Micheal Drury (McVean Trading) wrote on April 19th:
The US blockade moves the conflict to a new stage — a siege of the Iranian economy has started. Iran depends on oil sales for roughly 60% of its export revenues — which are used to pay for food and other crucial imports. Iran has historically see-sawed from trade surplus to deficit, depending on oil exports, prices and discounts. Oil revenues are the grease that keeps Iran operating, as it provides the revenue to finance the IRGC and the clergy’s subsidies to the masses. Remember that the economy was not in great shape ahead of the attacks, as the rial was collapsing, which brought a wide swath of protesters into the street — including the faithful and the business operators. The government enjoyed a windfall of revenue when sales to China continued — and oil at sea was freed from sanctions. However, the additional 40% in income earned will be dissipated in a few weeks, and money printing should begin again (given little ability to borrow).
(Weekly Economic Update, Volume 118, Number 3, April 19 [email], McVean Trading)
Sieges can last a long time. Naval blockades are different. They are both used toward the same goal though the scale is usually different. History can help us put the Hormuz-Iran blockade/siege in perspective.
In antiquity, the Athenian Siege of Syracuse (414–413 BCE) attempted to choke a single city through walls, trenches, and direct encirclement, while the Spartan naval blockade of Athens (405–404 BCE) targeted the city state’s commercial grain lifeline at sea. One squeezed a place; the other strangled a system.
Modern examples sharpen the contrast. In the Siege of Leningrad (1941–1944) Nazi Germany trapped millions inside a frozen ring using artillery and starvation as tactics. In the previous world war, the British naval blockade of Germany operated across oceans, trying to starve Germany of food and raw materials. Sieges crush a city; blockades constrict a nation.
For history buffs, I recommend reading Roman historian Josephus and his story of Masada or Greek historian Thucydides and the Peloponnesian War.
The economics of oil shock wars are important and depend on the dependency of oil users related to the source of the shock. We hear a lot about 20% of the world’s oil stuck behind the Hormuz choke point. We hear less about the actions already underway to work around the Hormuz shock. While the blockade/siege is an attempt to choke Iran, the rest of the world is moving as quickly as it can to protect itself against the impacts of a long siege.
Here’s an example from an excellent post on Substack by Shanaka Anslem Perera, April 20th.
Perera has described the Hormuz workaround so well that we are sharing the entire post and recommending his Substack to our readers.
A container of iPhones can get to Dubai in fourteen days right now. A million barrels of crude cannot get out at any price. That single sentence is the 2026 Hormuz crisis, and paper oil at $90.38 still hasn’t read it.
The scale of the rerouting is already unprecedented. Per project44, thirty-four thousand ships diverted in the first four weeks. The UAE’s share of Middle East diversions collapsed from 42.6 percent Week 1 to 33.1 percent Week 4. India’s Jawaharlal Nehru Port volumes rose over seven hundred percent versus February. Per CNN, Saudi Arabia’s Logistics Routes Initiative recorded ninety-four thousand outbound trucks to Gulf land borders between February 28 and March 18. Jeddah projected a fifty percent surge in arrivals within two weeks. Containers are not stopped. Containers are rebuilding the Middle East map in real time.
The architecture of that rebuild sits on Maersk’s corporate website. Between April 3 and 16 Maersk published Operational Updates [linked added by the Kotok Report for readers’ convenience] 18 through 22 disclosing the new land-bridge network. Charles van der Steene, regional managing director for the Middle East, confirmed the system to CNN: Jeddah for Red Sea entry, Salalah and Sohar in Oman, Khor Fakkan in the UAE, Jebel Ali via truck through Khor Fakkan, Aqaba for Iraq. Update 20 records the flow verbatim: “From UAE via Landbridge solution connection through Sohar, Salalah and Jeddah ports to Rest of world.” This is not a workaround. It is the new container map, published by the carrier that moves more boxes than anyone.
To the east, the Pakistan leg completes the geometry. The Pakistan-Iran transit corridor went operational April 13 per PressTV and Express Tribune, first shipment refrigerated trucks of frozen meat from Karachi and Gwadar through Rimdan-Gabd to Tashkent under TIR supervision with GPS tracking. Central Asia’s new maritime entry point is a Pakistani truck stop. Windward AI confirms at least two Iran-flagged containerships reached Bandar Abbas between April 14 and 18 hugging the Iranian coastline. The dark fleet is no longer marginal. It is infrastructure.
Then the page turns. Two hundred and thirty loaded oil tankers remain stranded inside the Persian Gulf per mid-April maritime reporting. Brent June settled Friday at $90.38, down 9.07 percent in a single session on Araghchi’s peace announcement. The same day Dated Brent physical traded at $144.42, the highest print since 2008. Saudi East-West and the UAE Abu Dhabi Crude Pipeline together move roughly nine million barrels per day against the fifteen to twenty million that normally transit Hormuz. QatarEnergy declared force majeure on all LNG March 4. Japanese refiners, sourcing seventy percent of their Middle East oil through Hormuz, asked their government to release strategic reserves. Containers reroute. LNG declares force majeure.
The shock hiding inside these two pages is not a trade blockade. It is a molecule blockade. Atoms with wheels under them get trucked, rerouted and priced with manageable war-risk surcharges. Atoms locked in hydrocarbon chains do not. Everything else finds a workaround. Carbon does not. Goldman sees this. JPMorgan sees this. Any macro book still pricing what CMA CGM does rather than what QatarEnergy does is the trade that unwinds first.
The thesis dissolves on one condition. If Saudi East-West and UAE Fujairah together move fourteen million barrels per day before August, or Brent closes below $88 for three consecutive sessions, the bifurcation collapses into ordinary disruption. Until then, containers truck, crude waits, paper prices peace, physical prices war. The blockade is not closed. It is bifurcated.
Conclusion
Meanwhile, worldwide sources of oil and gas are ramping up as fast as they can. Watch the entirety of the five contiguous oil-producing countries across the top of South America. For more information about these countries and their oil reserves, see
“Donroe Doctrine Part 3 – A Possible Bullish Outcome of the Maduro Affair” | Kotok Report,
https://kotokreport.com/donroe-doctrine-part-3-a-possible-bullish-outcome-of-the-maduro-affair/
There are three reasons why oil is not $200 a barrel and why the futures prices are in backwardation toward to pre-war levels:
- The workaround global response is rapid and evolving.
- Dependency on Middle East oil is much less extreme than it was in the 1970s.
- Unlike the US, China has diligently expanded alternatives to fossil fuel dependency. Thus the global vulnerability to an oil shock diminishes as time progresses, even as the blockade/siege continues.
In my opinion, Iran is losing the oil shock war. The only way they can restore themselves is IF the United States loses its will to see this existential war through to its natural end. The enemy is the IRGC.
To be continued…
Further Reading
“The United States Has Iran in a Choke Hold” | Paul Bachow, https://open.substack.com/pub/paulbachow/p/the-united-states-has-iran-in-a-choke?utm_campaign=post&utm_medium=email
“Saudi, UAE, Iraq: Can three pipelines help oil escape Strait of Hormuz?” | Al Jazeera, https://www.aljazeera.com/economy/2026/3/27/saudi-uae-iraq-can-three-pipelines-help-oil-escape-strait-of-hormuz
“Frenkel: Central Banks Should Focus on Price – and Financial – Stability in Geopolitical Crisis” | Central Bank Central with Kathleen Hays, https://kathleenhays.substack.com/p/frenkel-central-banks-should-focus
Jacob Frenkel is chairman emeritus of the G-30, a former Bank of Israel governor, a past chairman of JP Morgan International, and a fellow at the Global Independence Center’s College of Central Bankers. At 00:12:51:06 in this interview with Kathleen Hays, he emphasizes the importance of eliminating the nuclear threat. We encourage readers to listen to the entire interview.
The greatest danger emanates today from production and possible use of nuclear bombs; they are the most important things to eliminate. Much of the discussion today has focused on the need to open the Strait of Hormuz. This, of course, is an extremely important objective without which supply chains will be damaged at great cost. While securing the freedom of navigation is important it should not deflect attention from the most important danger that is the nuclear issue, that is the key issue. So, I would say the most important thing is to deal with the nuclear, the highly enriched uranium, remove it, remove it from the control of Iran, remove it from that location. And then, of course, stop weaponizing economic variables in order to advance political causes.
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