The US is Digging a Grave for its Own Empire

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Diplomacy between the US and Iran continues, writes Bloomberg. But, the positions of both sides remain as far apart as ever. “They want to make a deal but I’m not satisfied with it,” Trump told reporters. The US demands regarding Iran remain the same – an end to the nuclear program; the ballistic missile program; the end of the collaboration with Yemen, Hezbollah in Lebanon, and the Shi’ite factions in Iraq; and on top of all that an unconditional reopening of the Strait of Hormuz. In the 3W view, Iran rightly notes that these demands equate to an unconditional surrender by Tehran. Iran’s proposal remains to focus on reopening the Strait of Hormuz, in return for security guarantees to prevent a return to war, and to discuss the nuclear subject only once this has been achieved. For the US, and in particular Israel, this is unacceptable. 3W notes this means “the pain must worsen” for any progress to be made, and this means the key question is, who is hurting the most and who has the highest pain tolerance?

US president Trump is convinced that in the current standoff, Iran will be the first to blink. Trump touted what he called an “incredible” blockade of the Strait of Hormuz, writes Bloomberg. “Their economy is crashing, the blockade is incredible,” Trump told reporters at the White House. “Their economy is a disaster. So we’ll see how long they hold out.”

US president Trump is convinced that in the current standoff, Iran will be the first to blink

The experts in the room are not convinced the US’s blockade on Iran is working as effectively as US president Trump and his close advisors such as treasury secretary Bessent claim, Iran country may not be in imminent danger of a major crude oil shut-in as the US makes it out to be, writes Antoine Hallf for the Colombia Center on Global Energy Policy. On balance, Iran has considerably more spare storage capacity available than did Arab Gulf producers at the beginning of the war, he notes. That’s because Iran has structurally long storage capacity relative to exports. Iran has diligently worked to expand its storage capacity and diversify its export options since 2016. That means that even though Kharg Island stocks have already reached relatively high levels, it may still take a while, all other things being equal, before the US blockade forces Iran to shut-in production in a big way.

In addition, writes Bloomberg, Iran is experienced is managing production in response to its ability to export. “We have enough expertise and experience,” said Hamid Hosseini, a spokesman for the Iranian Oil, Gas and Petrochemical Products Exporters’ Association. The techniques to idle wells without lasting damage and maintaining the ability restart them quickly were learned over multiple wars and sanctions regimes, and honed during the first Trump administration, when the US withdrew from the Iran nuclear deal in 2018 and imposed sanctions that forced Tehran to slash production. Over the longer term, the curbs proved far from a death knell, with the country’s production rising in subsequent years.

What this means, in the 3W view, is the following. Iran is probably capable of slowing crude oil production to make its storage last longer. This storage is probably also larger than typically assumed, because the progress of the war so far communicates clearly that Iran has holistically prepared for situations such as the ones it finds itself in today. In addition, Iran has continued to load oil into tankers, an unknown number of which has been able to sail through the US naval blockade, writes The Arab Weekly. All this most likely means that Iran will be able to manage the implications of the US naval blockade much longer than what is typically communicated by western media. The view that “Trump is 14 days away from a decisive victory” is therefore most likely over-optimistic rubbish, or, in the case of Lindsey Graham, a “wet dream” from Tel Aviv.

in competition with China, the US actually needs all the allies it can get

That’s from the oil export perspective. From the products import perspective, last week 3W explained why a country with land borders such as Iran cannot be brought to its knees via a naval blockade.

At 3W we believe this is behind Trump’s recent statements that he is ready to strike Iran again if it doesn’t accept the US demands. He told reporters on Saturday that he could order renewed military action against Iran if it “misbehaves,” writes Axios. This is bluff and bluster, not a real policy position, in our 3W assessment. Most importantly, we say this because as CNN wrote last week, the US military is not capable of returning to war on Iran in any meaningful way. Already, the US has eaten into its stockpiles of critical weapons systems and ammunitions to the point that should a conflict arise over the next few years, it is at serious risk of simply running out. In other words, the US has nothing left to throw at Iran.

The first to reach the “unbearable pain” level are likely to in Europe and Asia, because Iran is prepared and the US is not dependent on energy from the Middle East. But, the pain in Europe and Asia will negatively affect the US, while the US – Israel War on Iran has increased sympathy for Tehran due to the fact it is clearly violating the principles of international law that the US so long promoted.

How this plays out was on show last week, when the US decided to reduce its number of troops stationed in Germany. The move was announced after German chancellor Merz said that the US was “being humiliated” by Tehran, that it went into the conflict “without any strategy” and had “no truly convincing strategy in the negotiations either”, writes The Financial Times. Trump also said that he would increase tariffs on EU cars to 25 per cent, a blow for Germany, and that he would “probably” consider withdrawing troops from Italy and Spain too over their lack of support for the War on Iran.

In other words, while Iran has to deal with the economic consequences of the current situation, the US has to deal with the fact that it is rapidly losing allies. In the arrogant, over-optimistic world of Washington DC this is probably brushed off as “inconsequential”, but any serious geostrategist will realize that in competition with China, the US actually needs all the allies it can get.

As such, in our 3W view, through this unnecessary and poorly prepared War on Iran, the US is digging a grave for its own empire…