Shot, in Tuesday's Wall Street Journal:
Persian Gulf oil exports have surpassed prewar levels, as an improvised shipping system under U.S. protection is helping tankers move oil through one of Iran’s fiercest waves of attacks in the Strait of Hormuz.
Middle East oil flows, including shipments through Hormuz and alternative routes across the region, averaged more than 24 million barrels a day in the week through Oct. 18, surpassing prewar levels of 23.3 million, according to ship tracker Kpler.
Preliminary figures show Hormuz oil flows, including offshore transfers in the Gulf of Oman, came to around 14 million barrels a day on average for the same period, or 82% of prewar levels.
Chaser, in today's Wall Street Journal:
For most of the war, Iran had an invaluable cushion: dozens of oil tankers holding millions of barrels of crude sitting safely in waters in Asia. Tehran steadily sold the oil to China, bringing in billions of much-needed cash.
Now, that floating storage is gone. By mid-October, the reserves were fully depleted, according to analysts at Kpler, as a U.S. naval blockade prevented Iran from replacing the crude it normally sells to Chinese refineries.
“There’s no more oil to discharge to China anymore,” said Homayoun Falakshahi, head of crude-oil analysis at Kpler.
The drop in oil revenue is a further blow to Iran’s struggling economy, already facing runaway inflation and widespread shortages. U.S. Central Command, which is responsible for the Middle East, said Saturday that the blockade has denied Tehran at least $25 billion worth of oil revenue, which will, in turn, constrict Iran’s ability to replace destroyed factories and weapons.
The U.S. has warned Iran that its embargo would eventually stop the flow of hard currency into the IRGC's coffers. The IRGC has blustered for months that it had plenty of reserves and options for income that work around the naval blockade. However, the US disrupted its other distribution channels on rail and road, and as the WSJ noted last month, its overland routes are subject to massive corruption and obstruction in Pakistan and Turkey. Its long-haul industry has mostly come to a halt, thanks to long delays at these borders and a lack of refined fuel for the trucks hauling the loads.
The regime in Iran bet that it could force the U.S. to retreat by controlling the Strait of Hormuz, and if necessary, get the Houthis to interfere in Red Sea shipments. Thus far, that strategy has failed. The IRGC has succeeded in making everything more expensive, but not nearly as much as it expected, and the U.S. Navy has succeeded in keeping the Strait open for business. The IRGC has run out of options, in other words, except in American electoral politics, which is the last bit of leverage they have left – and regime officials admitted yesterday to attempting to interfere with the midterms by delaying any settlement:
Iran is deliberately stalling the peace negotiations with the US to weaken President Trump’s political standing ahead of the November midterm elections, senior regime officials said.
Tehran has become convinced that Trump cannot be trusted and will strike Iran following the elections, leading the negotiating team to prolong the talks until after the president suffers a political blow, three Iranian officials and an insider told Reuters.
“Iran is preparing for renewed Israeli and US attacks, not for a deal with America to end the war,” one of the officials said.
“The clerical establishment is determined not to give Trump a political victory.”
Both the U.S. and Israel have shifted forces around in the region. The State Department ordered non-essential personnel back to the U.S. from several Gulf states this week as well. Those moves may indicate a planned offensive, but they are more likely a precaution against renewed strikes from the IRGC. The U.S. and its allies in the Gulf kept a close eye on the IRGC's floating crude oil and knew approximately when it would go all the way past the E and dry up.
Now, the IRGC has no hard-currency income with which to pay its rank-and-file military and militias, let alone feed its people and keep their cars running. The U.S. and the Gulf states have remained open for business. The only options now for the IRGC are capitulation or collapse, and Trump has learned enough about their tactics not to trust a capitulation. The real risk from Trump to the IRGC isn't a renewed round of attacks but rather a refusal to deal at all and wait for them to strangle and starve in the embargo.
The only other option for the IRGC would be to restart the war with the US, while avoiding Israel – who will not hesitate to decapitate the entire regime leadership again if attacked. If the IRGC starts a shooting war with Trump and involves the Gulf states apart from Israel, they know that Trump will come under more pressure to cut a deal that will let the IRGC off the hook. Now that the oil has run out, expect the IRGC to launch attacks sooner rather than later in the hope that they can leverage the midterms to increase that pressure. It is likely far too late for that to work, though, and Trump might just settle for taking out strategic IRGC facilities rather than going to full-spectrum warfare again.