The Iran war has re-escalated this week. The MOU is over and in some ways the situation is worse than the opening weeks of the war.
The US has bombed Iran for seven consecutive nights up to Friday. The intensity is around 30 strikes per night, 10% of peak intensity relative to late February and early March.
The US has reimposed its blockade on Iran and revoked licenses for sale of Iranian oil into the Western financial system.
Iran claims to have hit US bases in Syria, Kuwait, Oman, Bahrain and Jordan. The US claims not to have suffered casualties (although Kuwait, at least, has). The US has previously downplayed its losses in the immediate aftermath of strikes.
The Iran strikes point to a horizontal escalation of the war. Iran has struck across the Gulf and shut down the UAE port of Fujairah. This was the UAE’s only way to by-pass the Straits of Hormuz.
At the same time, the Houthi rebels in Yemen – who are allied with Iran but strategically independent – are becoming more belligerent. This could lead to the closure of the Red Sea to commercial shipping.
In Israel, PM Netanyahu made a public visit to Israel’s major nuclear site. The Israeli public is not strongly opposed to using nuclear weapons.
At the site, Netanyahu told media that Israel would make “far more powerful” strikes if Tehran launched new attacks on Israeli territory. Tehran has not made such an attack this week.
The current escalation boils down to the Straits of Hormuz and Lebanon/Hezbollah.
The MOU recognised Iran would “make arrangements for the safe passage of commercial vessels,” and agree on the Straits’ future administration beyond the MOU in tandem with Oman. Iran understood its control of the traffic to be exclusive and has fired on commercial vessels passing through the Straits on the Omani side.
In late June, Secretary of State Rubio brokered a hawkish statement from Oman and other Gulf countries against Iran’s control of the straits.
On Lebanon, the 60-day MOU essentially recognised Hezbollah’s presence in the south. Israel was called on to respect a ceasefire and withdraw.
Vice-President Vance spoke out forcefully against the Israeli backlash to this. However, Rubio then brokered and signed a deal between Israel and the anti-Hezbollah Lebanese government that legitimised Israel’s occupation of southern Lebanon and its campaigns against Hezbollah.
Rubio and Vance operating at cross-purposes points to the awful prospect that the Iran negotiations will be folded into jostling for the Republican Party presidential nomination.
Meanwhile, the US strategic petroleum reserve currently holds 316 million barrels. It held 415 million barrels at the start of the war.
The reserve sits 46 million barrels above the statutory minimum of 270 million barrels, the level beyond which a draw-down would be considered an emergency. For reference, draw-downs peaked at 10 million barrels per week in May.
Crucially, the reserve caverns cannot functionally be drawn to zero. The estimated functional minimum – beyond which their structural integrity is compromised – is about 140 million barrels above where we are now.
In short, US and Gulf leaders are flirting with global economic disaster. On the other hand, after the latest attacks it isn’t clear Iran will readily return to the negotiating table.
Sign Up To Our Free Newsletter