Iran Conflict Brief: What It Will Take to Open Up the Strait of Hormuz

**Daniel Sternoff** (0:04)
Events in the Middle East are changing quickly, and the complexities of understanding the global energy landscape grow deeper by the hour. We're cutting through the headlines to bring you real-time analysis. 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 new rapid response podcast series, the Iran Conflict Brief. I'm Daniel Sternoff, a Senior Fellow at the Center on Global Energy Policy. We are recording this podcast on Wednesday, March 11th at 8 a.m. in Washington, DC and 4:30 p.m. in Tehran and 4 p.m. in Abu Dhabi and Riyadh. At the current time, all eyes in the energy markets are on the Strait of Hormuz, which is effectively closed to tanker traffic, leaving stranded some 16 million barrels per day of crude oil and oil products and 11.5 BCF per day of LNG, almost a fifth of world supplies of each commodity. Petrochemicals, fertilizers, construction materials, food imports are all seeing widespread delays. Storage capacity limits have been rapidly hit across the Gulf for crude oil, forcing the shut-in of almost 7 million barrels per day in production and perhaps 2.5 million barrels per day of regional refining capacity. The IEA is on the brink of releasing some 300 to 400 million barrels in strategic reserves, which would be the largest release in history, and at current disruption rates would cover perhaps 20 to 25 days of current losses. So needless to say, these are dire straits, if you forgive the pun, and it is essential for the world economy and energy markets that transit be restored. Yesterday, oil prices were treated sharply on a tweet from Energy Secretary Chris Wright, US Navy, had escorted a tanker through Hormuz, raising hopes that the cavalry is riding to the rescue. That tweet, however, was retracted and was followed by reports that US intelligence has detected signs Iran has begun mining the strait. President Trump sent out a confusing truth, saying the US sees no signs Iran is mining the strait, but if any mines have in fact been laid, they need to be removed immediately, in all caps. Now, through this fog of war, I'm joined today by Mike Knights, one of the keenest observers of the Gulf and Middle East security environment and an expert on the asymmetric capacities of Iran and its regional proxies. Mike is currently head of research at Horizon Engage, a strategic advisory firm, and for over 20 years he's advised operators and investors in the region of political and security risks. Mike is also an adjunct fellow at the Washington Institute for Near East Policy, where he co-founded the Militia Stoplight, focused on Iran-backed proxies. So there is no one better to try to pierce through this fog of war than Mike, and we are going to explore today what needs to happen for flows to resume through the strait. Good morning, Mike.

**Mike Knights** (2:51)
Good morning, Dan. Great to see you.

**Daniel Sternoff** (2:53)
You too. So let me kick this off by asking your assessment of what is currently happening in the Strait of Hormuz. You know, the closure of the strait is probably one of the most war-gamed contingencies ever for US Central Command. And I think before this crisis, the general assumption in the oil markets was Iran might be able to temporarily impede shipping, but not for a great length of time. And most non-military observers, like myself, have assumed that the IRGC and Iranian Navy could use mine layers or fast boats with explosives or shore-based missiles to impose a blockade. And we really haven't seen any of those things. We've seen some cheap drones and a small number of incidents targeting ships for insurers and shipping companies, who then decided it's unsafe to cross the narrowest S-curve of the waterway. So from the looks of it, from a military standpoint, the IRGC has essentially weaponized commercial risk aversion, rather than actually imposing a blockade. So how does that asymmetry change CENTCOM's calculus? What does it mean? Or does it mean Iran can sustain the closure, even if the US is just drawing its surface Navy? So take it away. How are you seeing this?

**Mike Knights** (4:08)
You just made my job easy for me by basically listing all the key operative factors. But I'll just say this. As you said, the US Navy has been preparing for this contingency for over 40 years. When it started back in the 80s, and we did the tanker reflagging during the Iran-Iraq War, when Iran was attacking Iraqi and Gulf tankers, we were deploying about 30 surface vessels, we being the US, out of 268 If we deployed the same number of vessels today, we would be deploying them out of only 111 US surface naval vessels. So it's a far heavier lift for today's downsized US Navy than it was back in those days, and the US Navy is facing a much more advanced anti-shipping threat than they were back then. Back then, it was very mechanical. It was about dropping mines off the back of little ships. It was about facing pretty limited anti-ship missile capabilities and artillery from within visual range almost of the Strait of Hormuz, plus a bit of Iranian air power. But we felt like we could get a handle on that.