It was the atom bomb of deterrence. Iran was always understood to have the ability to close the Strait of Hormuz in the event of hostilities with the United States of America, or anyone for that matter.
In the war that just ended - sort of, maybe - Iran did indeed close the Strait. In doing so, it has likely set in train a series of events that will reverberate for decades, all to the detriment not only of Iran, but of the Gulf States in general.
What every single oil-importing nation just learned is that, should that nation be importing oil from the Middle East, its supply is not secure.
This will lead to the following:
1. Diversification: It will be very good to be in the oil industry in Canada, Venezuela, the United States, Mexico, Norway, Nigeria, and just about anywhere other than the Gulf States in the next few decades. Nations that import oil have likely already started to reconfigure their reliance away from the now insecure Middle East, toward the more secure Rest of The World. We are about to witness the slow but now inevitable reduction in the number of oil tankers leaving the Gulf every day. Expect occasional massive oil price drops as the countries in that region battle it out for a declining share of the market.
2. Electrification: China's move to electric vehicles is already saving them 800,000 barrels of oil per day. They could have a transportation sector that is about 50% electrified by 2035, which will save them about 2.5 million barrels of oil per day. Soon, every oil importing country will move even more aggressively toward electrification, not as a way to combat Climate Change, but as a way to address a now obvious strategic need. Mother Nature will be pleased.
3. Military and Security Realignment: Middle Eastern oil will become far less important to the world's economy in the next few decades, meaning there will be less incentive to safeguard and protect the Gulf States and their respective rulers. The USA may walk away entirely within a decade. The region could become even more of a geopolitical hot-spot, as Iran seeks to expand its Islamic Revolution, and other states seek to stop them. As well, Shia and Sunni Muslim states could move against one another as part of their 1,500 year passion play. The world will care less and less about this.
There is a Golden Goose. It has been laying Golden Eggs for Middle Eastern nations since 1973. Iran just hastened its demise....
