The Hormuz Trap: Oil, Insurance and the Global Economic Shock

History has a way of repeating itself through different actors but eerily similar circumstances. In 1956, the Suez Crisis exposed the limits of British imperial power when financial pressure from Washington forced London to retreat despite battlefield success. Nearly seven decades later, a similar drama appears to be unfolding around the Strait of Hormuz, the world’s most critical energy chokepoint. The America-Israel war with Iran and blockade from the Islamic Revolutionary Guard Corps have begun disrupting tanker traffic through the Gulf, triggering a crisis not just of military security but of maritime insurance and financial risk. With insurers linked to Lloyd’s of London reluctant to underwrite war-risk premiums and shipping companies refusing to sail without coverage, the strait faces the prospect of a de-facto financial blockade. The United States has stepped in with sovereign insurance guarantees of 20 billion $ by U.S. International Development Finance Corporation and the U.S. Treasury and naval assurances, but the risks remain high. As oil exports stall and Gulf producers begin cutting output due to storage limits, the Hormuz confrontation increasingly echoes the historical lesson of Suez: great powers may command fleets and armies, but control over financial systems and maritime trade can ultimately decide the outcome of geopolitical crises.

The Birth of Lloyd’s and the Maritime Insurance System

The institution now known as Lloyd’s of London began in the late seventeenth century not as a formal company but as an informal meeting place for merchants and shipowners. Around 1686, a coffee house run by Edward Lloyd became the gathering point for traders involved in Britain’s rapidly expanding maritime commerce. London was emerging as the hub of global shipping, connecting Europe with Asia, Africa, and the Americas. Merchants needed a way to spread the enormous financial risks associated with long ocean voyages.

At Edward Lloyd’s coffee house, wealthy investors began agreeing to insure portions of shipping ventures. Each investor would write his name beneath the description of a voyage and commit to covering a percentage of potential losses in exchange for a premium. These investors became known as “Names,” and the practice of underwriting risk collectively laid the foundation for the Lloyd’s insurance marketplace. As Britain’s maritime empire expanded during the eighteenth and nineteenth centuries, Lloyd’s evolved into the central institution insuring global shipping. Cargoes of tea, spices, textiles, opium, and precious metals traveling across imperial trade routes were routinely insured through Lloyd’s underwriting networks. Because shipping was the backbone of international commerce, Lloyd’s quickly became embedded in the financial architecture of the British Empire.

Lloyd’s and the Rise of the City of London Financial Empire

The rise of Lloyd’s cannot be separated from the broader growth of the City of London, the financial district that served as the nerve centre of Britain’s imperial economy. The City of London’s power historically rested on a triangular structure: shipping finance, insurance underwriting, and global banking. Merchant banks provided credit for trade voyages, Lloyd’s insured the ships and cargo, and British naval dominance protected the routes. This model allowed London to control the infrastructure of global trade without necessarily owning the cargo itself. Even after the British Empire faded, the City maintained influence by controlling the financial plumbing of international commerce currency markets, reinsurance, maritime law, and insurance underwriting.

The City of London is a unique financial jurisdiction that operates with a high degree of autonomy within the United Kingdom. Governed by the historic City of London Corporation, it functions as a global hub for banking, insurance, foreign exchange, and maritime finance. Unlike ordinary municipalities, the City maintains ancient privileges, its own political structure, and deep links with global financial institutions. Over time, it also became the centre of a vast network of offshore financial centres and tax havens tied historically to British influence such as the Cayman Islands, British Virgin Islands, and Bermuda. These jurisdictions provide low-tax or secrecy-based financial services that channel trillions of dollars through London’s legal and banking infrastructure, reinforcing the City’s role as one of the most powerful nodes in the global financial system. Even after the decline of the British Empire in the twentieth century, the City retained enormous influence over the infrastructure of world trade. Currency markets, maritime law, one of the most powerful components of this system because virtually every major shipping company relied on its underwriting capacity.

The Financial Backers Behind Lloyd’s

In its early centuries, much of the funding came from wealthy merchant families and investors connected to the global trade networks of the British Empire. Many early underwriters were associated with the East India Company and other colonial trading enterprises. Merchant banking houses that financed global trade also participated in Lloyd’s underwriting markets. Among the most influential were networks connected to Barings Bank and financiers such as Nathan Mayer Rothschild, whose banking empire dominated European government bond markets in the nineteenth century.

In addition to merchant capital, Lloyd’s attracted investments from Britain’s landed aristocracy. Wealthy nobles and gentry sought profitable investments outside agriculture and became underwriting “Names.” These aristocratic investors often came from families whose fortunes had been built through colonial trade, shipping, and finance. Lloyd’s thus functioned as a meeting point between the merchant elite of the City and the traditional landed aristocracy of Britain.

Today, its syndicates are funded by global insurance and reinsurance corporations such as AIG, Munich Re, Swiss Re, Hiscox, Tokio Marine, and Chubb Limited. Hedge funds, sovereign wealth funds, and private equity firms also supply capital to Lloyd’s underwriting pools. Through this structure, Lloyd’s effectively mobilizes global institutional capital to insure global trade. The marketplace now covers risks ranging from aviation and cyber-attacks to oil tankers traveling through conflict zones.

Lloyd’s War Risk Insurance & Strait Of Hormuz

One of the most sensitive areas of Lloyd’s business is war-risk maritime insurance. This coverage protects ships traveling through regions where military conflict, terrorism, or piracy create a high probability of catastrophic loss. War-risk policies cover damage from missile strikes, naval mines, drone attacks, and seizures during armed conflict. Few shipping routes illustrate the importance of this coverage more clearly than the Strait of Hormuz, the narrow maritime corridor connecting the Persian Gulf to the Arabian Sea. Roughly one-fifth of the world’s oil exports pass through this chokepoint. Tankers carrying crude oil and liquefied natural gas worth billions of dollars must transit waters that are frequently affected by geopolitical tensions involving Iran, Gulf states, and major world powers. During periods of heightened conflict, war-risk insurance premiums for vessels entering the Gulf can rise dramatically. In extreme cases, insurers may withdraw coverage entirely if the risks become impossible to price. Similar insurance withdrawals occurred during the Iran-Iraq “Tanker War” in the 1980s and during piracy crises near Somalia in the early 2000s

The American Response: Sovereign Maritime Reinsurance

Faced with the risk that private insurers might retreat from the Persian Gulf shipping market, the United States moved to establish a government-backed maritime reinsurance facility. By providing billions of dollars in sovereign guarantees, Washington is aiming to ensure that ships traveling through the Gulf can still obtain war-risk coverage. Reinsurance functions as insurance for insurers. If private underwriters face losses beyond a certain threshold, the reinsurer absorbs part of the financial impact. By stepping in as a reinsurer of last resort, the U.S. government effectively aims to stabilize the market and prevents the collapse of shipping activity through the Strait of Hormuz. However the data suggests that American efforts to resume shipping have not yielded results with a shooting war going on between America-Israel & Iran.

Financial institutions involved in shipping finance have also begun warning about the gap in coverage. Analysts at JPMorgan Chase have noted that current private insurance mechanisms may not sufficiently cover the scale of geopolitical and military risk developing in the Gulf shipping corridor. From the perspective of banks that finance tankers and cargo shipments, the exposure from missile attacks or major naval conflict could exceed the limits of traditional war-risk insurance pools. This growing concern among lenders further increases pressure on governments to step in when private insurance markets begin pulling back. US Secretary of Treasury Scott Bessent has blasted JP Morgan analysts on the maritime insurance risk being insufficient to cover the risks.

The United States has also attempted to reassure shipping companies through a pledge that the U.S. Navy would escort tankers transiting the Gulf if necessary. However, the reality on the ground or rather at sea appears more complicated. Behind closed doors, U.S. naval officials reportedly told tanker executives that no immediate escort capability is available, and there is no firm guarantee that escorts will be provided in the near future. The operational challenge is substantial. The current missile and drone threat zone stretches roughly 1,000 nautical miles, from Kuwait in the north down to Duqm in Oman in the south, covering a vast maritime area that would require significant naval resources to secure.

At present, roughly one-third of the deployed U.S. naval fleet is already engaged in Middle East operations, including strike missions and air-defence duties related to regional conflicts. Under these conditions, assigning additional warships to continuous tanker escort missions is far from a trivial commitment. Escort operations require multiple vessels operating in coordinated formations, supported by air surveillance and missile defence systems. This means that even if Washington intends to guarantee maritime security, the practical capacity to do so remains constrained. Without war-risk insurance, vessels carrying hundreds of millions of dollars in cargo simply cannot enter conflict-prone waters. Over and above the threats of drone strikes by Iran on passing tankers will always remain disrupting the strait for weeks and probably months.

Suez & The Lavon Affair

The mid-twentieth century marked a decisive shift in global power when the centuries-old imperial influence of Britain collided with the emerging financial and geopolitical dominance of the United States. For much of the nineteenth and early twentieth centuries, Britain had maintained its empire not only through naval strength but also through the financial machinery of the City of London, which controlled global trade through shipping finance, insurance, and banking networks. However, by the 1950s Britain’s economic position had weakened significantly after World War II. The event that exposed this decline most dramatically was the Suez Crisis. Although often described as a military confrontation over the Suez Canal, the crisis ultimately demonstrated that the true instruments of modern power were financial systems, currency stability, and access to international capital. Two years before the Suez invasion, however, a covert intelligence operation inside Egypt known as the Lavon Affair had already revealed the intense geopolitical struggle underway in the Middle East.

The Suez Canal itself was one of the most important strategic assets of the British Empire. Opened in 1869, the canal connected the Mediterranean Sea to the Red Sea and drastically shortened maritime routes between Europe and Asia. For Britain, whose imperial territories stretched from India to Southeast Asia, this waterway was indispensable. British commercial shipping, military deployments, and later oil supplies from the Middle East all depended on the canal remaining open and under friendly control. Through a combination of financial ownership in the canal company and military presence in the Suez Canal Zone, Britain effectively controlled the route for decades. Even as decolonization accelerated after World War II, London viewed the canal as one of the last pillars supporting its global influence.

The political environment of the Middle East, however, was rapidly changing. Arab nationalism was rising across the region, and newly independent states were challenging European colonial authority. In Egypt, the charismatic leader Gamal Abdel Nasser emerged as the central figure of this movement. Nasser sought to modernize Egypt, reduce foreign influence, and assert control over the country’s strategic assets. His policies alarmed Western governments and Israel, which feared that a strong nationalist Egypt could reshape the regional balance of power.

Against this backdrop, Israel conducted a covert intelligence operation in Egypt in 1954 that later became known as the Lavon Affair. The plan involved planting explosive devices in Western-owned civilian facilities such as libraries, cinemas, and cultural institutions in Cairo and Alexandria. The goal was not mass casualties but political manipulation. Israeli intelligence hoped that these attacks would be blamed on Egyptian nationalist groups, thereby creating the impression that Egypt was unstable and hostile toward Western interests. If successful, the operation could persuade Britain and the United States to maintain their military presence in the Suez Canal Zone rather than withdrawing from Egypt.

The covert operation quickly collapsed when Egyptian authorities uncovered the sabotage network after one of the bombs detonated prematurely. The false flag attack by Israel unravelled when several members of the group were arrested and put on trial, revealing the existence of the Israeli intelligence operation. The scandal triggered a major political crisis in Israel and led to the resignation of Defence Minister Pinhas Lavon. For Egypt, the incident confirmed suspicions that foreign powers were attempting to undermine its sovereignty. It also hardened Nasser’s resolve to challenge Western influence in the region.

The next major turning point came in July 1956 when Nasser announced that Egypt would nationalize the Suez Canal Company. The decision was partly driven by Western refusal to finance Egypt’s ambitious Aswan High Dam project and partly by Nasser’s desire to assert full Egyptian sovereignty over the canal. Canal revenues would now fund Egypt’s development instead of flowing primarily to British and French investors. For Britain and France, this was perceived as an unacceptable challenge to their authority and a direct threat to Europe’s access to Middle Eastern oil.

British Prime Minister Anthony Eden believed that Nasser had to be removed or at least weakened. Britain and France therefore began secretly coordinating with Israel to launch a military intervention. Under the plan, Israel would invade Egypt’s Sinai Peninsula, after which Britain and France would intervene under the pretext of separating the combatants and protecting the canal. In reality, the objective was to regain control of the canal and undermine Nasser’s government.

In October 1956 Israeli forces launched their invasion of Sinai, rapidly advancing toward the canal. British and French aircraft soon followed with bombing raids on Egyptian airfields and military installations. From a military standpoint the operation initially appeared successful. Israeli forces advanced quickly across Sinai, and Anglo-French air power crippled much of Egypt’s air force. However, the decisive battlefield was not the Sinai desert but the financial markets.

The United States, led by Dwight D. Eisenhower, strongly opposed the invasion. Washington feared that the attack would push Arab nations toward the Soviet Union and destabilize the broader Cold War balance in the Middle East. Instead of supporting its European allies, the United States used financial leverage to force Britain to abandon the operation. Britain’s economy was still fragile after World War II and heavily dependent on American financial support and dollar reserves.

At the time, the British pound was already under pressure due to capital flight and the costs associated with the military campaign. Britain needed emergency financial assistance from the United States and the International Monetary Fund to stabilize its currency. The Eisenhower administration exploited this vulnerability by threatening to block IMF assistance and refusing to provide financial aid unless Britain immediately ceased its military operations in Egypt. Simultaneously, the United States began selling pounds from its reserves, accelerating the currency crisis.

The result was immediate panic in British financial markets. The pound began collapsing as investors feared that Britain would run out of dollar reserves. Within days the British government realized it could not continue the military operation without American financial support. Despite battlefield success, Prime Minister Anthony Eden had no choice but to announce a ceasefire and withdraw British forces from Egypt. The humiliation was profound. Britain had nearly achieved its military objectives but was forced to retreat because of financial pressure from its own ally. The episode demonstrated that the real centre of Western power had shifted from London to Washington. After the Suez Crisis, Britain could no longer act as an independent global power without American approval.

The long-term consequences were enormous. The crisis accelerated the collapse of Britain’s imperial system and strengthened the dominance of the United States in global affairs. It also illustrated a broader lesson about modern geopolitics: financial leverage, currency dominance, and control over international lending institutions had become more powerful than traditional imperial tools such as armies or colonial territories. The Suez Crisis therefore stands as the moment when the old imperial order gave way to a new system in which global influence would increasingly be exercised through financial power rather than colonial rule.

Strait Of Hormuz a Strategic Chokehold

Strait of Hormuz becomes a financial choke point for global energy markets, not merely a military one. The analysis by JPMorgan Chase highlights how quickly Gulf producers could hit storage limits if exports through Hormuz were disrupted. Oil production cannot simply continue indefinitely when tankers stop sailing. Once storage tanks, terminals, and floating storage fill up, producers are forced to shut in wells and reduce output, which is exactly what Kuwait has begun signalling by cutting production and refining activity due to shipping risks linked to Iran.

The numbers illustrate the structural vulnerability of Gulf economies. Iraq, which relies almost entirely on maritime exports through the Gulf, would exhaust storage capacity in roughly six days if tankers stopped moving. Kuwait would face the same constraint within about two weeks, while the United Arab Emirates could last roughly 16–19 daysdepending on whether limited pipeline routes are used. Qatar, whose LNG and condensate exports also rely heavily on the strait, could maintain operations for roughly 20 days before reaching storage limits. Only Saudi Arabia has a longer buffer between 36 and 65 days because it can redirect some crude through the East-West pipeline to Red Sea ports, partially bypassing Hormuz.

Both Kuwait and Qatar have already declared force majeure on Oil & Gas supplied rescinding all contracts. Kuwait’s has started cutting back oil production by about 100,000 barrels a day as of early Saturday and is expected to almost triple on Sunday. Iraq started holding back production earlier this week as storage tanks started filling, reducing production from 4.3 million barrels per day to 1.7 million barrels which 60% less than one week back. Meanwhile, Saudi Arabia has shut its biggest refinery and Qatar closed the world’s largest liquefied natural gas export plant after drone attacks.

This dynamic explains why even the threat of disruption from the Islamic Revolutionary Guard Corps is enough to destabilize markets. If tankers cannot secure insurance or naval protection, they simply stop entering the Gulf. When that happens, oil producers are forced into a chain reaction: exports halt, storage tanks fill rapidly, and production must be curtailed to avoid infrastructure overload. The situation becomes even more complicated because maritime trade depends heavily on insurance markets historically dominated by Lloyd’s of London and its network of global underwriting syndicates. When the risk of missile attacks, drone strikes, or naval mines increases, insurers raise premiums dramatically or refuse coverage entirely. Without insurance, ships carrying hundreds of millions of dollars in cargo cannot legally sail. This creates a de facto blockade, even if the strait is technically open.

The economic consequences are already showing up in global markets. Energy disruptions in the Gulf quickly ripple across commodity markets because the region exports a massive share of the world’s crude oil and liquefied natural gas. European gas prices reacting sharply along with spikes in safe-haven assets like gold reflect investors pricing in the possibility of prolonged supply disruption. Israel has begun striking Tehran refinery in Iran causing black acid rain to which Iran has responded by blowing up offices of US Oil majors like Halliburton & KBR in Basra, Iraq. The Iranians are striking at the heart of the energy infrastructure in the gulf in retaliation from UAE to Qatar to Iraq to occasional strikes at ARAMCO refinery which was later denied by Iranians. If Hormuz remains closed or partially blocked for an extended period, the world would likely see rapid inventory drawdowns, production cuts across Gulf states, and sharp volatility in energy markets.

The Gulf crisis is already escalated into another level with US hitting De-Salination Plant Qeshm Island in Southern Iran by means of HIMAR rockets from Bahrain to which Iranians have retaliated by doing strike Desalination plant in Bahrain. Countries with highest stress levels in Gulf which depend on Desalination of water are Bahrain (3878%), UAE (1708%), Saudi Arabia (883%), Qatar (448%), Iran (72%), Oman (117%) thereby meaning these countries consume more water than what is available fresh water resources thus making heavily dependent on desalination plant. Gulf states heavily rely heavily on desalination for freshwater with Qatar (100%), UAE (95%), Kuwait (90%), Bahrain (90%), Oman (86%) and Saudi Arabia (70%).

Further GCC imports nearly 85% of its total food supplies with UAE (90%), Bahrain (90%), Saudi Arabia (80%), Qatar (98%), Kuwait (94%) and Oman (74%). To prevent food shortage these countries are taking other measures like airlifting food cargoes from India, Turkey and other nearby countries as Strait of Hormuz remains blocked. UAE’s Lulu Group has airlifted 80,000 Kgs of food supplies from India to keep Emirati markets stocked up. Due to threat by IRGC of striking vessels in Strait of Hormuz, Lloyds in London are refusing to underwrite significant risk premiums. Many shipping cargo companies like Maersk and Cosco of China have already halted shipments from Gulf countries passing through Strait of Hormuz.

Eerie Parallels between Suez & Hormuz Crisis and the Global Economic Shock

The eerie historical parallel between the Suez Crisis of 1956 and the current Strait of Hormuz confrontation lies in how control over maritime chokepoints and financial systems can suddenly expose the vulnerability of great powers. In 1956 it was Britain that discovered the limits of imperial authority when the United States used financial leverage to force London to retreat from Egypt. Today, in a striking reversal of roles, the United States faces a situation where military superiority alone cannot guarantee the functioning of global trade if the financial and insurance infrastructure of shipping begins to falter.

In the present crisis around the Strait of Hormuz, the threat environment created by the Islamic Revolutionary Guard Corps has already caused a dramatic reduction in shipping traffic. Tankers have been struck by drones and missiles, and vessels are receiving warnings that passage cannot be guaranteed. Ship traffic through the strait has plunged as insurers and shipowners reassess the risk.

War-risk premiums for vessels operating in the Gulf have surged dramatically sometimes rising by more than 1000%making voyages economically unviable for many shipowners. In several cases, insurers have cancelled or reassessed coverage for ships operating in the region after the escalation of hostilities, effectively halting tanker movements. When insurance disappears, ships stop moving even if the waterway itself is technically open. This is precisely why many analysts describe the current situation as a financial blockade rather than a traditional naval one.

Washington has attempted to counter the crisis by offering a $20 billion government-backed reinsurance program to support ships willing to sail through the Gulf, effectively stepping in where private insurers hesitate. Yet analysts remain sceptical that financial guarantees alone can offset the physical risks posed by missiles, drones, and naval threats unless the security environment improves. Such a disruption could also undermine the broader petrodollar system, the framework under which most global oil trade is priced and settled in U.S. dollars. The petrodollar system functions because Gulf producers export large volumes of energy and recycle the resulting dollar revenues through global financial markets. If oil exports are severely disrupted even for a short period the flow of petrodollar liquidity into the global financial system could tighten dramatically. That would create pressure not only on Gulf economies but also on the financial mechanisms that support the dollar’s role in global trade.

The economic cost of this war in Oil, Gasoline, Inflation, War expenditure would be borne by the whole world, however it will further drain American treasury adding more deficits and debts in this War effort potentially including deployment of ground troops in Iran that could be death knell for the American empire as well as economy with unsustainable debt levels. The Oil embargo of 1973-74 presents us a similar situation in the past, many people contend that crisis was created or enabled by US itself to crash soviet economy and many countries allied to Soviet Union during the Cold War. However, compared to 1973-74 (Oil Embargo), the tables in 2026 (Strait Of Hormuz Crisis) have totally flipped as the deck is stacked against America. The total federal debt in 1973-74 was 458 billion $ today in 2026 its 39 trillion $, the Debt to GDP ratio was 32-35% (1973-74) today in 2026 its 122%. Similarly US deficit is now 6% compared to 1-2% in 1973-74, Federal Reserve balance sheet is 6.6 trillion $ compared to 90-100 billion $ in 1973-74.

The above data shows how financially stressed US is today compared to 1973-74 and unless the chokehold of Strait of Hormuz is not resolved soon the whole global economy could go into tailspin with Oil, Gas shortage, crude touching 150$. There would be fertilizers and food shortages, liquidity squeeze globally while the central banks would be forced to halt rate cuts rather hike rates to curb inflation. Given the US employment numbers projecting negative growth and rising inflation this could lead to stagnant growth and high inflation also called ‘stagflation’ with the risk of recession burning through global economy. This hyperinflation could further impact America slowing down its fiscal spending and resultantly slowing its reshoring/re-industrialising bid deteriorating the situation for an already indebted America having no industrial or manufacturing base due to decades of offshoring. US Supreme Court judgement has already declared Trump Tariffs unconstitutional and US Court of International Trade judge has ordered refunds of Trump tariffs under IEEPA. US Customs & Border Department is due to refund 175 billion $ which could further strain US fiscal maths.

Further escalated energy costs due to Hormuz Crisis and war in Persian Gulf along with high interest rates by central banks could further dent America’s AI & Data Centre capex popping the AI valuation bubble in American markets. The consequences of the war in Persian Gulf and the Crisis in Hormuz could be profound for the global economy and more so for American economy and President Trump going into the midterms in late 2026. Thus it begs the question are the powers backing Iran in Russia & China and Lords of the City of London creating a perfect storm for Washington & America first lobby. The Russians have said the they would take care of needs of critical allies in India & China, while the Europeans aristocracy in Brussels and America First lobby in Washington will likely face the brunt of the crisis if the Hormuz blockade continues longer.

Geo-Politics of The Persian Gulf War

The geopolitical context adds another layer of complexity. Iran is not operating in isolation; its position is strengthened by a broader strategic environment in which powers such as Russia and China have incentives to see Western energy and financial systems destabilized. At the same time, London’s financial ecosystem historically centered around maritime insurers like Lloyd’s of London has responded cautiously, repricing or reassessing risk exposure rather than aggressively underwriting voyages in a war zone. The result is a situation where the world’s most important energy corridor can be disrupted not only by missiles or mines but also by insurance decisions made thousands of miles away in financial markets.

During the intensifying US-Israeli military campaign against Iran that began around late February, several Israeli media outlets spread unverified claims of direct Gulf state involvement in offensive strikes on Iranian targets. On March 8, 2026, The Jerusalem Post (citing anonymous Israeli officials and initially amplified by Ynet and Channel 15/KAN) reported that the United Arab Emirates (UAE) had carried out its first retaliatory strike by targeting an Iranian water desalination facility along the Persian Gulf coast in response to Iranian missile and drone barrages on Gulf states. Similar reports suggested potential strikes by Qatar inside Iran (denied earlier around March 3, 2026, by Qatar’s Foreign Ministry spokesperson Majed Al-Ansari via statements rejecting participation in any offensive campaign against Iran, with hints that Saudi Arabia might follow.

UAE officials, including Federal National Council Defence Affairs Chairman Ali Rashid Al-Nuaimi, immediately denounced the March 8 Israeli media claims as “fake news“ on X, asserting that Abu Dhabi makes independent decisions, would publicly announce any real action, and viewed the leaks as “inappropriate” and damaging to relations. US Senator Lindsey Graham’s who has championing cause of Israel has been egging on the Saudis, Qataris and Emiratis to join the coalition strike against Iran. A lot of fake news and propaganda has been spread including the that IRGC rockets destroyed the girls school while New York Times and all western media reported that it was American strike which killed 165 innocents girls in Minab, Iran. The sinister plot behind planting these fake news has been to ignite a fighting between gulf Arab kingdoms and Iran.

The Americans and Israelis are even plotting to use Kurds as mercenaries however many Iraqi Kurdish groups have refused to be American-Israeli proxies against Iran. The Chinese on the other hand have reportedly mediated between Saudi Arabia and Iran, even making Houthi back off from striking ARAMCO-SINOPEC JV. The Iranians thanked the Saudis for not allowing its territory for attacks against Iran. Iran also thanked India for giving refuge to Iranian Naval Ship IRNINS LAVAN at Kochi after American sunk Iranian Naval ship Deena in Indian Ocean. The Russian have openly come out backing Iran calling America & Israeli’s the aggressors while China is backing Iran but treading cautiously given a regime change in Tehran would be big blow to its energy & BRI investments. China would be hoping that Tehran manages to survive current onslaught and drag America into an endless war giving it its Ukraine.

The Russians are the ultimate beneficiary of the IRGC chokehold of the Strait of Hormuz as war in Persian Gulf has sent oil shooting to nearly 100$ benefiting Russia as prime supplier of crude and gas to Asian giants like China, India, Philippines, Indonesia etc. US has also alleged that Russia is providing strategic intelligence to IRGC (Iran) to target US bases and assets in middle east. This creates a spectre where Russia & China by enabling IRGC and City of London by escalating insurance premiums are creating global disruption, potentional destruction of Gulf economies which could significantly weaken hand of America in this region while Israel would emerge as stronger dominant player after Iran and GCC nations are weakened in this war in Persian Gulf.

The Iranians have shown amazing grit and defiance in face of American-Israeli aggression. Iranian drone and missiles strikes have led to estimated 6 billion $ in cumulative losses for US and Israeli military infrastructure. For a power of Iran’s size to do this to United States is unfathomable. US left its military assets in Gulf states defenceless to prioritise Israel. Many of the radars such as one on Qatar base will take years to build while Bahrain’s 5th Fleet Base is totally gone. THAAD batteries in Jordan, Patriot’s in UAE; Radar & Satellite base in Kuwait all have been taken out by Iran. While the amount of 6 billion $ may seem less but the issue is US military has lost a lot of operational bases in middle east hampering its air campaign & logistics supply lines. It will take years to rebuild it specially its air defence warning systems making its allies more vulnerable to Iranian strikes.

Iran is hitting strategically on critical targets be it military, energy or economic. Ports, Pipelines, Airports, Oil Tanks, Military bases, Missile Defence Systems, Data Centres, blocking Hormuz hurting oil economies of Gulf allies inducing a global economic shock. US is getting pushed back by Iranian strikes on US air bases, so the US sortie rate has declined to what can be sustained by long-range bombers and carrier aviation. It is down from 1000 on day 1 to 200 on Day 8. This war is not ending anytime soon as State Department bypassing Congress is giving thousands of more bombs to Israel and US is getting 30 THAAD missiles from South Korea and Indo-Pacific to protect UAE.

The Iranians in face of this onslaught are defiant that they will not negotiate or surrender as President Trump has asked for. This conflict is now entering into the second week and there is no de-escalation in sight. It is like playing poker with global economy with a very bad hand. he closure of Strait of Hormuz and the crude shock could be the Black Swan event which sink the global economy into recession and along with it Trump residency at the midterms. Will the Americans be forced to for ground troops option?, Will the regime in Tehran survive? Will China will be to save its investment in the Persian gulf? And will America & Israel be able to break the Hormuz blockade ?. The answer to these questions will be known in future as this conflict unfolds in days and weeks ahead !