Only 8 weeks ago, when it came to US President Donald Trump, our focus was on Greenland. Remember Greenland?
While no doubt imperfect, the Danes have run Greenland quite peacefully for hundreds of years. Trump never made clear exactly why he felt Greenland was in any way vital to US interests.
Only 6 weeks ago, US President Donald Trump attacked Iran, in alliance with Israeli President Bibi Netanyahu, without warning to either his intended protagonist or to his allies
Iran is a completely different kettle of fish. For 80 years, since the start of WW2, Iran has been central to the developed world’s access to oil.
The Brits and the Soviets partitioned the country early in the war to make sure that a pro-Nazi Shah wasn’t in control. They replaced him with a pro-Western son who remained an ally of the Americans and Brits, as well as the Israelis, until the late 1970s.
The son watched on from a royal palace, entertained by a glamourously attractive retinue he was noted for, as the Americans replaced a Prime Minister who had been elected on a platform of taxing Iran’s oil wealth for education, medical care and social infrastructure for Iranians in the early 1950s.
That in turn led to the son being overthrown in the late 1970s by a theological regime, which had the side effect of the most Westernised society in the Middle East becoming the most conservative.
But the biggest single concern of anyone having anything to do with Iran at any time after the 1940s was how to get oil out through the Strait of Hormuz.
An entire international oil and gas industry and Western reliance were built up in the years following WW2, predicated on shipping most of the production out through the Strait of Hormuz. That is the oil and gas industries of Iran, Iraq, Kuwait, Saudi Arabia, Qatar, and the United Arab Emirates.
Certainly, on occasion, those nations have considered reliance on the security of the Strait of Hormuz a considerable ‘strategic risk’ and have invested heavily in pipelines to transport oil to the Red Sea coast of Saudi Arabia or to locations in Turkey or the Mediterranean. To a minor extent, these massive investments have reduced the risk.
But in 2026, the risk of closure of the Strait of Hormuz remains the biggest single risk to the global energy market.
So it is a considerable assault on credulity to consider that anyone thought to militarily attack one of two nations in control of the Strait of Hormuz without considering the effect that this might have on shipping through the Strait.
Overnight, the first meetings between the American and Iranian delegations took place in Islamabad, Pakistan. They didn’t get anywhere and the takeaway from the meeting is a vibe of ‘serious differences’ against the backdrop that both the Americans and the Iranians at some point looked across the table and wondered, ‘what planet are these guys coming from?’
Those serious differences for sure involve reparations, nuclear programmes, armaments limitations, support for other states and organisations and their activities, and non-aggression commitments. For sure, there is a further major issue observable in the extent of any relationship to the Israeli military actions in Lebanon.
But before we can get near that minefield of issues, the simple status of the Strait of Hormuz needs to be agreed upon, and currently the positions of the Americans and Iran regarding the Strait of Hormuz are that:-
- The Strait of Hormuz would be declared a free maritime zone and remain permanently open.
The Iranian position is
- Recognised control over the Strait of Hormuz
With complete agreement on all other issues but disagreement over the Strait of Hormuz, Iran and the US would not reach an agreement.
Without agreement on that one issue, the rest of the world cannot get 20% of its oil needs, as much as 30% of its LNG needs, about the same of its fertiliser needs, and a good chunk of its petrochemical sources.
Without all of those sailing out of the Strait of Hormuz as they were 8 weeks ago, the developed world is staring at an energy, petrochemical and food shock of spectacular magnitude.
Presumably, we will go back to missile and drone exchanges within hours. The already considerable infrastructural damage to facilities in the Persian Gulf, which would need to be addressed before returning to the situation from 2 months ago, is mounting.
We all need to start factoring in that the world of February 2026 is not going to be returned to.
For Australia, that implies our sources of supply now need to be re-established, and, in many instances, our capacity to access, produce, refine, or deploy factors of our day-to-day life need to be renegotiated internationally or recreated from scratch in Australia.