calculated.
Some 400m. barrels of oil and refined petroleum products were unanimously approved for release by the 32 member nations of the International Energy Agency (IEA), while the US government committed 172 million barrels from its Strategic Petroleum Reserve.
None of this even touches on the oil supplied by the Western Hemisphere, where roughly 32% to 40% of the world’s total oil originates.
“There’s more production in other places, but [the disruption of] oil has not been anything like it would have been 20 years ago if they closed the strait,” he said, explaining how the US’s own oil and fracking industries have helped mitigate much of the damage.
Could Iran’s weakening control of Hormuz force a deal with the US?
“The oil price, it’ll go up and down. The fact that it went over $100 [a barrel], and the next day it was $80, that means that’s geostrategic variability. That’s not fundamental.”
A number of planned pipelines, namely the UAE’s plans to double its oil output through a parallel pipeline and Iraq’s plans for an Iraq-to-Syria pipeline, will also weaken the strategic value of Hormuz as states develop alternative routes.
Reflecting on these developments, US Treasury Secretary Scott Bessent shared earlier this month the prediction that the strait “is going to become just another body of water” over the next two years, estimating that 50-70% of the exports passing through the waterway would instead travel through underground pipelines.
Noting that the Iran-backed militias operating in Iraq could still cause some issues with the planned pipeline, he reasoned that this would provide further motivation for Iraq to keep to its September 30 deadline to disarm the groups.
O’Donnell further argued that beyond Hormuz becoming less valuable as a transit point for fuel, Iran’s own ability to defend its claim over the waterway has also diminished, as has its ability to attack neighboring states’ alternative oil routes.
“The Americans systematically bombed the region and knocked out every radar that was ever turned on. Little by little… they systematically degraded it. And now you see [oil tankers] are sneaking or being escorted at night, where Iran can’t visually see the tankers very well,” O’Donnell explained.
“Iran had a more or less static defense or offense, missiles and drones that they can’t reproduce, and electronic eyes that undoubtedly the Americans can only degrade at some rate. And so their ability to control Hormuz will degrade over time.”
In other words, Iran is losing leverage over Hormuz from both directions: The waterway is becoming less indispensable to global energy markets, and Tehran is becoming less capable of controlling it.
The natural outcome of this will be vessels traveling largely unimpeded through the strait as Iran is left with degraded weapons and defenses, he continued, predicting that even the regime’s hardliners would eventually need to make a deal with the US despite their current “bravado” as the financial crisis hitting Iran worsens.
Aware of this, Iran may make a “desperate attempt” to step up its pressure campaign on the US through attacks on Gulf states, potentially even launching a ground incursion, O’Donnell said.
What will happen to Hormuz if Iran loses control?
Having rubbed shoulders with a number of diplomats and analysts in the region, O’Donnell said he had been told by a number of sources that Gulf states were aware, prior to the war’s outbreak on February 28, that Iran had strategized a plan to target them as a means to pressure the US into dropping or moderating any campaign against it should the need ever arise.
When the US continued to attack despite Gulf pressure, quickly eliminating Tehran’s leadership, the Islamic Republic went for the Strait of Hormuz, “because it’s so important globally.”
Despite not approving of the US’s attacks on Iran due to the consequences for them, O’Donnell said that Gulf states were unwilling to see Hormuz remain under Iran’s control for reasons outside of the issue of fees.
“As soon as there’s something on Asharq or on Sky News that they don’t like, they’ll hold up the UAE ships,” he said. “As soon as there’s something on Al Jazeera they don’t like, they’ll hold up the ships for a week.”
This, he reasoned, is why Gulf states would not allow the United States to leave the conflict, despite alternative oil routes becoming available in the not-so-distant future.
“If they’re going to make a deal, now’s the time to make a deal and get it over with. They can cause a lot of pain, but in the end, Iran is really going to become diminished. And if they go diehard, it’s going to be hard for everybody, obviously,” O’Donnell said.
“If you have a diminishing lever, best to make what deal you can… The US knows it’s going to take a long time, it’ll be fairly painful for allies, [but] in the end, it’s going to get better for us.”