Trump's new Strait of Hormuz plan | BBC News

Welcome to the global news podcast from. the BBC World Service. Today, I'm joined. by our business editor, Simon Jack. Simon, Donald Trump effectively trying. to exert more control over the Strait of. Hormuz. What impact has that had? >> Well, it's seen a decline in the number. of ships getting through. Um if we go back to the dark days of May. when it was totally or effectively. totally shut, you used to see 60 to 80. vessels getting through every day. Now, that went to almost zero and then when.

you had the so-called memo a memorandum. of understanding, that crept up to about. 30 to 50. We're back down in the single. digits at the moment. Having said that, it's quite hard to accurately monitor. the crossings. A lot of ships will turn. off their transponder, their tracking. devices. Um. but and but but but certainly true that. Donald Trump's claim that oil is flowing. like never before is pretty inaccurate.

And that and the the result of that is. that we've seen oil prices which went. from the the heights of $120 a barrel. all the way down to 70 and almost below. And we're now at 86. For my money, it's pretty odd that the. oil price isn't actually higher than it. is. And I think the reason for that is. that every time we get to close to a. real pinch point, there is some kind of. backing off from the US president. For. example, he said he was going to.

reimpose the blockade. He was going to. going to say anything that goes through, anything non-Iranian as well, would. attract a 20% tariff. Well, the world. didn't like the look of that one bit. And in fact, he backtracked from that. and said instead of doing that, he was. going to basically secure trade deals. with the Gulf states which would. compensate the US for helping to get. their oil, their exports, their crucial. currency that they need through through. the Gulf. But all of this is pretty. vague. It changes on an hour-by-hour.

basis. But, at the moment, oil price not. where it's been at the height of the. conflict, but nevertheless elevated from. when we saw the memorandum memorandum of. understanding. >> Yeah, as you say, it was a sort of huge. U-turn within the last 24 hours where he. said there was going to be these 20%. tariffs, then he backtracked and and. talked about these trade deals. Are these trade deals real or are they. just something that he's. come up with without much consultation. with officials? You know what. >> I've got to tell you, no one really. knows.

what he means by that. Now, there is no. overarching trade deal between the GCC, the group of Gulf countries. There are. some individual deals on things like AI. chips and food with individual. countries. But, it's quite hard to see how big. trade deals come out of nowhere in the. kind of time scale you would need to. make an immediate impact on what's going. on. Trade deals usually take a very long. time to conclude. So, there are individual agreements with.

Gulf state countries, but I think trying. to pull together sort of massive trade. deals which would compensate the US into. the hundreds of billions of dollars, which is what he's said, I think is. quite hard to conjure with and I don't I. don't know anyone who's told me the. detail of how that would actually work. >> As you say, very little oil seems to be. getting through the Strait of Hormuz. People have been burning through their. stockpiles. At some point, they're going. to reach the end of they and. there's going to be a crisis. >> Well, it's very interesting this because. if we go back to sort of April, May, you.

had the International Energy Agency. saying that this crisis was going to be. worse than all the other oil crises we'd. seen before back in the early 70s and. the 80s and the tanker war of 2008. and it was going to cause a global. economic crisis. It didn't happen. Now, what's very interesting about that, it. turns out that the US the the the world. energy supply network proved itself to. be more resilient than thought. And that one another big factor, which. is perhaps underreported, is the role of.

China in all of this. Now, China, obviously a massive consumer of energy, it managed to draw down on its reserves, as you say, but also moderate demand in. China, um, in a way that hasn't damaged. its economy. So, I think if you want to. read what's going to happen next, I. think that seeing what China does next. with its own demand, what's happening. with its reserves, is actually crucial. to seeing whether we re-escalate to, um, oil prices which actually create an.

economic crisis. It's not just oil, remember, that goes through the Strait. of Hormuz. It's lots of other products. like fertilizer for food, and it is. interesting that you've seen, um, wheat. prices begin to pick up again this week. Now, some of that can be is to do with, um, Ukrainian attacks in in the Black. Sea on Russian ships, big exporter of. wheat. But, it's a it's such a complex. picture. But, what is interesting is. that this so-called worst crisis i- in. oil supply in history, according to the.

IEA, did not translate, yet at least, into the kind of economic crisis that. some predicted. And a lot of people have. kind of got headline fatigue about this. in the sense that they say, "Oh, here we. go. One day it's this, one day it's. that. Da da da." So, they're reluctant. to react too too violently to anything, cuz they know it could be reversed. tomorrow. So, I'm not saying that there. is no potential economic crisis here. Maybe there is, but it hasn't materialized yet. And the.

way the world supplies its oil, what. have you, has proven pretty nimble, but. it agile, pretty resilient to this. point. >> The Iranians have regarded the Strait of. Hormuz pretty much as their trump card, but they do have potentially another. card up their sleeve, which they're. starting to starting to talk about, which is. if they could persuade their allies, the. Houthi rebels, to close the Bab. el-Mandeb. uh crossing. >> Yeah. Yeah, I. >> That could feed into this badly, cuz. >> Yeah, this could escalate things um.

significantly because if you look at a. map of um the Middle East, you've got. Saudi Arabia, if you like, going down. the middle with the Persian Gulf on its. right and the Red Sea on its left, Saudi. Arabia has a coastline on both of those. sides. On the other side of the Red Sea. is Yemen, and Iran has proxy uh. interests there in the Houthis, who over several years have been um you. know, bombarding shipping from time to. time. And if you were to cut that off, as well. as that, then you know, it straight away.

moves about 20%, then Red Sea and Bab. el-Mandeb is maybe 8 to 10%, then you're. obviously got two important choke. points. What I would say is that um. because of the repeated attacks over the. last few years from Houthis on some of. that traffic, a lot of people have found. other ways to go through, so they'll go. north rather than south from there. So, go north up towards the Suez Canal. rather than south into the Gulf of Aden. It's geography lesson here, which uh you. know, we're all learning ourselves,

aren't we? So, um so yes, but that. definitely a potential escalatory uh. move they could make. Um and but as I. say, people have found themselves quite. resilient and have kind of got used to a. little bit of trouble through that bit. and have find other ways to reroute it. as you know, going north rather than. south. >> Mr. Trump is a businessman. He's written. books on the art of negotiation. Is his. strategy working? And and and what do we.

think he actually wants? Because it. depends what his objective is as to. whether his strategy is working. >> He's under a lot of pressure. politically to prove that. the net result of this war is not to. make Iran a more powerful player than it. was before. Clearly you've got one set of objectives. about never having a nuclear weapon and. you we can talk about that, slightly. different issue. But it a lot of people would say that. Iran have. had what they may have thought already. but has certainly had it confirmed that.

they've got an incredibly powerful. weapon in uh the. control of the Strait of Hormuz. And. the worst political outcome for him is. that. the current regime stays in place, they. don't get the enriched uranium, and Iran. emerges with a greater sense of its own. economic power than it went in with. And. I think that's why that he's sort of if. you like um. uh continuing to sort of keep up the. rhetoric that we control it. So really.

this. Middle East thing is now become about. like who controls the Strait of Hormuz. Iran is very clear that it's them. The US can't allow them to think that or. let the rest of the world think that. because politically that would seem to. be a very poor outcome from a war which. has by the way had political. implications in the US. Um gasoline went. up, you know, very significantly to sort. of four, five dollars a barrel when it. used to be around sort of three. And American motorists are super. sensitive to gasoline prices. They see.

it as a such a fundamental input. And we. all know and all we've all learned if we. didn't know the pervasive. inflationary impact of higher fuel. prices because it's not just um you know. oil rigs and what have you. When it goes into sort of trucks and. cars then every single thing that goes. to your local supermarket, your grocery, it gets into fertilizer. It oil prices. get into just about everything and push. prices up. When prices go up, inflation.

goes up. That means interest rates. sometimes have to go up and that has the. ability or the effect of um raising. prices puncturing growth. So, it's an. economic bad outcome for everyone. >> The midterm elections are in November. It's not so far away. Has Donald Trump. got time to sort this out and turn the. economy around before people go to vote? >> Well, what we've seen after the. memorandum of understanding is that oil.

prices snapped back pretty quickly. They. went from the highs of 120 down to 17. below in pretty short order. Now, there. are supply chains and it will take a. while for the bulge in the snake of. these higher prices to go through right. through global supply chains. But, if they can sort something out, it. is quite possible you get back on the. track that I mean, if Iran could be. accepted back into the community free to. sell its own oil, you know, hostility. seized. Larry Fink, the boss of. BlackRock, told me just a couple of.

months ago, he thinks that oil could end. up at 50, even $40 a barrel. So, they. could snap back. But, it seems to be, you know, the. you know, the. the conflict with Iran and the war of. words with between the leadership in the. White House and in Iran. appears to be pretty intractable at the. moment. You know, I'm in charge of the. history of oil. No, I am. And it's hard. to see a way through that in a way that. can be resolved quickly enough before we. start homing in on these midterm. elections, which are absolutely crucial.

for for Republicans in the US. So, they'll be very mindful. And I think the. Iranians will be very mindful that this. is coming down the track as a political. event for the US, too. >> The BBC's business editor, Simon Jack. Plenty more from the Global News Podcast. on the link below. Thanks for watching.