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- Laleh Khaliliprofessor of Gulf studies at the University of Exeter.
Amid the ongoing crisis in the Strait of Hormuz, we speak with Laleh Khalili, a professor of Gulf studies who researches the shipping and logistics industry and its impact on the global economy. The U.S. implemented a naval blockade on Iran earlier this week, which Khalili says could lead to its military “firing on ships that it assumes are Iranian or carrying oil from Iran or other cargo to Iran.” Iran, in response, could “interpret this as a belligerent action,” ending the fragile ceasefire agreed to by both parties. “Iran is going to defend itself against this imperial imposition, and how it’s going to do that remains to be seen.”
Meanwhile, explains Khalili, shipping disruptions in the Gulf have affected the supply chains of key resources including oil, aluminum, helium and fertilizer. “Transportation costs are going to be higher, so food prices are going to be higher; people’s MRIs are going to be scheduled out by six months … semiconductor manufacturing is going to be affected,” Khalili says. “The crisis is only going to get more horrific before it gets any better. ”
Transcript
NERMEEN SHAIKH: Iran’s military says it will begin disrupting shipping in the Sea of Oman and the Red Sea if the United States does not end its naval blockade of Iranian ports. Iran’s threat of escalation came as U.S. Central Command said U.S. forces have completely halted maritime trade to and from Iran, with at least 10 vessels forced to turn around. At a press conference today, Defense Secretary Pete Hegseth said the U.S. plans to enforce the blockade. Iran effectively closed the Strait of Hormuz in early March, disrupting global oil and trade markets.
On Wednesday, White House Press Secretary Karoline Leavitt was questioned about the Navy blockade of Iranian ports.
LIBBEY DEAN: On Iran, is there a timeline for how long this blockade is going to remain in place in the Strait of Hormuz by the United States that President Trump has voiced to you or that you’ve heard among officials?
PRESS SECRETARY KAROLINE LEAVITT: Sure. I will never set timelines on behalf of the president of the United States. But with respect to the blockade, as you know, it has been fully implemented, and it’s being enforced against vessels of all nations entering or departing Iranian ports. I want to make that point clear. I’ve seen some misreporting on that, as well. This includes all Iranian ports on the Arabian Gulf and the Gulf of Oman. And our U.S. forces in the region are supporting the freedom of navigation for vessels that are transiting the strait to and from non-Iranian ports. So, I know some in the press were confused about that. We are supporting the freedom of navigation, just not with respect to any tanker or vessel that would benefit the economy of Iran as these negotiations continue.
AMY GOODMAN: Karoline Leavitt went on to say that the White House is optimistic about continuing negotiations between the U.S. and Iran. On Wednesday, a high-level Pakistani delegation traveled to Tehran to lay the groundwork for a possible second round of talks.
We go now to London, where we’re joined by Laleh Khalili. She’s a professor of Gulf studies at the University of Exeter and author of several books, including Extractive Capitalism: How Commodities and Cronyism Drive the Global Economy, as well as Sinews of War and Trade: Shipping and Capitalism in the Arabian Peninsula.
I can’t think of any time that your work was more relevant than now, Professor. Let’s start off with this naval blockade of Iranian ports entering its fourth day. The blockade is being enforced, according to CENTCOM, by 10,000 U.S. troops, over a dozen warships, dozens of aircraft. Can you explain exactly what’s happening and, for the geographically challenged, the difference between the Strait of Hormuz, the Persian Gulf, and how it’s extending beyond to the Red Sea and the Sea of Oman?
LALEH KHALILI: OK. Thank you very much for having me on. And yes, sadly, this is a terrible way for my area of expertise to actually be of relevance.
So, first, the geography of the area. The Persian or Arabian Gulf sits between Iran on the north, a sliver of Iraq on the west, and then the various countries that are known as emirates or kingdoms of the Gulf — Kuwait, Bahrain, Saudi Arabia, Qatar and the United Arab Emirates — around the southern shore of the Persian Gulf. At the narrowest bit where the Persian Gulf meets the Gulf of Oman on the other side, that’s the Strait of Hormuz, which, depending on how you measure it, it’s around 25 to 30 nautical miles. So, the Gulf — the Strait of Hormuz lies in the north — between Iran in the north and the Musandam Peninsula, which is an extension of Oman, in the south. So, in fact, the water of the Strait of Hormuz is divided between those. There is no high seas. There is — this is territorial waters divided evenly between the two countries. So, that’s the first thing.
The second thing is that, of course, the whole Iran basically lies on the entire northern shore of the Persian Gulf, but also the Gulf of Oman. So it does have capacities. In fact, one of Iran’s big ports, in which India invested, Chabahar, is in the eastern part of Iran in the northern shore of the Gulf of Oman. Red Sea is on the other — the Red Sea is on the other side of the Arabian Peninsula, so the Red Sea lies on the western shore of Saudi Arabia. And the way that Iran can disrupt trade in that, in the Red Sea, is through firing missiles, for example, as it has done already, to the port of Yanbu, which is a oil-lifting port for Saudi Arabia on the Red Sea, but also through possibly having its ally, the Ansar Allah of Yemen, which are otherwise also known as the Houthis, disrupting trade there, as they did during the Israeli genocide of Palestinians in Gaza.
But there are a couple of things about that blockade question that I think is really important to note. First of all, the U.S. claims to have stopped completely and totally the trade of oil out of Iran, or indeed has blockaded any kind of ships going to or from Iran. In fact, reporting from shipping companies that actually track this stuff comes back that in the four days since the blockade has started, somewhere between 14 to 15 ships have gone through the Strait of Hormuz, at least half of them to Iran.
And the way that they have done so is either through routes that obviously the U.S. is incapable of, or not particularly good at, policing, through spoofing their Automatic Identification System — spoofing is this process where the Automatic Identification System is essentially presented as somebody else’s ID system, indicating a different country or different flag country for the ship and — or ships have gone dark, which is something that happens all the time. In fact, when I traveled on a freighter many, many years ago, 10, 11 years ago, one of the things that was most striking when going through the Red Sea, the Gulf of Aden and indeed the Persian Gulf, was the extent to which warships, particularly U.S. or the EU warships, actually turned off their AIS and went dark. So, this is a practice, although a lot of people like to present it as some kind of a nefarious thing. If we are going to think of it as nefarious, in fact, a lot of ships take take part in this practice of going dark, including especially the United States. In fact, this, as in the case of U.S. naval ships, has resulted in all sorts of — in all sorts of problems, collisions, indeed, with U.S. Navy ships.
Now, in terms of the actual blockade and the effects it’s having, I was just looking at the Bloomberg today, and forgive me as I read this out, because it was really striking to me. Bloomberg, which is, of course, one of the most reliable financial reporting sites anywhere in the world, reports that we are “moving from short-term jolt to a long-term shock as the largest supply disruption in the history of the global oil market takes place.” So, this is what’s happening.
And obviously the blockade continues, because before the war, before the U.S. and Israeli war on Iran started on the 28th of February, somewhere between 140 to 170 ships a day were crossing the Strait of Hormuz; now it’s only 14 to 15. And one of the things that this has meant is that about 10 million barrels per day of oil supply has been lost. This includes — although, of course, the primary people being punished by this shortage of oil are the economies in Asia, in fact, it actually also affects the United States, because some of the last ships that left the Persian Gulf before the war started were actually delivering their supplies now, so we are going to see the effects of the blockade in the coming week or two. And apparently one of these ships actually arrived in California, because, unlike the rest of the United States, California actually does receive oil from the Middle East, and its refineries use a medium-sour oil, a kind of a medium grade, and “sour” meaning high sulfur, a kind of oil that comes specifically from the Middle East. So, the effects of this are, of course, being felt incredibly widely. Another really striking statistic was that an actual real-world barrel of oil was sold in Sri Lanka at more than $280 a barrel. That is double what the price is going elsewhere in the world. And so, the effects of this are incredibly, incredibly striking.
What the blockade might mean, of course, is that the U.S. will start firing on ships that it assumes are Iranian or carrying oil from Iran or other cargo to Iran. But, of course, if it does so within the context of the ceasefire, it is violating the ceasefire. And if it does so outside the context of ceasefire, Iran can interpret this as a belligerent action, because, of course, a blockade is exactly that, particularly as it is blockading Iran in its territorial waters. So, the state that we’re in is that, of course, we’re not getting any reliable or credible kind of reporting from the Trump administration whatsoever. And the state of play in the region, of course, is that Iran is going to defend itself against this imperial imposition, and how it’s going to do that remains to be seen.
NERMEEN SHAIKH: Laleh, as you mentioned, despite the fact that the U.S. says that its blockade is entirely effective and no ships are getting through, at least 14 to 15 have got through, including several Iranian ships. Now, The Washington Post reported just yesterday that more troops are expected — U.S. troops are expected to arrive in the region, an additional 6,000 to arrive soon and 4,000 to arrive at the end of the month. I mean, if you could say something about what would make and whether those troops — and obviously this is speculation — whether they might help to impose a more total blockade, or, you know, where you see this going?
LALEH KHALILI: It’s really difficult to say, again, in part because reporting on this war has been so drastically narrow and that there’s so much misinformation coming from the United States and its allies in the region, both the Arab Gulf emirates, as well as Israel. And, of course, there is little reporting that comes from the Iranian side that is completely and totally verifiable. There’s an interest by everybody to sort of not give the whole picture.
In the case of this troops arriving, I wonder how many of those troops that are arriving were the troops that were on the way when, a couple of weeks ago, the U.S. declared that there was going to be airborne troops deployed to Iran. There’s also some question for me, and it’s not a question that only I’m asking: I’m really curious as to why the pilot that was downed, the two pilots that were ostensibly rescued a couple of weeks ago, have not appeared on any television shows — they have not been paraded around as such things are customary — and, indeed, whether or not the story of a pilot rescue was actually cover for a trial run of taking away Iran’s uranium near Isfahan. So, to me, it’s unclear how the arrival even of another 15,000 or 20,000 troops are going to accomplish this, because in addition to, obviously, the troops arriving, you’re going to need to have equipment arriving, as well. You’re going to have to have more ships, etc. And so, this means repositioning, basically, the U.S. naval posture, not just in the Gulf, but also elsewhere in the world, as it shifts its ships to the region.
This also indicates, to some extent, that perhaps what the aim of the Trump administration is is to return to hostilities after the end of the ceasefire period. The problem with, of course, this is that there is so much that the sort of the shocks that we saw in the first couple of weeks of the war are going to only accelerate in a number of different areas. So, obviously, the, as I said, about 10 million barrels per day of oil has been taken out of the market.
But in addition to that, there was reporting today that there’s going to be an incredible shortage of aluminum, as aluminum smelters in the Gulf have either been hit — and in one case, there was a very dramatically describing instance where an aluminum smelter in Abu Dhabi was hit, and the actual molten aluminum froze in the pipes, making — I mean, they would have to basically replace a lot of the equipment in those. With aluminum, actually, prices being at a four-year high, higher than it has ever been since the Russian war on Ukraine, there’s also China has just banned export of sulfuric acid, which is really incredibly necessary for the production both of fertilizer, but also very more — much more significantly, in the manufacturing of semiconductors.
Helium reserves are down massively, because, of course, Qatar was one of the world’s biggest — Ras Laffan plant was the world’s single largest producer of helium, although the U.S. is the largest country producer of helium. And with helium being — the helium amount being down, semiconductor manufacturers, including chip makers for companies like, for example, Nvidia are concerned, because, of course, helium goes to MRI machines and to chip makers. And, of course, given the way that the market is so overblown and there’s such a big bubble around AI, there’s probably going to be a shift from using helium for MRI machines to towards the chip makers, because, of course, that’s going to be, you know, out to the profits in the pockets of the tech bros. And what that indicates, of course, is that this is going to also hit people really hard.
So, the effect of what the war is going to be is going to actually be felt even more strongly in the coming weeks, in both inflationary terms, in the inflation in the price of petrol at the petrol pump, but also in other ways, because, of course, transportation costs are going to be higher, so food prices are going to be higher, when people’s MRIs are going to be scheduled out by six months or some such, when semiconductor manufacturing is going to be affected. This is going to be quite significant.
The other factor in all of this, of course, is the question of insurance. And a lot of insurance providers have actually either suspended providing insurance to any ships in the whole of the Middle East region, the whole of the sort of region surrounding the Arabian Peninsula, or have increased the war risk premium incredibly, in a very kind of dramatic sort of way. Now, the U.S. has kind of promised, since the beginning of the war, that it is going to cover the insurance via kind of a backstop for insurance. The U.S. International Development Finance Corporation has talked about how it is moving toward sort of getting — working with private insurance providers to insure about $40 billion worth of ships. But that’s actually like a drop in the bucket, because in the early part of the war, JPMorgan estimated that the actual amount needed for ships that are in the Gulf, as a minimum, is $352 billion, so this would be 10% of the amount of ships.
So, again, this combination of both the market, the logic of commercial risk, on the one hand, but, on the other hand, the fact that Iran poses a credible threat to ships in the Strait of Hormuz, in the Gulf of Oman, and both directly and via its allies and Ansar Allah in the Red Sea, means that I actually think that the crisis is only going to get kind of more horrific before it gets any better.
NERMEEN SHAIKH: Laleh Khalili, thanks so much for joining us, professor of Gulf studies at the University of Exeter and author of several books, including Extractive Capitalism: How Commodities and Cronyism Drive the Global Economy and Sinews of War and Trade: Shipping and Capitalism in the Arabian Peninsula.
When we come back, the ongoing civil war in Sudan enters its fourth year, creating what the United Nations calls the world’s worst humanitarian crisis. Stay with us.
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NERMEEN SHAIKH: Lila Downs performing “Clandestino.”