FOX Business host Larry Kudlow examines the Trump administration’s strategic approach to Iran and the shifting dynamics of the Middle East conflict on ‘Kudlow.’
Recent data from United States Central Command confirms that Iran does not maintain control over the Strait of Hormuz. Since early May, U.S. forces have facilitated the safe transit of 825 commercial vessels and approximately 380 million barrels of crude oil through this critical international trade corridor.
These figures explain the nearly 40 percent drop in oil prices, with West Texas Intermediate now trading around $71—a level consistent with prices seen a year ago, prior to the escalation of the Iran conflict. Consequently, equity markets have decoupled from Iranian threats regarding the Strait, while record-breaking corporate profits continue to drive stock market growth.
Beyond U.S. naval presence, a potential production war is emerging as OPEC’s influence wanes. The United Arab Emirates is looking to increase its output from 2 million barrels per day to as many as 5 million. Similarly, Iraq is projected to scale production from just over one million barrels per day to between 4 million and 5 million.
Strategic shifts are further undermining Tehran’s leverage. Saudi Arabia is diverting exports through its East-West pipeline to the Red Sea, while the UAE and other nations have rerouted tankers through the Southern Hormuz channel near the Omani coast. Together, these maneuvers are dismantling Iran’s strategy to bottleneck the global economy.
Meanwhile, the United States is approaching a production level of 14 million barrels per day. The Energy Information Administration forecasts that global crude production and trade flows will return to near pre-conflict levels by the end of the year.
With hundreds of tankers fully loaded in the upper Arabian Gulf ready for market, and Chinese oil demand plummeting due to a persistent economic slump, the evidence suggests that Iran’s purported “oil weapon” in the Strait of Hormuz has been effectively neutralized.