What is “winning” in the context of this war?
It seems to me that it is that oil and gas production resumes and that oil and gas prices decline to levels that the world can broadly afford and over time decline further reaching closer to the levels of $70/bbl prevailing before the Straits of Hormuz were closed by Iran.
How likely is that, given the damage incurred so far, the decades of hostility and the fact that the US can no longer claim to be neutral in the conflict?
Recent history
It seems like the attack on the North Field/South Pars was Benjamin Netanyahu acting on his own volition rather than a planned escalation of the conflict by the US. The immediate outrage from Trump suggests that the latter is annoyed that the conflict has been escalated, probably unnecessarily in Trump’s view. Without the escalation Trump might have had an easier job to press ahead with his plans without drawing other countries into the conflict. Now, Iran has attacked Qatar and the conflict is in danger of spreading.
However, I imagine the message from Trump to Netanyahu – after the event admittedly – was clear: that the conflict should not be escalated because Iran had the capacity to escalate it in a much more damaging fashion than the US and Israel had. It was likely not a deliberate escalation of the conflict by the US. Netanyahu of course is facing legal action in Israel (corruption charges and crimes against humanity) which are paused while he is Prime Minister, giving him a good reason to retain the post of Prime Minister. Some have viewed his actions as self-serving, and he is clearly a divisive figure in Middle East politics.
Trump’s rhetoric remains confrontational. He has warned that if Iranian attacks against Qatar’s North Field continue, he will authorize US attacks on Iran’s South Pars field (South Pars and the North Field are co-located in the same geological structure.) For a President facing the risk of a catastrophic attack on major oil and gas export terminals in the Gulf and the resulting sharply increased prices while faced with Midterm elections in the US, that would be a brave move.
Prime Minister Netanyahu has told President Trump that “boots on the ground” are the only way to defeat Iran, given the Iranian state’s pervasive position and influence throughout the country. “Revolutions from the air don’t work” is the Israeli PM’s view, who also insists that many world leaders agree with him but are reluctant to say so publicly. Be that as it may, it would be a brave move as I note earlier to escalate further on Israel’s part when President Trump is coming face-to-face with Colin Powell’s admonition about Iraq – “if you break it, you own it.”
Who are the winners in the conflict so far?
One clear winner who probably cannot believe his luck is Russia’s Vladimir Putin. Estimates suggest that the increase in the oil price since the US invasion of Iraq earlier in March has generated an additional $150 mn a day in revenue for Russia – that’s $1 bn a week extra to use in attacking Ukraine, another foreign policy priority for Europe – although not necessarily a priority shared by the Trump administration in the light of actions to date. Ukraine’s leader has reportedly been asking European leaders why they had decided to encourage the recovery of Russian oil exports while Ukraine was still under attack by Russia. Ukraine is one of the tangential losers of the Iranian conflict – “out of fight, out of mind”.
So much for Russia. China is winning on a relative basis, oil supplies from Iran are still reaching China while the Gulf is effectively blockaded by Iran’s proximity to the Straits of Hormuz, placing the US – the region’s main supporter and guarantor – at a relative disadvantage against its major strategic competitor.
India, on the other hand, has successfully negotiated the safe passage of two natural gas tankers through the Straits with New Delhi suggesting that diplomacy is the way to go. President Trump asked America’s western allies to send warships to help force open the Strait of Hormuz and reduce prices. At the time of writing none of the US allies have yet volunteered, although clearly discussions are ongoing given the importance of the Gulf shipping lanes to the world economy. But the downside of being cut off from Gulf oil supplies seems to be acting as a deterrent.
Western economies are also losers in the current geopolitical situation. Oil prices are higher, interest rates are under pressure, budgets are under strain as a result of higher energy prices feeding through to regional economies. Western influence is also in question since any war will most likely be seen as one of choice that was started by the US.
Politics
Could President Trump be one of the losers of the war that he started? If the war drags on through 2026 and into 2027 then I think yes he could. Pocketbook issues start to come into play as we head towards the US Midterm elections looming for both parties. With an already challenged economy, and cost-of living discussions being top-of-mind for many, the Midterms (all of Congress and a third of the Senate are up for election) will be a referendum on President Trump’s performance not only as Commander-in-Chief but also as Chief steward of the nation’s economic performance. A poor performance by the President in either (or both) arenas is likely to amplify calls for a more moderate American approach to international relations.
Higher oil and gas prices, an unstable Middle East, a potentially ongoing war against an entrenched opponent, even ground troops being committed in the face of all the evidence that this has historically proven to be a high-cost route, are all set to make 2026 a difficult year for the Republicans, despite the fact that US oil production is almost twice the level of Saudi Arabia’s or Russia’s and the only one of the three countries showing consistent growth in that oil production. If the US is fighting in the Gulf while oil and gas production is adversely affected by the choice of a conflict with Iran while the impact flows through to energy prices, that will be a very challenging environment in which to achieve a Republican victory for 2028.
What will other politicians do? Not rush to President Trump’s aid seems to be their first response. Hope that the situation around the Middle East calms down is probably the second response – but only time will tell whether that is the case. President Trump will almost certainly want to “make a deal” to bring the war with Iran to a close, rather than have it fester but the question is how much will he have to give away to ensure that any deal he and the Iranian government settle on is sustainable. All eyes will be on him… searching for any backsliding after a series of combative comments from the President targeting Iran.
