Chapter 1: What is the main topic discussed in this episode?
Welcome to American Power. I'm your host, Nat Towson, stand-up comedian, speechwriter, many other kinds of writer, and most politically relevantly, podcast host. I'm here with my favorite panel of experts. Up first, our military expert, Chad Scott.
Hey, everyone. Yeah, former U.S. Army officer, many years of experience there, graduate of Hopkins. Glad to be here.
And up second, but certainly not second in our hearts, you know him as Mr. Global himself, Matt Randolph, our energy expert.
Hey, everybody. Mr. Global here, Forbes contributor, energy expert.
So obviously a lot has happened in the last week. We are currently recording this in the evening of Monday, April 13th. And as of now, probably the top of line news item is that the U.S. is now blocking the Strait of Hormuz. I want to go to Matt, Mr. Global first and talk about how did oil markets respond to this announcement originally?
And now that it's in practice, how is this affecting oil globally and how is it going to impact us?
Yeah, it's been pretty interesting. So upon the initial announcement by the Trump administration, oil jumped eight to nine percent overnight. It opened up this morning around one hundred and five dollars. But then China's defense minister came out and said, you know, bet you're not going to stop our oil. We're going to we have an agreement with Iran.
And we're going to honor our agreements and we're going to continue buying oil. So, you know, China is basically defying Donald Trump at this point saying they're still going to carry on business as usual. Uh, there are three tankers currently, uh, uh,
docked at karg island getting loaded in iran and those are chinese tankers so i guess we'll see what happens when they leave the straight but china said no we're still going to conduct business as normal and on that message oil prices actually fell by a few dollars so they're still up a little bit today but i think they're around 99 somewhere around there as time of this recording but it's been an interesting day uh to see china come out and say yeah we're not we're not doing that
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Chapter 2: How did the U.S. blockade of the Strait of Hormuz impact oil markets?
was able just to narrow that down to the Gulf of Oman as a choke point, it's still a very large area. It's still about the same size as Washington state. So we're talking about two carriers. As of right now, the USS Abraham Lincoln is the one carrier. You're talking about one carrier as of right now trying to police an area the size of Arizona.
And when that happens, you start to run into a manpower and surveillance problem. And a blockade really only works if you can find the ships, then identify the ships, then classify where they are coming from and where they're going. You can hail them. You can stop them. You can board them. You can inspect them. And then you release them, divert them, or seize them.
There's a lot of steps that go with this.
And I'm sorry, just to jump to reiterate one thing. Did you say one blockade?
As of right now, well, there's 15 ships, one carrier group.
One carrier group, okay. 15 ships for an area the size of the state of Arizona.
Yep, and so the thing is, I just don't think that's enough assets to do this. So I don't think this is going to be a true complete blockade. It's probably going to be more like a partial blockade or really a, hey, if you find a ship and can get to it and grab it, do it. But if you can't, it's just the threat of the U S military's reach. That's where we're at.
And at this point, this is assuming that ships kind of abide by what the U S military wants them to do, because you know that, I mean, Our ships are slow. Their ships are slow. So if you see a ship off in the distance or pick it up on some sort of surveillance mechanism, a drone or whatever, you still got to get there and they can alter their course. They can spoof their destination data.
They can manipulate their transponders. Hell, if they're at, it's at night, they can just go dark, turn off their transponders, turn off their lights and then operate at night. And it just becomes very difficult to try to, to try to blockade at distance when, when you have just this one group, um, And just from a military standpoint, the U.S.
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Chapter 3: What are the logistical challenges of enforcing a blockade?
So anything that Iran has sent out of the straight hasn't even reached its destination yet. And that's when they get paid. They get paid on delivery. So for eight more weeks, Iran's getting paid. Not only are they getting paid, but they're getting paid hundreds and hundreds of millions of more dollars because we lifted their sanctions. So they weren't selling that oil for 60.
They were selling it for 110. So they're getting nearly twice as much money as they were. So this entire blockade, unless they're considering that, is useless for a couple of months. It is completely useless for a couple of months.
But meanwhile, all of the other effects will be felt for those two months that affect us negatively. Like we're waiting to starve them out, but it hasn't started yet. Like it effectively has not started yet for them. Plus, like you said, they lifted the sanctions.
Chapter 4: How does the blockade affect international relations with nuclear powers?
So like now this is almost an enviable situation for them because now they're selling at a higher profit.
Yeah, because the first ship that we stop, the Bab el-Mandeb Strait is closed. Nothing has come out today about the Bab el-Mandeb Strait, but I guarantee you the first ship that gets stopped coming out of the Strait of Hormuz, the Bab el-Mandeb Strait will be closed immediately by the Houthis. It's just going to happen. The Houthis said they were going to do it.
Iran came back later and said, yes, we're going to help them do it. So that strait will be closed. So...
Explain that to the listeners, though. What's the political calculation there? Why is that what triggers the Houthis to close the Bab al-Minnab Strait?
Because it inflicts more economic pain on the world. Like 10, 12% of all global trade goes through that strait. A significant amount of oil, but I'm talking about all trade. Grain, fertilizer, just anything in the world that can be shipped. Ships through the Bab al-Minnab Strait. Yeah, and most people think of stuff coming out of it, but most of the stuff goes through it.
It's a huge shortcut, so you don't have to go around the Cape of Good Hope in Africa. People go into that, into the Red Sea, go through the Suez Canal, and that's how they get to Europe and the East Coast of the United States. When you close that off, you add two weeks to every delivery of cargo that heads in that direction in the entire world.
And that causes shortages on shelves, that causes price spikes, etc. So it'll be a huge pain point and choke point when they close that. So almost every arrow points towards more escalation by this blockade that literally doesn't do anything to Iran for two more months. This is what doesn't make any sense to me at all about the blockade.
Because unless you're willing to have the Strait of Hormuz closed for two more months and the Bab el-Mandeb Strait closed, Like, that is a huge impact on the global economy. That's when you're looking at global recessions. And that's how long it's going to take.
Well, when they say Trump is playing 5D chess, what they mean is that time and distance mean nothing to him. He's tesseracting to the moment of impact.
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Chapter 5: What are the implications for U.S. allies regarding the blockade?
Yeah.
And I'm saying Trump's I'm sorry, I'm saying Trump lifting the sanctions on Russia was a sort of like ineffective, like a needless insult to NATO because it didn't even work.
Yeah, no, 100%. And I mean, it's just it's yet another step in this long history of Trump kind of undermining NATO. I mean, we saw it in between the the the fighting and the. Failed talks. He kind of ramped up the rhetoric against NATO because NATO is not helping Trump at all. And there's a reason for it. They're not required to. The NATO alliance is a defensive alliance.
The article six states that the. Focus on the defensive aspects of it have to do with a specific geographic region, which is the North Atlantic and the countries involved in those. And there's a historical precedence to where other countries are not supporting other NATO countries in their foolish or often sometimes necessary endeavors.
For instance, when you look at the Suez Canal, the Suez crisis, when the United Kingdom and France went after the head of Egypt for trying to nationalize the Suez Canal, it was Nasser at the time. The United States said, we're not getting involved in that whatsoever. And in fact, went to the United Nations and rallied against the United Kingdom and France.
And it was eerily similar to what is happening now. We're seeing a critical trade straight, a trade point, a trade access route being held up or being controlled by a singular country. So another group of Western allies decide we're going to open it by force. And other countries are like, we're not doing that.
So when Trump sits there and says and complains that other NATO allies aren't helping us in the Strait of Hormuz, there is a historical precedent that that's not how NATO was designed. So Trump is trying to use the notion that the United States is the preeminent power and therefore should control everyone in NATO as an excuse and is making him...
really upset he's getting really um poopy faced about all of this nato kind of backing away kind of keeping out of this fight but it's necessary and it's a it keeps the credibility within the alliance and if we don't have he's threatened to quit nato before to exit nato is that is that you know at this point i don't understand what it would mean to pull out versus just not participating but is that something that you think would ever really happen
Or is it better for him to be involved in NATO and just misbehave?
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