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Welcome to The Geopolity’s What We’re Watching (3W), our daily look at the interconnected worlds of Geopolitics, Economics and Energy. Curated from the world’s leading sources of information, our analysis and commentary is designed to help you make sense of the events driving the major developments in the world.
Transit through the Strait of Hormuz appeared to grind to a near standstill last week, writes Reuters. Some ships may pass through undetected with their transponders off, but the figures are nowhere near the more than 130 ships that traversed the Strait of Hormuz daily before the war launched by the US and Israel on Iran in February.
Iran is clearly of the intention to keep things this way. Bloomberg writes that Iran struck two UAE linked vessels on Thursday, and that a further UAE vessel was struck by Iran on Friday.
The US tries to counter this reality with words, saying that it can and will maintain a naval blockade of Iran indefinitely and ratchet up economic pressure on Tehran, writes Reuters. This, the US envisions, will inflict severe economic pain on Iran, as a result of which it will eventually surrender. “Indefinitely the United States Navy can maintain a blockade like that because we’ll rotate ships in and out, as we have, and we’ll continue to,” Hegseth told reporters. Treasury Secretary Scott Bessent said on Thursday that the United States planned to inflict more financial damage on Iran. “Watch this space for more announcements coming next week because we are going to apply measures like have never been seen in the history of economic isolation on a country,” he said in an interview.
Bloomberg writes that the US has already run out of sanctions options. Anything additional it might do, is likely to bring China directly into the conflict and have significant implications for the US economy. The US could sanction the Chinese banks that enable China’s purchases of Iranian crude oil. Burt the risk in this is that hitting Chinese companies or financial institutions risks worsening tensions with Beijing ahead of a planned meeting between President Donald Trump and Chinese leader Xi Jinping. There’s also an economic tradeoff, since curtailing Iranian barrels would remove discounted crude from the global market and could lift already elevated oil prices. And of course, China could retaliate with sanctions on US interests. Another option would be to seize the Iranian assets currently held frozen. But how that could “tilt the balance” is unclear.
the US has already run out of sanctions options. Anything additional it might do, is likely to bring China directly into the conflict and have significant implications for the US economy
As part of this plan, the US is moving its last aircraft carrier in the Asia Pacific region to the Middle East, writes The Associated Press. The USS George Washington is departing the Pacific and will replace the USS Abraham Lincoln. AP notes this runs counter to the US’s official grand strategy, in which the Asia Pacific is the second US priority after the American hemisphere. Rather than a sign of military strength, the rotation is actually an indication of US weakness, in the 3W view. The Financial Times writes that the USS Abraham Lincoln is being pulled out of the Middle East as it is struggling with supply shortages, water contamination and mental health problems including suicide attempts on the ship. The latter indicates, in turn, that morale is desperately low among US service members, who struggle to see why the US is in the war on Iran – other than to support Israel.
In addition to military repositioning, and additional sanctions preparation, the US is also reaching out to allies to see if they can do diplomacy with Iran on behalf of the US, writes The Associated Press. Last week, US secretary of state Marco Rubio met in person in Washington with the foreign minister of Austria and held a call with the foreign minister of Greece. Officially, Iran was not on the agenda for either of these two meetings. However, both foreign ministers then spoke with Iranian foreign minister Abbas Araghchi, almost immediately after their talks with Rubio. AP referred to the move as a “desperate push”.
After 47 years, the US sanctions weapon has also run out of ammunition
The ridiculousness of it all was on display on Saturday, when US president Trump told a rally that “After we finish defeating Iran … pretty soon I’ll be declaring the Hormuz Strait a territory of the United States,” writes Reuters.
Iran is not impressed by it all. “The Strait of Hormuz cannot be seized by a tweet or an aircraft carrier, by issuing an order or by delivering an election speech,” Iran’s deputy foreign minister Kazem Gharibabadi posted on X, writes Reuters. “This strait will be opened and closed only under Iran’s command, and so long as you do not accept the reality of defeat and stop indulging in fantasies, Iran will continue to enforce the blockade,”
In the 3W view, all of the above indicates the US is desperate, as a result of which it is hallucinating. Iran has established a decisive control over the Strait of Hormuz. The US military is unable to do anything about this, not just because of weapons shortages, but also because of a growing issue with moral among the ranks. After 47 years, the US sanctions weapon has also run out of ammunition. This leaves the US without leverage in negotiations. The idea that by bringing in small European nations, some US leverage can be restored is nonsensical.
In the 3W view, the US is now in the classic situation where by trying to get out of a hole, it is in fact making the hole deeper. In the Asia Pacific, for example, US allies feel very uncomfortable with the redeployment of the USS George Washington, writes The New York Times. And rightly so. Ukraine is left severely exposed in its war with Russia since the US stopped delivering it missiles for its Patriot air defense system, writes The Financial Times. At 3W we would add to these facts the Mecca Defense Agreement between Saudi Arabia, Turkiye and Pakistan. We said that we believe this agreement has been designed in coordination with the US, but we have not ruled out the possibility that it is in fact a response to the inability of the US to effectively protect its allies – in which case it is a further point of evidence that the US is only making matters for itself by refusing to accept the current reality in the Persian Gulf.