President Donald Trump appears to have given Iran a way to inflict economic pain across the globe for years to come, according to one expert.
Josh Lipsky, senior director of The Atlantic Council’s GeoEconomics Center, argued during a new CNN interview on Saturday that Iran has learned it can cause significant economic damage by controlling the Strait of Hormuz, and that the regime could leverage that for the foreseeable future. Lipsky noted that Iran learned this lesson after Trump and Israeli Prime Minister Benjamin Netanyahu started bombing Iran in late February.
The Trump administration’s recent decision to relax sanctions on roughly 140,000,000 barrels of Iranian oil at sea only reinforces that point, Lipsky noted.
“The message Iran has received over the past three weeks and has shown through their actions, is that they realize they have what I would call asymmetric economic leverage over the rest of the world, and that’s through the Strait of Hormuz chokepoint,” Lipsky said. “They know that people, not just in the U.S., but around the world, do not want higher gas prices. They don’t want higher airline prices. And we’re already seeing that trickle in.”
“This one choke point has ripple effects all over the world,” he continued. “So Iran is leveraging everything they can because they can’t fight back militarily in a significant way, despite what we just saw in Israel. They can’t really compete with the U.S. and Israel, but economically, they can cause pain. And their gamble is that they can cause enough pain to get the U.S., Israel, and others to relent. And so the administration is trying to find ways to ease that economic pain.”
Energy prices have soared since the war in Iran began. As of Friday, a barrel of crude oil cost more than $98, which represents a 48% increase from the previous month. In turn, the average cost of a gallon of gas in the U.S. has increased by almost $1 a gallon up to $3.92, according to AAA.
Lipsky noted that prices are unlikely to come down anytime soon because the Strait of Hormuz, which accounts for 20% of global energy trade, has become a high-risk passage.
“That’s not something companies and people were predicting even a month ago,” he said.
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