Hormuz Blockade Is a Throwdown the US Can't Win Says Marc Champion

The US president's threat to block Iranian exports through the Strait of Hormuz is likely to drag him deeper into a war than to force Tehran's capitulation.

A blockade of the strait, a waterway for about a fifth of the world's oil supply, could increase pressure on Tehran, but it's unlikely to work if Iran responds by hitting more energy assets around the Gulf.

The US administration needs to recognize it cannot hope to get a quick win and may have to drop its ultimatums and return to talks on a more realistic timescale with a ceasefire in place and Hormuz open. Bloomberg Opinion columnist Marc Champion joins to discuss. Oil prices fell and stocks rose as expectations rose for an accord that could end the more than six-week war. Brent crude traded 1.3% lower at almost $98 a barrel on Tuesday. The S&P 500 futures edged higher after the US benchmark erased its war-driven losses on Monday.

The latest push shows the two sides haven’t given up on diplomacy after their first round of direct talks in Pakistan failed to produce an agreement. Negotiating teams could return to Islamabad later this week, Reuters reported, citing sources it didn’t identify, while adding that no firm date has been set.

Switzerland said it’s ready to provide diplomatic support to efforts to end the conflict amid speculation discussions could take place in Geneva. The traditionally neutral country hosted talks about Iran’s nuclear program before the US and Israel started bombing the Islamic Republic on Feb. 28.

The war has left thousands dead, damaged infrastructure and disrupted energy flows beyond the Persian Gulf, rattling markets and triggering fears of a global inflation crisis.

Surging prices of products such as jet fuel and gasoline are already squeezing consumers, the International Energy Agency said on Tuesday, pointing toward the first annual decline in global oil demand since 2020.

Fighting has largely paused since shortly after the April 7 truce was agreed. The exception is in Lebanon, where Israel is continuing its military campaign against Iran-backed Hezbollah.

Talks between Israel and Lebanon are due to take place in Washington on Tuesday in an effort to resolve the conflict, which has killed more than 2,000 people and displaced a million more, according to the Lebanese government.

Read More: Israel and Lebanon Set for US Talks to Defuse War With Hezbollah

Trump’s blockade of Hormuz represents a further test of the ceasefire’s durability. About a fifth of the world’s oil and liquefied natural gas was shipped through the strait before the start of the war on Feb. 28.

“We can’t let a country blackmail or extort the world,” Trump said, warning Iran against charging fees for vessels to transit the strait.

A ship under US sanctions and linked to China is making its way through Hormuz, testing the blockade. The Rich Starry, a medium-range tanker, is trying for the second time in less than 24 hours to exit the waterway.

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