Reopening the Strait of Hormuz Is Going to Take Awhile

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1:58response is not over yet. Just about three weeks into the Iran war, attacks are escalating on vital parts of the Middle East's energy infrastructure. Iran has also threatened to attack ships in the Strait of Hormuz, the narrow passageway that, in normal times, is the gateway for one-fifth of the oil sold on global markets. Hundreds of tankers are now stranded, waiting to get through. The large majority of the tanker fleet is just sort of still stuck in the Persian Gulf and sort of dealing with a lot of really difficult problems right now. Jerry Doyle is Bloomberg's global defense editor. He says these ships, with an estimated 40 ,000 seafarers aboard, are at the center of a crisis with global reverberations.

2:41Obviously, you know, folks are living aboard a ship with no particular end date when they might be able to get off of it. There's always the threat of missiles. They can see oil installation burning on shore. You know, GPS is scrambled and jammed, so that makes navigation more difficult. The regional upheaval sent oil prices up sharply on Thursday. European gas futures soared as much as 35 percent. But restoring global supplies and settling markets won't happen until traffic in and out of the Persian Gulf resumes. The cost of insuring one of these ships for this voyage has gone up fivefold. A few ships have been able to get through the Strait of Hormuz, apparently with Tehran's blessing.

3:24But ships without that run the risk of attack. And then there's concern about mines. U.K. Defense Secretary John Healy has told reporters that it's clearer and clearer that the Iranians may have started mining in the strait. U.S. Defense Secretary Pete Hegseth has said the U.S. has no clear evidence of that. But just the possibility that Iran has laid mines in the strait, Jerry says, makes passage all but impossible. It's sort of a reverse Schrodinger minefield, right? Until you find the mines that aren't there, you have to assume they are there.

4:03I'm David Gura, and this is The Big Take from Bloomberg News. Today on the show, as the consequences mount of the Strait of Hormuz being closed, the very real risks of navigating this crucial waterway, including the potential of mines, how the U.S. and other countries are trying to figure out if those explosives are there, and what it would take, and how long it would take. to remove them if there are.

4:29One of the White House's stated goals for the Iran war is to annihilate the Iranian Navy. I asked Bloomberg Global Defense Editor Jerry Doyle what capability the Iranian Navy still has after more than two weeks of fighting and what problems that poses for the Strait of Hormuz. I mean, in conventional terms, the Iranian Navy is just not really there. It doesn't have much in terms of a surface fleet at the moment. All of its larger ships have been sunk, damaged, destroyed. What it does have left, again, in some unquantifiable number, is a lot of these small speedboats, which can navigate an area like the strait pretty easily, which can put out from shore or hidden locations pretty easily and can carry some nasty stuff on board, including missiles, anti-ship mines, and even explosive charges themselves.

5:15So walk us through, if you could, the ways in which Iran could target ships passing through this strait. You've talked about these small boats and what they could do. What are some of the other ways that Iran could target tankers and ships? Well, sea mines are probably the easiest way. They're very easy to distribute. You can place mines in the strait sort of under the guise or with the normal patterns of sort of life in the strait using small boats or traditional commercial vessels called dows that are ordinarily in the strait anyway. You can push them out from shore if you want. And the issue with mines is that, as one expert told me, the number of mines you need to create a viable naval minefield is zero.

5:58Until you find the mines that aren't there, you have to assume they are there. Just the threat of a minefield existing in a narrow waterway like that means that it has to be cleared. You sort of have to prove the negative. You have to show that there is nothing there, and that requires a lot of painstaking work. While the ships are conducting that sort of activity, they're in range of all of Iran's shore-based weapons, which creates a dangerous situation. So that is kind of the easiest way that Iran can close this trade, by either threatening to or actually mining it. And then it sort of becomes an impassable barrier until the mines are cleared.

6:38I want to linger on this for a minute. that that is the kind of psychological power of a shipping company or a captain or an insurance company just wondering if, in fact, there are mines in the strait. Could you kind of help us get into the head of each of those individuals, sort of what they would need to know or see to feel comfortable going through the strait at this point, given what you say is kind of the fear of there being mines in these waters? Well, I think what they would need is either assurances from the Iranian government or the Iranian military that their ships would be able to pass safely or guided through perhaps parts of the strait that are not mined or are safe.

7:14Or they would need assurances from foreign militaries, from the U.S. Navy, from the Gulf Navies that the strait is safe to transit. It has to be pretty clear assurances either from the party that would potentially mine the strait and know where those weapons were or the folks who would go through and clear it out. Jerry, let's get into the mechanics of, I guess, trying to assess if there are mines, also clearing mines from a body of water like the Strait of Hormuz. How does a military go about doing that? Well, different militaries have different capabilities for it. You can have purpose-built ships which often have non-magnetic hulls.

7:51There may be fiberglass or wood covered in fiberglass, something like that, which allows them to pass through these mined areas a little more safely. And then you use those ships and the sensors on board those ships to spot the mine with sonar or other means of detecting anomalies under the water, magnetic anomalies and things like that. Then once you have those contacts identified, then you can assess whether they are mines or not. They could just be junk on the bottom of the sea. And then once you have the information, what you feel is reliable information about what's a mine and what's not, then you have to go through and disable them.

8:26And there's different ways you can do that. You can use a small explosive charge. You can even use divers if you want, although that's obviously very risky. But it's a really painstaking process. Now, the U.S. Navy is sort of phasing out those purpose-built boats. What it uses is its littoral combat ships, which are these smaller, faster military vessels that are designed to operate in close to shore. And they have a mine-clearing sort of module package that they can mount on board the ship. And they use these remotely controlled vehicles, on crewed undersea vehicles to go scan at some distance from the ship and look for mines.

9:03Usually no same tools, the sonars and magnetic anomaly detectors. And then you have to go through, again, the whole process of clearing the mines. That is considered a little bit safer for the ship involved because it doesn't have to be directly in the minefield. But in the case of the Strait of Hormuz, clearing the strait and the waters around it would require the ship, the main ships, to still operate within range of around anti-ship missiles, which makes it a very complicated and fraught process. You mentioned the U.S. was phasing out this kind of old mind-sweeping technology. There were four of these ships in the Middle East that were moved out by the Navy in January.

9:40Now we have these new literal combat ships that haven't really operated in these sorts of conditions before. And I wonder what kind of complications that introduces them having to kind of do this in real time, maybe before they've been tested in doing this. Well, I mean, that is the complication. You're doing something you haven't done before in these types of circumstances. And so, you know, on the positive side of a ledger, you will learn how well things work. You will learn some better practices. But on the negative side, obviously, it's like there's a lot of risk. The stakes are pretty high.

10:11So if you make a mistake, extremely bad consequences can result. That's right where I wanted to go. You're describing a process that is, you could say, delicate or risky. is this work that can be done in the middle of an active conflict? I mean, it can be done. And World War II, for example, it has been done. But in modern warfare, it's just not considered a very safe thing to do. It's something you can do if you have to, but it's very, very risky. Because again, it's painstaking. You have slow-moving surface vessels that are operating within range of the enemy, and that makes them much easier targets.

10:48And in a constrained area like the Strait of Hormuz, it's even more dangerous. So how long could it take for the Strait of Hormuz to reopen? That's next.

11:11I'd love to turn to the timeline here. If you start with the assumption that there could be mines in the Strait of Hormuz, and you need to make sure that there aren't or you need to clear them. How long is that process likely to take? It depends on how many mines there are and the area of sea that they want to make sure is completely clear, right? Maybe many days, maybe weeks. It really depends on how heavily mined it is, how big of an area they want to make sure is safe, and what kind of opposition they face. state. If this is a mine clearing operation that's going to take place while Iran is launching missiles from the shore, it will take a very long time.

11:51We've heard the president of the United States ask allies to help in reopening the strait. So far, many of those allies have demure. They're not interested in getting involved. Theoretically, what could they offer the U.S. in this effort? How could that sort of speed along or improve the process by which they would get the, you know, honestly, the U.S. Navy, you know, has more or less the same sort of capabilities in these areas that their allies do. Many hands make lighter work, I suppose, but it's not like new or different technology will be brought to the fore. And all of those ships, all of those ally ships would be, you know, facing the same threat that the U.S.

12:31would be. So it's difficult to see what having allied ships in the area would do operationally besides sort of offload some of the risk of clearing the mines. We have seen oil bouncing around$100 a barrel. This is the pressure on the U.S. to get this straight opened up and traffic moving again more quickly here. What would a sustained closure of the Strait of Hormuz mean for oil prices, for energy prices more broadly? Why is this something that's really applying a lot of pressure on the U.S. at this point in time? Well, something like 20 % of the world's oil passes through the Strait in normal times.

13:06And so So removing that supply or making it take a much more expensive or convoluted or lengthier time-wise routes to get out of the region just adds to supply pressure. And, you know, the reserves that are being released are not going to be able to be released at a volume that matches the amount of oil that is being cut off by the straits closure. And then, of course, because so many aspects of the global economy rely on oil, rely on fuel for container ships, for aircraft, for your car, all the prices for those things start to go up too. And the higher oil prices get and the longer they stay high, the more intense those pressures are going to be, sort of inflicting quite a bit of pain and disruption into the global economy.

13:53Jerry, I think a lot of us have been trying to figure out if there's a unified rationale for this war. We've heard a lot of things, different things from the president, members of his administration. Now, several weeks into this conflict, I'm curious sort of what you think the role of oil prices is in shaping the direction of this war. And if we were to get, you know, higher prices of oil in a sustained way, how that could shape the way that this conflict continues to unfold? Certainly from Iran's perspective, the oil prices and sort of the economic pain that Iran can inflict by keeping the strait closed, by damaging oil infrastructure around the region, that's really their one big, maybe their only major card remaining to play.

14:33And because they are in an existential fight, they have not seemed to have shown much reluctance to play that card and to inflict that pain. From the U.S. perspective and from the rest of the world's perspective, they're suffering economic pain and hardship and all these things without necessarily a clear goal. And so it's hard to square this idea of, you know, so I'm willing to endure this much pain and hardship in order to have this goal at the end of it. But if we don't know precisely what that goal is, it's hard to calibrate. And so that's complicating this calculus at the moment, I think.

15:12But I do think it's fairly clear that the longer oil prices stay high and the more those costs start to trickle down to ordinary people, especially, you know, consumers in the U.S., the more political pressure they will be on the U.S. to end the war or reach some sort of terms of, you know, ceasefire or just walk away.

15:39This is The Big Take from Bloomberg News. I'm David Gurrat. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you like this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

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