US escorts ships in Hormuz: Risk of war rising?

[0:00] OK, let's bring in Marco Vincenzino, who is a global strategy advisor and geopolitical risk specialist, joins us live now from New York. [0:07] Marco, great to have you back with us. [0:09] So what's your view on this so-called Project Freedom, as the U.S. president has put it, [0:16] that the U.S. will begin escorting ships out of the strait into the Gulf of Oman on Monday? [0:22] Yeah, currently, I think it's an attempt to try to break the current standoff. [0:30] We can call it a protracted state of managed instability, whereby the standoff is now, it's gone on for a few weeks. [0:40] Both sides are declaring an embargo, have declared an embargo, and both sides are probing each other without wanting to return to war. [0:48] So we see this as a way to try to break that impasse, to try to create momentum. [0:53] But at the same time, there's always the risk of miscalculation out there. [0:57] And that risk of miscalculation is very high at the present time. [1:01] And I would say is that the possibility of a return to war is something that is real. [1:08] Maybe people have underestimated. [1:09] I'd say both sides do not want that, and especially the international community does not want that. [1:14] But the way, if you play that grain of brinksmanship, one slight miscalculation, things have been out of control. [1:22] You have another vicious downward cycle, possibly worse, even than the first round of conflict from starting on February 28th. [1:31] The U.S. president has been very definitive about this, saying that this will start on Monday morning. [1:35] And you do wonder whether or not Iran has been involved in this process of making this announcement of, you know, the potential escorting of vessels out of the strait. [1:50] I mean, once again, I refer to that state of protracted instability. [1:54] It's sort of a new status quo that has been evolving in recent weeks. [2:00] And that new status quo is that each side, one probing the other without wanting to make that move to descend into armed conflict again. [2:09] So you can call it sort of, it's like a show going on at the present time, a dance. [2:13] A dance in the Gulf, the dance of Hormuz. [2:16] But when does it actually bake remains the same question. [2:19] For the global economy, as we know, Hormuz has been emphasized many, many times. [2:24] 20% of global oil flows go through there. [2:26] Markets continue to remain volatile. [2:29] Supply and chains can keep to remain disrupted. [2:32] Insurance and shipping costs will go up and, you know, will skyrocket if there's a return to conflict. [2:38] So this is not just a bilateral U.S.-Iran situation. [2:42] The consequences for the global trade, global commerce, and global stability are enormous. [2:50] We are, I mean, you could say we're close. [2:52] We're on the cusp of a descent, a descent into the abyss if there is a return to conflict again. [2:59] And I think the current situation is if there is a deal, what needs to be is it's not going to be a long-term deal, [3:05] but some form of deal at least that can buy some time and defuse the current economic crisis. [3:11] And this will keep going on. [3:13] Like I said, a protracted state of managed instability. [3:16] If we look at a live map of the strait, you can see all sorts of vessels trapped there from tankers to cargo ships [3:23] and even vessels holding huge cargoes of fertilizer. [3:29] So there we go, the dots in red, the arrows in red, they're the oil and gas tankers, the green ones, the cargo ships, [3:35] just hundreds and hundreds of them sitting there in the Arabian Gulf. [3:40] Once they start coming out, how quickly, if the strait has opened up permanently, [3:46] how quickly will the energy shock that has gripped the world start to be relieved? [3:54] It's going to take weeks. [3:56] Somebody would argue months. [3:57] This is not going to be an overnight change. [3:59] You've had from roughly 120 vessels crossing the strait Hormuz on a daily basis prior to February 28th [4:08] down to single-digit vessels. [4:11] And the pipeline of backup is enormous at the present time. [4:16] So I don't think immediately if the straits do open and you have a resumption to commerce again, [4:27] it's important to point out. [4:28] It's important to manage expectations. [4:30] This is not going to be a return to the previous normal. [4:34] The new normal is different. [4:36] The new normal is one that's going to be an error that the error of secure, predictable, and stable flows is over. [4:44] Even though the supplies keep going through, well, resume, if they do resume, [4:49] the new normal is going to be marked one in which this managed instability is going to be marked by coercion, [4:55] constant threats, and the possibility of an outbreak of conflict at any given moment. [5:00] Once the strait of Hormuz, once that red line was crossed, an entire new system, an entire new age, [5:06] and an entire new era in global commerce has developed, particularly in the Middle East. [5:10] All right. [5:11] Well, we'll have to leave it there. [5:12] Marco Vincenzino, Global Strategy Advisor and Geopolitical Risk Specialist, joining us from New York. [5:17] Thank you. [5:19] Thank you. [5:19] Thank you.