Successfully enforcing the blockade will require a sustained commitment of US Navy ships and personnel, as well as clear guidance from the Trump administration and the Navy’s legal department
Washington: A US blockade of Iranian ports at the Strait of Hormuz could cost Iran up to $435 million or Rs 4,081 crore a day in economic damage, as tensions between Tehran and Washington escalate, according to a Wall Street Journal report. The blockade, which US President Donald Trump said began on Monday, could further disrupt the flow of oil, fertiliser, food and other goods, leading to further inflation.
But analysts have pointed out that Iran’s potential loss depends on several unknown factors, including how impenetrable the US blockade turns out to be and to what extent Tehran can reroute oil exports through the Jask terminal, outside the Hormuz waters.
The short-term damage is likely to be offset by the Iranian oil already on the water. As of late March, Iran had an estimated 154 million barrels floating outside the blockage-affected Gulf, according to Kpler.
“The US quarantine of Iran’s ports will cost Iran about $435 million a day in economic damage,” Miad Maleki, a former official with the Treasury Department’s Office of Foreign Assets Control, told WSJ.
The estimated losses include about $276 million in lost exports, mainly crude oil and petrochemicals. But Maleki’s estimates are based on Iran exporting 1.5 million barrels of oil a day at a wartime price of about $87 a barrel and assume more than 90 per cent of the oil transits through Kharg Island, inside the Persian Gulf.
How Trump’s Blockade Could Work?
Trump threatened to impose the blockade after talks to further a fragile ceasefire ended without a deal this past weekend. Iran had previously halted nearly all tanker traffic through the key waterway, allowing only some ships perceived as friendly to pass while charging considerable fees.
The point of the US blockade is to maximise pressure on Iran by strangling its cash flow from the energy trade.
According to Marc Thiessen, columnist and former White House Director of Speechwriting, the blockade accomplishes virtually the same thing as would a military operation to seize Kharg Island– through which almost all of Iran’s oil passes. However, he opined that the blockage would inflict similar damage to the Iranian economy without the risks involved in deploying US ground forces — likely shutting down Iran’s oil exports and cutting off its energy revenue.
Moreover, by blocking Iran’s energy exports to China, which gets 45 to 50 per cent of its crude oil and 30 per cent of its liquefied natural gas imports through the strait, Trump can also give Beijing an incentive to join him in that pressure campaign.
However, successfully enforcing the blockade will require a sustained commitment of US Navy ships and personnel, as well as clear guidance from the Trump administration and the Navy’s legal department, according to a report by Associated Press.
How The US Plans To Enforce The Blockade
The US has 16 warships in the Middle East, but according to an AP report, no warships are in the Persian Gulf — the body of water that forms most of Iran’s coastline.
Moreover, a notice to mariners about the military’s plans said access to Iranian ports is being restricted, but the ways these measures “will be applied in practice … are in development”.
The biggest challenge for US forces will be the enormous volume of shipping traffic that usually transits the Strait of Hormuz, where nearly 20 per cent of the world’s traded oil passes in peacetime.
A considerable number of ships may be needed to enforce the restrictions, said Sidharth Kaushal, a naval power expert at the Royal United Services Institute, a defence and security think tank in London.
“A lot depends on the early days of the blockade, how many vessels the Americans can seize, and how much they can convince vessels attempting to slip through a cordon that they’re likely to be seized,” Kaushal said. “But in all likelihood, I’d say it will prove difficult for the US to enforce.”
