Iran Conflict Brief: The War's Lasting Impact on Gulf States

**Daniel Sternoff** (0:01)
Events in the Middle East are changing quickly, and the complexities of understanding the global energy landscape grow deeper by the hour. Join me as we talk to leading experts on the latest developments in the region and what it means for the rest of the world. Welcome to our rapid response series, the Iran Conflict Brief, a special edition of the Columbia Energy Exchange podcast. I'm Daniel Sternoff, a senior fellow at the Center on Global Energy Policy.
Good afternoon, we are recording this podcast on April 1 at noon in Washington, DC, 8:30 p.m. in Tehran, and 8 and 7 p.m. respectively in Abu Dhabi and Riyadh. This is day 33 of the war in Iran, and the conflict is at a strategic inflection point. Officials in Washington have began framing the case for victory. Iran's conventional armed forces and its military industrial complex have been decimated, and its nuclear program, according to President Trump, has been set back 15 to 20 years. Trump has mused that he could end the war without re-opening the Strait of Hormuz, and that the killings of Iran's top leaders is a form of regime change. Financial markets believe the president is looking for an off-ramp, and that the war may wind down in the next two to three weeks. Yet at the same time, the USS George Bush and its carrier strike group are heading to the Middle East, where it will meet reinforcements from two Marine Expeditionary Units and airmen of the 82nd Airborne. Trump has clear optionality to escalate, including ground missions to help open Hormuz or to retrieve Iran's stockpiles of highly enriched uranium. Iranian outbound drone and rocket fire has dipped, but in Tehran's eyes, its war of attrition is succeeding. If the war ended today, Iran would hold the strategic upper hand over world energy flows. The Strait of Hormuz remains mostly shut, and while energy prices are being held in check by hopes the war will end soon, physical markets are growing tighter by the day. Shortages and rationing are spreading in Asia, and the supply shock is moving toward Europe. Middle Eastern crudes are trading $10 to $20 a barrel over dated Brent, and physical North Sea barrels are starting to be bit up to keep oil local instead of flowing east. Time is Iran's friend and a growing threat to the world economy. I'm joined today by Robin Mills, a Dubai-based non-resident fellow at the Center on Global Energy Policy and the CEO of Qamar Energy, which he established in 2015 to meet the need for regionally-based Middle East insight and project delivery across the oil and gas, renewable, hydrogen and carbon management sectors. Robin has led major consulting assignments for the EU and Iraq and has worked in the region for Shell, the Emirates National Oil Company and Dubai Holding, concentrating on business development in the UAE, Qatar, Iraq and Iran. He is the author of two books, The Myth of the Oil Crisis and Capturing Carbon, and is the energy and environment columnist for Abu Dhabi's The National newspaper. Robin joins us on the ground in Dubai and has been living and breathing this crisis. I can think of no one better to speak about the war and the impact it is having in the Gulf States. Good evening, Robin.

**Robin Mills** (3:11)
Good evening.

**Daniel Sternoff** (3:13)
So, first of all, Robin, how are you? The UAE has borne more drone and missile strikes than any country in this conflict, including Israel. How have you personally been experiencing this war? And are there any signs that you can see that the frequency and intensity of Iranian attacks on the UAE is diminishing?

**Robin Mills** (3:32)
Well, I would say firstly, daily life is fortunately fairly normal. We get alerts, of course. Missiles, drones come in, we hear explosions and so on. And perhaps once a day, perhaps twice a day, probably not more than that where we are. But in terms of physical damage around the city, there's very little to see. We're sensible, we stay indoors when there's alerts. But otherwise, as I say, daily life is fairly normal. Of course, the city is fairly quiet. The tourists have gone. Schools are teaching virtually. So there's some adaptation to the threat. But otherwise, we're trying to carry on and carry on normal business and normal life as far as possible.

**Daniel Sternoff** (4:17)
Right. Well, hoping that you're staying safe. So let's turn to the situation in the Strait of Hormuz. We're a little bit hobbled during our conversation because President Trump will be giving a primetime address to the American people at 9 p.m. Eastern tonight, and he could declare victory and say we're wrapping up. He could be escalating. He could be stalling for more time. So we don't know exactly where he's going to be deciding. But I think at the current point in the war, we're at a place where a US-led military operation to reopen the strait would clearly be risky and time consuming, and it might not still fully restore maritime traffic. But a negotiated reopening would require concessions to Iran, you know, implicitly or explicitly recognizing its authority over 20% of world oil and gas flows. Which of those is the lesser evil for the Gulf states?