Suez Canal

LEARN MORE ABOUT THE SUEZ CANAL

To understand where this conflict may be headed, history offers a useful guide. In the fall of 1956, Egypt nationalized the Suez Canal and as a result Britain and France, joined by Israel, launched Operation Musketeer to take it back. Militarily, it worked. Strategically, it did not. They lost not on the battlefield, but because of political and economic pressures on the home front. Seventy years later, the United States finds itself in a strikingly familiar bind.

Operation Epic Fury has achieved its immediate military aims in Iran. Leadership has been disrupted, missile and drone facilities degraded, and uranium stockpiles reportedly depleted. But the broader strategic goals that these tactical elements signal; an open Strait of Hormuz, more U.S.-friendly Iranian leadership, and regional stability, have not been met. The Strait remains effectively closed and Iran, while militarily weakened, is emboldened.

THE HORMUZ PROBLEM

Most recognize that gasoline comes from oil. Fewer recognize petrochemicals made from oil and natural gas provide the building blocks for over 95% of all manufactured goods, including plastics, fertilizers, pharmaceuticals, and synthetic fibers. The Strait of Hormuz is the artery through which these inputs reach market. Before the conflict, roughly 21 million barrels per day moved through it, approximately 18% of global supply. As a result of its closure WTI crude oil prices have risen 50% from pre-war levels and Non-U.S. grades have risen by 100% or more over the first quarter. The economic toll for such disruption is acute. The Dallas Federal Reserve recently estimated if the Strait remained closed for the remainder of 2026 it would reduce real global GDP growth by 1.3%, roughly equivalent to Mexico's entire economy going dark for a year.

MOTIVATED RESOLUTION

The U.S. midterm elections are nearing and the voting topic du jour is affordability. Gasoline prices and inflation are not abstract policy debates. They are felt at every fill-up and often find their way into voting booths. Like Britain in 1956, the forcing function is less likely to be the battlefield and more likely to be the pressures at home.

The challenge remains finding a credible exit. According to the associated press Iran’s terms for peace include per-ship tolls on Strait passage, their right to enrich uranium and pursue a nuclear program, and reparations for damages sustained among others. These terms suggest Tehran believes leverage is on its side.