Is Iran Tapping Out?
President Trump has leveraged his Arab allies with strategic patience
To ‘tap out’ in combat sports competition is to accept the humiliation, disgrace, wounded honor, and the loss of standing among peers that comes with the admission of defeat. Farsi has a word that contains all these meanings and more: dhull (ذل). To verbalize submission to anything but Allah is to lose face, aberu (آبرو, ‘water of the face’). It is a deep, stabbing blow to Persian prestige that makes Shia fanatics cry.
Yesterday, President Trump made another Iran announcement. At the request of Qatar, Saudi Arabia and the United Arab Emirates, “serious negotiations are taking place” to end the Hormuz crisis with “NO NUCLEAR WEAPONS FOR IRAN!” If the Iranian side cannot come to an agreement in 14 days, he stands ready to launch “a full, large scale assault of Iran, on a moment's notice”.
“We’ve had periods of time where we had, we thought, pretty much getting close to making a deal, and it didn’t work out”, Trump told reporters later. “But this is a little bit different.” Also, it is “a very positive development, but we’ll see whether or not it amounts to anything.” Taken seriously but not literally, we may parse this as an attitude change from the Iranian side.
The IRGC have changed their minds about choking out. Regular readers will recall that three weeks ago, Iran was making a lot of noise about overland oil export by trucks and trains to replace the Hormuz traffic, and that I rubbished this talking point as a pure cope.
As a rule of thumb, one Aframax or Suezmax tanker at sea contains enough crude oil to load 2,000 trucks, while one Very Large Crude Carrier (VLCC) carries as much petroleum as 2,800 rail tank cars. Iran can currently export 8-10 percent of their total crude capacity this way.
To replace the lost Hormuz export capacity with new overland connections, the regime would probably need to spend as much as they did on their nuclear program. It would take time they do not have, for as I advised readers in that 29 April update, the oil infrastructure of Iran is decrepit, storage capacity is limited, and the geology of most wells makes shutdown especially risky.
The long-term economic damage of maintaining a standoff in the Hormuz might make it impossible for Iran to build any new infrastructure. Unlike their Gulf Arab neighbors, who banked their money and built civilizations with oil profits, Iran — or rather the IRGC — spent their share of the oil revenue on proxies to colonize and occupy the Middle East and attack their neighbors.
Time is not on their side, though there are many in the west who would have you believe it is. Like the IRGC, those westerners are desperate to save face, but the only plan they have for victory is denial. After the Saudi intervention in the first week of May, pausing American operations, denial hit fever pitch. Regular readers will recall that I told everyone to calm down.
I was confident because Donald Trump has a great relationship with all these crown princes. They are his friends and Jared Kushner’s business partners. They take photos with him, hands on a glowing globe. When Iranian drones and missiles began to strike their cities and infrastructure, their societies did not rise up in revolution as expected in Tehran. The crown princes got mad at Iran. If anything, they are more eager to see the IRGC destroyed than Trump is.
Not by coincidence, Qatar, Saudi Arabia and the United Arab Emirates have all made major infrastructure announcements lately. They have been applying economic pressure on Iran, and the signal in the noise is that the IRGC is tapping out.
The Crown Prince of the UAE announced on Friday that he wants to fast-track a planned West-East Pipeline project to double export capacity through Fujairah (on the Gulf of Oman, outside Hormuz) to around 3 million barrels per day (bpd) by 2027. This project largely builds onto the existing Habshan-Fujairah pipeline. The emirates have left OPEC to become a free agent in the market and this will ensure their independence.
During the crisis, Saudi Arabia has ramped up flows through its existing East-West (Petroline) pipeline (Abqaiq to Yanbu on the Red Sea, capacity up to 7 million bpd). It has carried record volumes (e.g., ~5–7 million bpd at peaks) to bypass Hormuz, sustaining exports despite attacks that temporarily cut throughput by ~700,000 bpd in April. Full capacity was restored in days. This project originated as strategic insurance against Iranian aggression.
During April, the Saudi Landbridge rail project was accelerated. This railroad will connect the eastern oil fields to the Jeddah on the Red Sea and northwest to the Jordan border. Port expansions at Yanbu, and new Red Sea facilities, are all part of longer-term ‘Iran-proofing’ that began before the crisis and became priorities since 28 February.
Kuwait is already half-finished building the Gulf Railway Project, a 1,352-mile (2,177 km) network that will link Kuwaiti oilfields to Muscat in Oman by crossing Saudi Arabia and the UAE. Completion was planned for 2030, but now the project will speed up. Note that this was announced at the end of April.
Cross-border pipelines and rail connections to Duqm, linking the Emirates to a port on the Arabian Sea coast of Oman, are being fast-tracked. This was announced in mid-April. This month, Qatar, Kuwait, and Bahrain, who do not have a direct bypass of their own coastlines, are rapidly expanding overland trucking and rail through Saudi Arabia, the UAE, and Omani ports. Because they have access to a global market for oil trucks, they can do this at scale long before Iran will.
If this sounds more like a race than a wrestling match, you are getting my point. I am no expert on Iran, or oil. Military history has iron laws, however. One of them is that war is fundamentally a macroeconomic affair, therefore the winner of any given war is most likely to be the side with the larger macroeconomic alliance.
Iran simply faces a much more powerful macroeconomic alliance than the IRGC has, or can build in any reasonable amount of time. Operation Economic Fury found its schwerpunkt, its decisive moment, in Beijing last week. There will not be an emergency Belt and Road Initiative for Iran. Chairman Xi cannot afford one, anyway. He has his own problems. Trump flew home from the meeting with all the leverage in Hormuz.
Per Marco Rubio, all the Iranians who matter are hardliners. These however can be subdivided into realists and fantasists. The psychic pain of dhull, the avoidance of aberu, and Shia apocalypticism feed into the fantasy of victory, producing AI slop propaganda, for example.
Humans being humans, the humiliation of defeat will always be too much for some of the hardliners to handle. Humans being humans, however, fantasists can also become realists, and in military history that is usually the moment when money runs out.
Iran started reducing flow from their wells weeks ago. When storage ran out at Khargh Island, engineers started dumping oil into the gulf. The catastrophe has washed up on beaches in the gulf, inflicting economic damage on the tourism trade that Iran’s neighbors have built with their oil money. This is not a permanent solution even for the IRGC, nor is it a winning stratagem. Economic warfare is dirty, but the Arab states were always better equipped for it. Iran will pass out before the Arabs ever tap out.
Israel still has Iron Dome units deployed in the Emirates, but the IDF’s offensive combat role was limited to the seven weeks of Operation Epic Fury. In fact, the disclosure of two secret Israeli bases in Iraq likely marks the withdrawal of Israel from OP Economic Fury altogether.
For this phase of the conflict, Donald Trump has instead turned to his gulf allies, even been deferential to them, while they brought their full economic strength to bear. Xi Jinping was the last hope for the fantasists. Benjamin Netanyahu is not going to rescue them with airstrikes. War is not a popularity contest and Trump is happy to play the heel.
The Arabs are applying the decisive pressure now. Pass out or tap out, the crown princes have clearly resolved that Tehran is not going to keep their uranium, their enrichment, or their Hormuz Strait hostages. The Islamic Republic is running out of time and options to avoid the humiliation of wet faces.