In War

At War 

We all woke up a week ago Saturday to learn that Israel and the US attacked Iran in a preemptive strike to move towards regime change and to ensure that the Iranian regime could never develop a nuclear weapon. 

The Iranians are facing overwhelming force and are experiencing possibly the heaviest bombing in the shortest time in modern history.  The Iranians have responded by closing the Strait of Hormuz and attacking the energy infrastructure of their neighbors. 

About 20% of the world’s oil passes through the Strait.  Most of it goes to Asia, but oil is fungible, and its price fluctuates globally.  Petro resources are effectively blocked from passing through the Strait; we will most likely see an increase in energy prices.  We expect global trade to be disrupted.   

Gasoline prices are rising and up by about 20% across the country.  Oil prices are up above $100 a barrel, levels not seen since 2022.  Many economists believe that the price of oil could rise to over $150 a barrel in weeks which would translate to gasoline prices pushing past $5 a gallon in most of the country. 

The Iranians and Americans were involved in diplomacy to discuss ending sanctions and curtailing Iran’s nuclear program.  Israel and America decided to engage in a conflict with the objective of enacting regime change in Iran. 

President Trump was elected on a promise to avoid foreign adventures and focus on making America first and building our economy by revitalizing manufacturing and creating more jobs. 

The current conflict will increase prices in the short-term and make Americans less safe abroad and possibly at home.  The TSA is currently going without pay due to the government shutdown and travelers are facing long delays at airports.  There have been sporadic reports of domestic terrorism, and most Americans are feeling less safe than a few weeks ago. 

A best-case scenario is the installation of a new regime in Iran that acknowledges Israel’s right to exist and is friendlier toward its neighbors and western interests.  More stability in the region will result in more economic development and help the people who live and work in the middle east. 

The best-case scenario assumes that the US and Israel can effect regime change and foster a grass roots uprising of the population to install a more democratic government.   

The greatest military asset the Iranians have is an estimated 70,000 Shahed drones which cost between $20,000 and $50,000 to make.  In the first week of the war, the Iranians are reported to have launched about 2000 of these drones, and most were shot down. 

A risk is that the US runs out of munitions capable of targeting these drones and our embassies and military bases become vulnerable.  Other risks focus on the world’s economy as energy prices rise due to oil disruptions.  Further, Iran has long been known as a supporter of terrorism and attacks on US soil are not out of the realm of possibility. 

The war ending in weeks with a regime change would be wonderful and mark a great win for the Trump administration.  We are now in the fog of war.  Reporting is sparse and biased.  We hope that the US and Israel can prevail quickly.