Lions led by Lamb
Trump is losing this war by his own definition. Yes he has depleted the missile reserves of the Iranian regime. Yes the US has established air superiority over Iran. However the true measure of success is not “missiles intercepted” or “bunkers destroyed”.
The measure of success is the number of ships passing through the Strait of Hormuz and on that measure Trump is losing badly. Tanker traffic is now close to zero and will be for some time. The only traffic passing through is heading to China.
It only takes one drone to sink one tanker. Iran manufactures these drones for around $35k. The tankers they can sink are worth around $350mil fully laden. That’s a risk reward ratio of 10,000 to 1. That’s the definition of asymmetric warfare.
That means extraordinary risk for any ship passing through the Strait and minimal risk for Iran. Iran produces 200 drones per month. So even if the Americans were able to destroy all of the existing drones, the new drones being made, somewhere deep in the mountains, would continue to pose a threat to most tanker ships.
We in Britain are uniquely vulnerable to this crisis. Britain has effectively banned any new oil and gas extraction and has no storage buffer. Westminster has for 25 yrs based its gas storage needs on optimistic assumptions of frictionless global markets. It has a maximum gas storage capacity of just 12 days. Compare that to Germany’s 89 days, France’s 103, or the Netherlands’ 123.
Quite apart from the energy price rises, an inflation and interest rate spike today would be far more damaging with our current levels of debt. A spike in interest rates could set off a financial meltdown unlike anything we have seen since 2008.
What options do we have?
In the North Sea energy firms are ready and willing to start extracting gas, but Energy Secretary Ed Milliband is refusing to permit drilling, whilst Starmer is refusing to help the Americans keep the Strait open.
There is a historical precedent for this situation.
In September 1980 The UK established the Armilla Patrol during the Iran Iraq war to keep the Strait of Hormuz open for oil tankers. At the time Iranian attacks included mines, missiles, and fast boats, just as today.
The Royal Navy provided escorts, overwatch, and mine countermeasures alongside the larger US-led Operation. This helped ensure the strait stayed open despite hundreds of attacks on shipping. Could we repeat this feat today? It seems highly unlikely.
First of all the Iranians now have drones, not just missiles. These are cheap to make and highly mobile meaning their launch can be from literally anywhere. Far harder to predict than a missile launch.
As for our navy, today we have 6 destroyers instead of 12. We have 7 frigates instead of 35. We do not have the navy we did in 1980. Nevertheless it is much more in our interests to keep the Strait open than for the Americans who are net oil and gas exporters and now have access to the largest oil reserves in the word in Venezuela.
Financial markets are on a knife edge. A spike in inflation could force central banks into higher interest rates. That could put enormous pressure on government borrowing. It could force the UK into a 1976 style crisis. That could force the government to cut spending dramatically, whether they want to or not. A punishment budget that could bring down the government and force a general election.
The alternative would be another huge round of QE (money printing) leading to even more inflation and interest rate rises later on. Neither option is a good one.
So why are Starmer and Miliband dithering? Why are they not taking immediate steps to avoid such a calamity.
Answer: They can’t see it coming. They have absolutely no idea what’s about to happen to global financial markets. They can’t imagine that oil might hit $200 per barrel and they don’t even understand how oil prices actually vary in the real world depending on the region.
Their fate is now secured and they deserve it. We in the UK do not deserve them. We are a country of Lions led by Lambs.
