I got shellacked for this post back in March — but it turned out to be pretty prescient. 7 months of war later, Iran can’t completely close Hormuz — but it can make transits dramatically more expensive in economic and military terms. 1. The U.S. has committed 30% of the Navy to the Battle for Hormuz. 30%! Setting aside the budgetary costs, think of the opportunity costs: the training, maintenance, etc., being forgone to fight this war. By expending scarce military resources at an astounding rate, the U.S. is depleting its readiness and jeopardizing our capacity to handle contingencies that could genuinely threaten U.S. security — not just today, but well into the future. Is it worth it? Certainly not. 2. Getting crewed vessels to run Hormuz is extremely expensive in hazard pay and insurance. Crews are collecting a massive premium (as they should) for risking their lives to cross the strait. Other rerouting efforts to avoid the Red Sea also add exorbitant transit costs, pushing up crude prices. All of this is for Trump to avoid the indignity of paying Iran off with tolls, which would likely be much cheaper than the $15-$20 per barrel risk premium to cross Hormuz cited in recent Wall Street Journal coverage. (Although the longer this goes on, the higher Iran can bid up the price for tolls, because we’re showing them we’re willing to pay $15-$20 extra to get oil out of Hormuz. Whereas Iran’s “ask” early in the war was a $1/barrel premium, it’s going to be much higher now, because markets have shown a willingness to pay.) Bottom line: The Hormuz situation has not changed substantially since early in the war. Iran can drive up the costs and risks to traffic through the Strait of Hormuz, indefinitely. The U.S. can’t stop all attacks. The only difference is that markets are finally adjusting to the new reality — shippers are moving oil despite attack — and pricing in higher risk as a result. Oil will flow from the region, but as long as this quagmire continues, prices will stay high, and the U.S. will waste its resources “securing” global oil prices of $100/barrel. This situation was entirely unnecessary. Congrats, Mr. Trump, on starting your first Forever War.