Compared with blindly proposing a 20% charge for the Strait of Hormuz, Trump seems to have gotten “smarter” this time.
Don’t underestimate this tweak in the rules. If the previous 20% charge for the strait was shameless, then using investment instead of charging 20% makes it look rather wise.
A charge means taking money out of someone else’s pocket and increasing costs. It’s not only that Iran is unwilling—Gulf countries are also unwilling.
But if you replace charging with investment, it becomes an asset investment. Compared with cost increases, asset investment is easier to accept—and it’s profitable. And Gulf countries themselves already have a lot of capital invested in the United States.
With this simple change in the rule, the strait fee shifts from a “charging right” to capital returning flow. The United States still benefits. For Gulf countries, though, it’s much easier to accept.
The emergence of this rule means Iran is put on the back foot. Once most Gulf countries can accept this charging scheme, perhaps only Iran will oppose. If Iran insists on interfering with the strait, it may trigger widespread anger and lead to Iran being isolated in the region.
In fact, judging from the recent game between the US and Iran over the strait, it’s no longer limited to a conflict between the two. Both sides are trying to rally the Gulf countries and isolate the other #美国6月CPI降至3.8% .
Based on the recent crude oil price trend, the market still holds a certain level of optimism about this rule change. Of course, risks remain. After the US blocks Iran, how Iran will respond—that question will be a key focus of this week’s geopolitical watch!
Don’t underestimate this tweak in the rules. If the previous 20% charge for the strait was shameless, then using investment instead of charging 20% makes it look rather wise.
A charge means taking money out of someone else’s pocket and increasing costs. It’s not only that Iran is unwilling—Gulf countries are also unwilling.
But if you replace charging with investment, it becomes an asset investment. Compared with cost increases, asset investment is easier to accept—and it’s profitable. And Gulf countries themselves already have a lot of capital invested in the United States.
With this simple change in the rule, the strait fee shifts from a “charging right” to capital returning flow. The United States still benefits. For Gulf countries, though, it’s much easier to accept.
The emergence of this rule means Iran is put on the back foot. Once most Gulf countries can accept this charging scheme, perhaps only Iran will oppose. If Iran insists on interfering with the strait, it may trigger widespread anger and lead to Iran being isolated in the region.
In fact, judging from the recent game between the US and Iran over the strait, it’s no longer limited to a conflict between the two. Both sides are trying to rally the Gulf countries and isolate the other #美国6月CPI降至3.8% .
Based on the recent crude oil price trend, the market still holds a certain level of optimism about this rule change. Of course, risks remain. After the US blocks Iran, how Iran will respond—that question will be a key focus of this week’s geopolitical watch!