The 60 Day Peace Window Closed, and Trump’s Iran Strategy May Shift Dramatically

17 August marked the 240th anniversary of American folk hero Davy Crockett -- ‘King of the Wild Frontier’, as the old song goes. It also marked the official end of the 60-day period for negotiations to end the conflict between the U.S. and Iran. Whether U.S. President Donald Trump sees himself as King of his own Wild Frontier is anyone’s guess. And whether he will have an affectionate song written about him in the year to come remains to be seen. But, judging from the current situation in and around Iran, and its ongoing global ramifications, few people are likely to be singing and dancing in the streets any time soon; it seems safe to say. So, where exactly are we in a conflict that has every sign of becoming the sort of ‘endless war’ that Trump swore to his supporters that he would never get the U.S. involved in again? As it stands now, the U.S. has officially halted peace negotiations and has shifted to a total enforcement posture. Bizarrely, it has to be said, Trump has declared the Strait of Hormuz -- the key global energy transit route through which around 30% of the world’s oil historically moved and about 20% of its liquefied natural gas (LNG) -- “an American territory” and stated he would formally designate it as such “pretty soon”. In line with this extremely bold reimagining of reality, he added: “We have the blockade. No ships get through unless we want them to.” Washington has also re-initiated its most severe economic isolation campaign to date, under the operational handle of ‘Economic D-Day’, warning that any country allowing Iran access to their banks, business networks, or airports will face immediate secondary sanctions. Since the imposition of this policy, U.S. Energy Secretary Chris Wright confirmed that the naval blockade in the Gulf of Oman has brought Iranian crude exports to a near-total halt, with U.S. forces having actively intercepted, redirected, or boarded dozens of commercial vessels attempting to run the blockade. Related: Goldman Sachs: Europe Needs Much Higher Gas Prices to Secure Winter Supply Iran, meanwhile, has declared the diplomatic window dead and has officially categorised the new U.S. sanctions and blockade as a ‘declaration of war’ on global sovereignty. National Security Council Secretary, Mohsen Rezaei, warned regional neighbours that if they assist the U.S. campaign, Tehran will treat them as enemies and target their interests directly. In line with this, Iranian Army spokesman Brigadier General Mohammad Akraminia stated that the country’s military posture has shifted from defensive to offensive, while Iranian Parliament Speaker Mohammad Bagher Ghalibaf issued a list of demands for reopening the vital Strait of Hormuz energy transit route. Iran maintains that shipping will only resume under exclusive Iranian terms, which comprise the immediate lifting of the U.S. blockade of the area, the removal of sanctions on Iran, the payment of war reparations to Tehran, the unfreezing of blocked Iranian financial assets and state funds held abroad, the withdrawal of U.S. forces from the Persian Gulf and Gulf of Oman areas, and a permanent end to all military operations and threats against Iran and its regional allies across Lebanon, Palestine, Yemen, and Iraq. In an adjunct move, Tehran is also working on formalising its own permanent transit authority over the chokepoint through a sovereign pact with Oman, with Iran demanding a 5% to 7% cargo transit fee on the value of all commercial shipments passing through the Strait. Over and above the grand rhetoric and studied unpredictability of Trump’s recent comments on Iran, the kernel of the key objective that he wanted to achieve in the conflict in the first place re-emerged last week. Early in the conflict, Trump clearly laid out the four objectives he wanted to achieve with the action, and these were (in the order in which he said them): making it impossible for Iran to build a nuclear arsenal, degrading and destroying its missile stockpiles and production capabilities, regime change, and the end of the financing and arming of its proxies. Each of these aims was endorsed by every member of his cabinet back in February. In his detailed Truth Social post of 17 August, Trump directly or indirectly reiterated all of these objectives. It ran: “We need all of our Allies to stand with the United States of America to isolate, and defeat, the Iran threat. These maniacs are on the ropes, and these historic measures will cripple them and their ability to project terror worldwide. Iran will never have a nuclear weapon.” Preventing it ever having a nuclear weapon is directly stated, ending its support for proxies is echoed in stopping its ability to project power worldwide, and changing the regime is implied throughout. Interestingly, part of the historical basis for Trump’s contempt for what he views as the inertia of U.S. allies to help more directly in Iran is also alluded to. As examined in detail in my latest book on the new global oil market order, when Trump withdrew the U.S. unilaterally from the Joint Comprehensive Plan of Action (colloquially ‘the nuclear deal’) in 2018, several major European powers busily worked on ways that would allow them to continue to trade with Iran, circumventing the newly re-imposed U.S. sanctions. These measures included the introduction of a special purpose vehicle -- the ‘Instrument in Support of Trade Exchanges’ (INSTEX) -- that would act as a clearing house for payments made between Iran and European Union (E.U.) companies doing work there. In response, a letter from the U.S. under-secretary of treasury for terrorism and financial intelligence, Sigal Mandelker, to INSTEX President, Per Fischer, on 7 May 2019 read: ‘I urge you to carefully consider the potential sanctions exposure of INSTEX [as] engaging in activities that run afoul of US sanctions can result in severe consequences, including a loss of access to the US financial systems.’ Trump also rightly regards Europe’s unwillingness to respond forcefully to Russia’s invasion of Crimea in 2014 -- because it did not want to lose its access to cheap and plentiful Russian oil and gas -- as effectively an invitation to Russia the invade the rest of Ukraine in 2022. There has been much chatter recently about whether Trump would order the use of a nuclear weapon on Iran to end the current stalemate, but according to Washington-based sources who work very closely with Trump’s core team, any mention of this would have occurred merely as part of a full examination of all operational options available in a wargaming scenario. More specifically, it would have occurred in passing examination as a tactical nuclear weapon option to destroy Iran’s remaining highly-enriched uranium that is believed to be located somewhere under Pickaxe Mountain, at depths that cannot be reached by even the most potent of U.S. missiles. “The ramifications of the U.S. using any sort of nuclear weapon anywhere right now, particularly with Russia in Ukraine [as also analysed full in my latest book on the new global oil market order, the U.S. threatened to destroy all Russian forces in Ukraine, Crimea, and the Black Sea, with conventional weapons if Russia used nuclear weapons against Ukraine] and China eyeing Taiwan, would be disastrous, and there are multiple better options,” said one of the sources. One better option, according to a Washington-based source who works closely with the U.S. Treasury, is maintaining a military presence in and around the Strait of Hormuz and the Bab el-Mandeb Strait (the other key regional energy transit route, threatened by the Iran-backed Houthis) to allow oil and LNG traffic to move freely, while at the same time increasing economic sanctions on Tehran. “These were working well before they were relaxed for the peace talks, and they’re likely to do so again, especially if pressure is put on China at the same time,” said the Washington source. Although China has continued its support for Iran since the start of the conflict with the U.S. -- through massive imports of Iranian oil and technology used in Iranian weaponry -- Trump’s ‘Economic D-Day’ may cause Beijing to think again, if the plan is fully implemented. U.S. Treasury Secretary Bessent confirmed last week that Washington will impose “the ‌toughest sanctions in history" on Iran and urged Beijing to cooperate with the U.S. “It is a one-two punch. We have the blockade [on Iran], and we are going to have the toughest sanctions in history… It is going to work in Iran and we are going to collapse this regime,” he said. “We are confident that everyone wants the Strait (of Hormuz) reopened, and for energy prices to come back down,” he added, “and keep in mind that the Chinese get 50 per cent [of their] energy from inside the Gulf, so it would do them a big service to get with the program.” By Simon Watkins for Oilprice.com More Top Reads From Oilprice.com