What the Iran War Just Revealed About American Power

Six Weeks, 400 Tankers, and One Uncomfortable Truth

On Tuesday night, President Trump announced a two-week ceasefire with Iran. The condition was straightforward: Iran reopens the Strait of Hormuz — immediately, without tolls. Iran agreed. For a few hours, tanker traffic appeared to stir. It looked like the worst might be over.

Then — to the surprise of no one who’s been paying attention — Israel struck Lebanon. Iran called it a ceasefire violation and shut shipping back down. The Islamic Revolutionary Guard Corps (IRGC) announced that transit through the Strait had stopped. As of this morning, over 400 tankers remain anchored in the Persian Gulf. Thirty-four LPG carriers. Nineteen LNG vessels. The world’s most important oil chokepoint — through which a fifth of global supply flows — is still effectively closed. Six weeks and counting.

The White House insists the ceasefire is holding. Iran says it isn’t. Negotiations are set for Saturday in Islamabad — led by JD Vance, Steve Witkoff, and Jared Kushner. Whether there’ll still be a ceasefire by then is anyone’s guess.

But here’s the question worth pondering: why are these negotiations happening at all?

The United States has the most powerful military on the face of the Earth. It spends more on defense than the next ten countries combined. It has carrier strike groups in the Persian Gulf right now. It has cruise missiles, stealth bombers, satellite-guided everything. It has already destroyed much of Iran’s above-ground military infrastructure and killed its supreme leader. And yet — six weeks later — the strait is still closed. And the most powerful government on the planet is sitting down at a table in Pakistan to ask Iran to reopen it.

The reason is simple: unless you’re willing to commit outright genocide — which, until recently, Trump appeared willing to consider, posting on Truth Social that “a whole civilization will die tonight, never to be brought back again” — no amount of firepower is a match for geography and a people with nothing left to lose.

Let me explain both — because they tell you exactly how this ends.

Why the Strait Is Still Closed

The Strait of Hormuz is a narrow bottleneck at the mouth of the Persian Gulf through which roughly 20% of the world’s oil supply flows every day. At its narrowest, it’s just 21 miles wide. The navigable shipping channels — two miles wide each — run through Iranian waters. Iran has nearly 1,000 miles of coastline overlooking them, lined with mobile anti-ship missile batteries that can be packed up and relocated before a counterstrike lands. The Defense Intelligence Agency (DIA) estimated Iran possessed over 5,000 naval mines before this war started. You don’t need to lay all of them. You just need the world to believe they’re there — and no commercial insurer will write a policy for a tanker to sail through. No policy, no passage.

The U.S. government can flatten every military base in Iran from 30,000 feet. They can destroy its air defenses, its navy, its command structure. And the strait will still stay closed. To physically secure the passage, you’d need a full-scale ground invasion of Iran’s southern coast — and even America’s entire 1.2-million-strong active military probably wouldn’t be enough. For all his questionable rhetoric, I don’t think even Trump would be reckless enough to go that route.

And then there’s the other thing that no amount of cruise missiles can neutralize: the people on the other end of them.

Say what you want about the Iranian ayatollahs — but they are not cowards. They absorbed six weeks of the most intense aerial bombardment since the opening days of the Iraq War, lost their supreme leader, and responded not by capitulating but by tightening their grip on the strait. When Iran published its 10-point peace plan, people chuckled. Withdrawal of all U.S. military forces from the Middle East. A non-aggression pact. Reparations for war damages. Lifting of all sanctions. Iran’s right to nuclear enrichment. Continued Iranian control over Hormuz.

Maximalist? Sure. But I genuinely believe they won’t settle for less than 80% of it. And if you think about it from their perspective, you’d probably do the same. You agree to something today — something that leaves American bases in the Gulf and Israeli jets within striking distance — and what happens a year from now? Another operation. Another supreme leader assassinated. Another round of “we had no choice.” From Tehran’s point of view, accepting anything less than a fundamental restructuring of the regional order is just agreeing to be attacked again on someone else’s timeline. So they’re going all in. They have to.

This is why I don’t believe these negotiations will produce a lasting ceasefire, let alone a lasting peace — not unless Iran feels it got its way.

The Lesson the World Just Learned

Now, I want you to think about something.

If the U.S. could reopen the strait by force, there would be no ceasefire. There would be no negotiations. There would be no “deal.” The fact that Trump had to go to the table — and that the condition of the deal is that Iran reopens the strait — tells you who actually holds the cards.

This — and this war in general — has exposed something that will be very hard to erase — from the minds of America’s enemies and allies alike.

The U.S.-led international order, built on American might as the last Western empire standing, is all but cracked open. For America’s enemies, the lesson is that you can defeat the United States — if you have the right geography and the willingness to absorb the punishment. For America’s allies, the lesson is worse: you can no longer count on Washington to protect you.

Before this war, the U.S. guaranteed safe passage through Hormuz. It had military bases across the Gulf to protect its allies and keep the oil flowing. The U.S.–Israeli war on Iran revealed that none of that was enough to actually protect the Gulf states. Or to move their oil. The only thing standing between Saudi Arabia and an Iranian missile right now is Iran’s decision not to fire one.

So if you’re Mohammed bin Salman — Saudi Arabia’s crown prince and the most powerful man in the Gulf — and you need your country protected, who do you call? Washington, which just proved it can't keep the oil flowing? Or Tehran, which just proved it can stop it?

These aren’t hypothetical questions. We already know the answer. Saudi Arabia has been in daily diplomatic contact with Tehran since the war began — not through Washington, but through its own backchannel. They hosted an emergency meeting of Arab and Muslim foreign ministers in March to discuss the war — and the consensus wasn’t to rally behind the U.S. It was to demand a seat at any negotiating table. These are countries that spent decades under the American security umbrella. The fact that they’re now scrambling to build their own relationship with Iran tells you everything you need to know about how much faith they have left in that umbrella.

And it’s not just the Gulf. Here’s something the legacy media has been curiously quiet about: France, Japan, Malaysia, Thailand, and the Philippines have all negotiated passage through the Strait directly with Tehran, bypassing Washington entirely. Payments are being routed through China’s Bank of Kunlun. Not in dollars. In yuan. Think about that for a second. These aren’t “rogue” states. These aren’t BRICS members making a political statement. These are longstanding U.S. allies — some of them NATO members — quietly making other arrangements because they’ve concluded that the American security guarantee is no longer worth what it used to be.

So what does all of this mean for the U.S. and the ongoing war?

In my estimation, the U.S. government will have to swallow this defeat — sooner or later. What exact form that takes, or how many more people will have to die before it does, is anyone’s guess. But the U.S. government will eventually have to concede Iran’s supremacy in that part of the world. Unless, of course, its leaders are willing to put millions of boots on the ground — or commit a genocide. It’s just a question of time. As President Trump himself said to Ukraine's Volodymyr Zelensky in the Oval Office — you have no cards.

Regards,

Lau Vegys

P.S. And as I've been writing to you recently, this whole situation is about to get much worse. The traditional foreign buyer base for U.S. Treasuries is coming under enormous stress — all at once. Saudi Arabia, the UAE, and Kuwait together hold over $1 trillion in U.S. financial assets, and with Hormuz effectively closed and their oil revenues collapsing, they’re about to become forced sellers. Japan — America’s single largest foreign creditor, with $1.2 trillion in U.S. Treasuries alone — is getting crushed by the same energy shock: it imports nearly 90% of its energy, and two-thirds of its oil supply is currently blocked. We walk through all of it in our latest issue of Crisis Investing — along with two new recommendations built on exactly this thesis. Even if you’re not yet on the paid side, the lead — featuring Doug Casey’s latest words of wisdom — is free to all.