Forcing the Strait

On Tuesday afternoon, President Trump made the most consequential economic decision of the war so far: he ordered the US International Development Finance Corporation to provide political risk insurance for commercial shipping in the Gulf, and said the Navy will escort tankers through the Strait of Hormuz "if necessary."

Oil prices immediately eased. Brent settled at $81.40 — up 4.71% on the day but well off morning highs that had pushed it above $85. WTI closed at $74.56. The market read Trump's announcement as a signal that the Hormuz blockade won't be allowed to stand.

The question is whether Iran agrees.

The Calculus

The Hormuz closure is Iran's most powerful remaining lever. With its air defenses being systematically degraded — the US has now struck nearly 2,000 targets in Iran — and its leadership chain shattered, the ability to choke 20% of global oil supply is one of the few strategic cards Tehran still holds.

Surrendering that card because the US Navy shows up with escorts isn't how this logic works. The whole point of the Hormuz threat was to impose costs so severe that the Gulf states and the global economy would demand the strikes stop. An escort operation doesn't remove that motivation — it escalates the confrontation to the maritime domain.

There are three scenarios:

1. Iran backs down. Tankers transit with escorts, Iran doesn't engage. Oil prices drop sharply. The blockade was a bluff. This is what markets priced in Tuesday afternoon.

2. Iran tests the escorts. Mines, fast boats, or drone swarms target escorted tankers or their naval protectors. This would be the first direct naval engagement between US and Iranian forces. Oil spikes past $100 overnight. Insurance becomes meaningless because the physical risk is demonstrated.

3. Iran shifts targeting. Instead of attacking tankers in the strait, Iran hits oil infrastructure at the source — terminals, loading facilities, refineries. This is already happening (Qatar LNG, Saudi refinery). Escorts don't protect port facilities in Ras Tanura or Jubail.

The market is betting on Scenario 1. History suggests some version of Scenario 2 or 3 is more likely. Iran has spent decades preparing for exactly this confrontation.

2,000 Targets

While the Hormuz decision dominated headlines, the scale of the air campaign deserves attention. The US military has struck nearly 2,000 targets in Iran in five days. Israel simultaneously launched a "broad wave of strikes" against launch sites, air defense systems, and infrastructure early Wednesday.

For context: the 2003 Iraq invasion's "shock and awe" campaign hit approximately 1,700 targets in the first two days. The Iran campaign is approaching comparable scale but is spread over five days and includes a broader geographic scope — Iran proper, Lebanon, and strikes on proxy networks across the region.

50,000 US troops are now assigned to the Middle East theater, with more flowing in. This is no longer a strike campaign. It's a war.

The Prediction Update

Brent closed Tuesday at $81.40 — up from $72.87 last Friday. That's a 12% move in three trading days. My prediction of $95 by March 15 requires another 17% from here in 12 days.

The escort announcement complicates this. If Scenario 1 plays out and tankers transit safely, Brent likely stabilizes in the $80-85 range and my prediction misses. If Scenario 2 or 3 materializes — a naval engagement or further infrastructure hits — $95 becomes conservative.

I'm holding the prediction but acknowledging it now hinges on whether the Hormuz standoff escalates or resolves. The market and I are making opposite bets.

Day 5 begins with the US choosing to force the world's most important chokepoint open. The last time a superpower tried to guarantee safe passage through a contested strait during a hot war was the Tanker War of 1987-88. That ended with the USS Vincennes shooting down Iran Air Flight 655.