[The Long Game Brief] Iran Strikes in the Strait of Hormuz Once Again

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Source: https://mideastsoccer.medium.com/hormuz-tensions-rise-26877ba73bf3

In the most recent interview after the renewed strikes from Iran on vessels in the Strait of Hormuz, James M. Dorsey went on India’s NDTV Profit to explain what this means for the fragile U.S.-Iran peace deal.

At present, there are some other important events happening in international politics. For one, Russia and Ukraine continue to exchange heavy attacks on each other’s own maritime targets in the Black Sea. Secondly, President Trump is currently speaking at a NATO conference in Ankara, Turkey, where **a headline about Spain** has already circulated in the worldwide media amid the Transatlantic alliance tensions.

In response to the question about NATO and this latest escalation of attacks in the Strait of Hormuz, **James Dorsey said**:

“The Iranians may be overplaying their this time around, because what they are asserting, quoting Article 5 of the Memorandum of Understanding, is that they have total control of the Strait of Hormuz. The fact of the matter is that what they’re doing is trying to prevent Oman, together with the United States, from encouraging shipping to go through Omani territorial waters, and there’s no legal basis for that. That also means that Trump really doesn’t have a lot of options.”

On the points about global crude oil markets, it is should be noted that oil prices have already declined significantly since the U.S.-Iran memorandum of understanding (MOU) was signed last month.

At the time of this publication, oil prices are rising slightly on the news:

YTD Price Chart for UK Brent Crude Oil

As you can see from the YTD chart above, crude oil prices haven’t went down to the price levels of USD $60 per barrel that we have been accustomed to before the U.S. invaded Iran’s territorial waters in the Persian Gulf. Unfortunately, oil prices will not be going back down to that level for the foreseeable future.

On the issue of who controls the Strait of Hormuz, Dorsey pointed out that Oman has the same amount of leverage as Iran for shipping:

“The fact of the matter is that the Strait of Hormuz is part Iranian territorial waters, part Omani territorial waters, and Oman has sovereignty over its territorial waters. Iran legally cannot impinge on that, and that’s the point where Iran may be overplaying its hand because it’s not going to find a lot of international sympathy, including among those NATO countries with which the United States at the moment has strained relations over Iran. They’re not going to support the Iranian position.”

In a previous **interview with CNBC**, James Dorsey gave his opinions on how the Trump Administration wants to shape the narrative:

“I think we’re used to President Trump creating his own world. Underlying what he said in the CNBC interview…is the notion that Iran is militarily defeated and it’s on its knees and willing to compromise and do whatever takes to end the war. I think if we look at the facts on the ground, that’s not quite correct.”

On the points about U.S. agriculture exports to Iran, this really got my attention because Iran’s market hasn’t previously been known as one that trades in agriculture with the U.S. In fact, this is very foretelling about U.S. agriculture, because the U.S. has struggled to get market access with China in recent years. China has already heavily **switched over to both Brazil and Argentina for soybeans**, for example.

Here’s what Dorsey said about the Iranian funds being used for U.S. agriculture imports:

“I don’t see how Iran could agree to a release of some funds of Iran that then the use of which is dictated by the United States, and then can only be used for purchases in the United States; that in Iran’s perception would be a violation of its sovereignty.”

I totally agree with Dorsey. The U.S. agriculture exports to Iran would be more expensive than all of the other imports options, notably Brazil, Argentina, Russia, Ukraine, Romania, Bulgaria and Australia.

There seems to be this misperception of the Trump Administration that the U.S. is holds a stick to other countries when it comes to U.S. agriculture exports. China has already given a big middle finger to the U.S. government and agribusiness sector in this regard. To think that the Iranian government will simply use the funds to purchase expensive agricultural commodities, all in a favor to a country that it was just at war with, is utterly preposterous.

I publish a newsletter covering current affairs topics and global commodities markets in [**The Long Game Brief**] every week.

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