- 25 days until Middle East oil production stops…
- Hitler’s warning for Trump…
- Have you heard of the “Presidential Bypass”? It’s a legal loophole the rich use to keep their money. And though you might not know it, you can use the same exact loophole to slash your taxes.
Dear reader,
25 days.
If the Strait of Hormuz remains bottled for 25 days, a Gulf region oil glut will exceed saturation.
Regional oil storage tanks will begin to overflow. And with no place to store fresh production… oil production will dwindle to nonexistence.
What would be the result?
Oil prices would be up and away. Reports Yahoo Finance:
- JPMorgan Chase has warned that Brent crude oil prices could spike to $120 per barrel if a full-scale conflict in the Middle East leads to a sustained disruption of oil flows through the Strait of Hormuz, estimating that Gulf producers can only sustain normal production for roughly 25 days if the Strait is completely blocked, after which saturated storage would force a total shutdown of regional production.
Iran Lays Down the Gauntlet
The Strait of Hormuz stretches a mere 21 miles at its narrowest point.
“If anyone tries to pass,” warns one Iranian official,” the heroes of the Revolutionary Guards and the regular navy will set those ships ablaze.”
I do not know how many elements of Iran’s regular navy remain on the surface.
Yet the Republican Guards can menace shipping with swarms of small craft and naval mines.
Meantime, scores and scores of aerial drones anti-ship missiles are believed to infest the craggy nooks surrounding the vital maritime passage.
Thus the insurance rates on shipping destined for the Persian Gulf have gone skyshooting — to record heights.
Several maritime insurers have cancelled war risk coverage altogether… and shipowners will not hazard the perilous passage absent insurance.
Trump Moves to Keep Oil Prices in Check
Of course, the United States president is keenly sensitive to the oil price. And he has exulted over the declining gasoline prices he believes his policies have yielded.
The so-called affordability crisis will likely bulk large in this year’s midterm elections.
And a prolonged disruption of Middle East oil flows may drastically elevate gasoline prices. The president’s Democratic opponents will use them to bludgeon him badly.
The president is well aware of it. And so he proposes to absorb the risk confronting maritime insurers.
What is more, he proposes to bodyguard the oil-carrying behemoths through the Strait of Hormuz, if necessary:
- Effective IMMEDIATELY, I have ordered the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf. This will be available to all Shipping Lines.
- If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible. No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD. The United States’ ECONOMIC and MILITARY MIGHT is the GREATEST ON EARTH — More actions to come. Thank you for your attention to this matter! President DONALD J. TRUMP
The Risk
Oil prices retreated following the president’s announcement, to his pleasure no doubt. Yet the proposal is not absent of risk.
Assume the president orders the United States Navy to take up escort duty through the waterway.
The majority of its vessels presently loll, safely, hundreds of miles from the Iranian coastline. Escort duty would bring them within sight of the hostile shore.
Recall, the Strait of Hormuz spans a mere 21 miles at its narrowest point.
What if Iran unleashes its swarms of watercraft and armadas of missiles and drones upon the blockade runners?
I hazard many of the Iranian marauders would endure interception and subsequent destruction. Yet a portion of “leakers” — perhaps a substantial portion of leakers — would almost certainly penetrate the cordon.
Thus multiple vessels of the United States Navy may absorb damaging blows. Some, potentially, may even absorb fatal blows… and sink to the bottom.
Is the president prepared to absorb the political blows… and sink in the polling?
The Iranians would razz him plenty hard over it, to be certain.
And his domestic foes would denounce him at the height of their voices.
Meantime, the oil price — and the related gasoline price — would likely take a fantastic leap.
China Could Potentially Take Advantage of U.S. Weakness
Will the foregoing transpire?
I hope it does not transpire. Yet the scenario falls within the range of authentic possibility.
How would the president respond? Order additional strikes?
Yet the ammunition stocks dwindle by the day. My agents inform me that they will run critically low within weeks.
My men likewise inform me that the president is requesting that South Korea and Japan ship off American air defense systems positioned therein for Middle Eastern duty.
These systems were intended to thwart China, the far larger bugaboo than Iran.
What if China proceeds against Taiwan in the face of weakening American defenses in East Asia?
Then what?
Hitler’s Warning
Meantime, America’s Gulf allies are cross because the air defense inflows are destined largely for Israel — while the Gulf allies absorb blow after Iranian blow.
Upon enduring these blows… what if they decide that their alliances with the United States no longer serve their interests?
Herr Hitler once said,”The beginning of every war is like opening the door into a dark room. One never knows what is hidden in the darkness.”
The moustached Austrian discovered, to his everlasting horror, what was hidden in the darkness.
President Trump has opened the door. We do not yet know what is hidden in the darkness.
I would advise him to reach for the light switch.
Brian Maher
for Freedom Financial News
