School of War - One Battle of Hormuz After Another, with Sal Mercogliano

Episode Date: June 29, 2026

Sal Mercogliano, professor of history at Campbell University and host of the What’s Going on with Shipping YouTube channel, joins the show once again to discuss Iran's renewed attacks on commercial shipping in the Strait of Hormuz. Why is the ceasefire already beginning to unravel? What is Iran trying to accomplish by asserting control over the strait? And what could the long-term consequences be for global trade, energy markets, and freedom of navigation? 02:11 - New arrangement in the Strait of Hormuz 05:19 - Humanitarian situation for sailors 06:53 - Jobs at sea and AI 08:05 - New rounds of violence 11:02 - Route options for ships 13:30 - Why did the ceasefire break down? 15:05 - Iran asserts control over the strait 16:10 - Why were these ships targeted? 19:08 - Strait of Hormuz as a strategic choke point 21:49 - What Iran learned from the Houthis 23:21 - Why energy prices haven't spiked 28:20 - Impact on developing nations 29:13 - The endgame in the Strait of Hormuz 33:22 - U.S. naval presence in the Gulf 36:26 - Iran's maritime protection racket Follow along on Instagram, X @schoolofwarpod, and YouTube @SchoolofWarPodcast, or at The Free Press Learn more about your ad choices. Visit megaphone.fm/adchoices

I want to get a sign that says the straight of Hormuz is, and then a little thing you can flip open today or closed today. Over the weekend, it looks like it went closed again with Iranians taking shots at ships, the United States responding things now back into what appears to be another sort of tentative kind of ceasefire. We've got Sal Mercagliano, our shipping expert correspondent and general guide to all things maritime back on the show today. Let's get into it. It is a prescription for war, this Iraqi invasion of Hawaii. December 7, 1941, a date which will live for the experience of Vietnam is to end in a state. We continue to face.

And in the little street, which you'll never know that. Hi, I'm Aaron McLean. Thanks for joining School of War. I'm delighted to welcome back to the show today. Salmer Cagliano. He is professor of history and chair of the Department of History, criminal justice and political science at Campbell University. He's the host of the most excellent What's Going On with Shipping YouTube Channel. He's been an essential commenter, analyst, voice over the last few months, in particular when it comes to the question of the Strait of Hormuz, but of course on maritime issues more broadly. Sal, thank you so much for coming back on the show.

Thanks for having me, Aaron. I'm going to start with the obvious subject, which is the Strait of Hormuz is back in the news. We should talk about the events that began on Thursday and then sort of hit their climax and seemed to have paused now in and around the Strait. But actually, before we do that, could I ask you to step back into the last couple weeks since the memorandum of understanding between the United States and Iran was signed and just described to us before the shooting started on, I guess it was Thursday of last week, what was the new world shaping up to look like?

What was the new arrangement in the Strait? Well, the memorandum of understanding actually created two things going on at the same time. Number one, it was a repeal of the U.S. blockade, which was significant. Now, this is outside the Strait of Hormuz. What we saw happen was Iranian ships let loose. I mean, we saw Iranian ships set sail. All of a sudden, we had Iranian oil at sea moving. We'd had Iranian ships really stuck inside the Gulf of Oman. The U.S. had executed a pretty tight blockade. We'd just had a wave of attacks against three. commercial ships that were not Iranian, but we believe we're doing ship-to-ship transfers. In other words, taking Iranian oil on board to later transport them. With the MOU, those Iranian ships plus other Iranian ships that were stuck in places like Sri Lanka, India, Pakistan, all started setting sail. And that gave everybody the hope that, listen, the strait's going to open up. Part of the MOU was release the U.S. blockade, open the Strait of Hormuz.

And what we saw was two areas of the Strait of Hormuz were being used. One was a northern section that was controlled by the Iranians. This is the infamous toll booth that they were running. And then a southern route that had been developed by the United States under Project Freedom, which initially started with two American ships coming out, and then very clandestinely until the president and a few others started talking about it quite openly, that they were running ships out through that southern route. And meanwhile, the center route, which is the international channel that ships usually go through,

remain closed because of mines. And so we were moving ships in and out. And what we had hoped to see, based on the MOU, was probably not a return to pre-war levels. It wasn't going to get to that. But we expected to see kind of the mass exodus of ships out of the Strait of Hormuz and potentially the resumption of at least some trade in and out of the Persian Gulf. And it looked like we were getting up to, again, not pre-war levels, but before Thursday, I saw numbers on the order of 60 or 70 ships, which would be about half of.

of pre-war traffic, right? Right. June 25th was probably the peak is what we saw. We had a lot of ships going in. And again, it's kind of hard to track those vessels because some of them are running dark. In other words, they're not having their transponders on. But what we did see was, you know, ships were running through the straight with their transponders on, which was significant, something we had not seen, especially through the Southern Channel. And so that Oman kind of U.S. Channel in the South was seeing a lot more traffic. We still had ships going through that northern route, too.

and so everybody was like, okay, maybe we're going to start seeing it. Now there was a lot of trepidation, obviously, a lot of concern. Not everybody was crazy to sail back into the straight because of obvious issues. But then, and at the same time, too, I should mention that the International Maritime Organization, in kind of concert with the day of the seafarer, June 25th, was trying to broker a deal to try to get more ships out that had been stuck in the Persian Gulf. And so they initiated Secretary General Arsenio Dominguez, worked with all the parties to try to get these ships that have been stuck in the Persian Gulf out.

And so what we saw on June 25th was that peak. I sort of lost in a lot of the commentary and reporting on this issue is the humanitarian dimension of the sailors themselves. Many of them trapped up there in the Gulf for some time now in fairly austere conditions. And facing a fair amount of danger, I saw the number, you'll confirm whether this is right or not, but the 14, I think it's 14 mariners have been killed in and around the strait since the start of hostility. So it's serious business being on one of those ships out there. It is, and that number is correct.

11 by the Iranians and three in an attack by the United States, Indian crew were killed. And it's been pretty bleak. I mean, the IMO has done a lot to raise this level somewhere in the range of 20,000 merchant mariners trapped and stuck inside it. Now, fortunately, we've seen the resumption of air travel in and around the area, so crew changes are being taken. But initially, there was a lot of issues. There was issues with food shortages on the ships. Even making water is difficult on a ship that's not moving. And so we had those issues fuel, of all things.

You're in the middle of the Persian Gulf, couldn't get fuel for the vessels. And one of the problems that the shipping companies had after a while was, okay, we can do crew rotations. We can get the crews off, but there weren't a lot of crews signing on to go, hey, I want to go to the Persian Gulf and get on a ship stuck and potentially get ship. shot at by somebody. So it creates a lot of problems. In matter of fact, one of the things that we just saw this past week come out is a potential problem emerging in global shipping with lack of crew members that's forecasted out that we're going to be thousands, 30,000 short within years. Wow. Well, I guess that's one job AI can't do. That's sort of flippant. I actually do. I actually have no idea what effect AI is going to have on the operation of ships, but at least

at least for now, it seems like you need humans. Actually, one of the things that was very interesting about this report that just came out is that actually the number of jobs at sea are going to increase. Even with AI, because of the number of ships out there, we're still seeing an overall increase. And so we're looking, you know, where are we going to pull those mariners from? Mariners come from all over the world. But there are some countries in particularly that provide a lot of mariners, India, Indonesia, Philippines is probably the number one, China.

but really getting tougher and tougher to do it. And so, yeah, that dimension of the attacks is a really tough one because it puts a lot of strain, particularly on the younger members on the crew. Yeah. Well, Sal, you and I just need to hold the line on podcasters. We can't have AI taking the podcast jobs. Okay, so that was all by way of preface. Let's talk about then the real news of the last several days, which is as of Thursday of last week,

you saw traffic increasing generally. the bulk of that traffic on that southern Omani route that you described a little bit of traffic through the Iranian route. And this appears to have upset the Iranians who then attacked. Maybe just could you walk us through the events of the last few days from the point of view of the strait? Yeah. So we saw on June 25th, we had this kind of exodus going on. So quite a big moving ship. Ships were moving through. And we had an attack on a container ship, the ever-lovely. It was one of three evergreen container ships. You may remember evergreen quite famously. One of their ships got stuck in the Suez Canal back in March of 2021. This was the ever-given, ever-lovely,

and her two sister ships are smaller versions of that same ship. They had been stuck in the Persian Gulf since the beginning, I mean, back since February 28th. And they were being orchestrated out, not part of the IMO effort, but part of the U.S. effort. So the U.S. was coordinating. Now, the U.S. had sent out guidance to shipping. And I got to say the guidance to shipping, is a bit confusing at times. We get these announcements out from what's called the Joint Maritime Information Center, which provides this, you know, how do you sail out through the Persian Gulf? And so they gave routing lines, so you have the chart lines where to follow. They give you warnings about potential minds and actual sightings of mines. But one of the interesting things

is you don't really have to coordinate. You just have to kind of follow these rules and this kind of set parameters to go out. So Ever Lovely was one of these ships. that was coming out and it was targeted. What we got was a true social post from the president that said four one-way drones were launched against shipping. Three were shot down, but the fourth hit the ever-levely on the starboard side of the bridge, which is to me very significant because if they're hitting the bridge, that means you're trying to hit the crew.

That's what you're trying to do in that type of strike. You're trying to intimidate the crew. Now, the ship suffered damage, but no crew members were wounded and the ship was able to to get out of the Strait of Hormuz. This triggered the IMO, the International Maritime Organization, to stop its effort. It had gotten about 115 ships out, maybe about 2,500 merchant mariners across those platforms out over the past three days. And so that kind of stopped the overt movement of ships.

But what we saw was while the AIS went dark, so if you're watching marine traffic, you wouldn't see any ships going through the Southern Channel. What we saw via satellite, via open source intelligence, was ships were. were still moving. And the following day, a very large crude carrier was hit. This is a big huge super tanker, two million barrels of fuel. It was struck by a missile. And this has caused a kind of retaliation by the United States. The U.S. initiated a series of strikes along the coasts of Iran, specifically along the Strait of Hormuz. And we got, again, this kind of ceasefire breakdown between the two. And what we're seeing right now is ships are moving through the Strait of Hormuz,

but not in the same levels that we had previously. So we had these two Iranian strikes on ships. We had sort of two rounds of American retaliation and some Iranian retaliation to the retaliation as well. That is to say, Iranians taking shots at Bahrain, amongst other targets in the region. You know, the situation that you describe in the strait itself is a bit bewildering. So I guess if you're on one of these ships that's stuck up in there and you want to come out, I guess you have three options, or you had three options, you could go through the Iranian route. And I, Sal, RAP, my cybersecurity,

because I actually went to the Persian Gulf straight authorities website and nosed around and read the insurance documents and things like that. So that's option one. And then I guess in the Omani route, you have both US and UN or international, option. I don't know how one signs up for one or the other of those, but it's really two different lanes and three different schemes. Is that fair? No, I think that's fair. And the Persian Gulf

Strait Authority, the PGSA, not to be confused with the golfing entity, the PGSA was established by Iran to kind of create this structure. And, you know, it is a classic shipping structure. It has forms. It has checkboxes. It has, you know, fax number. So, I mean, it has everything you expect to see in shipping, the most up-to-date technology always in shipping. And the problem with the PGSA, and the problem really with the Iranian strikes is we don't know why they specifically targeted Everloveli and Kiku, which is the tanker that went through. The Iranians aren't exactly clear why they do this. And this is what creates the problem. The PGSA, and this is the kind of, we get back to the root of the problem, which is the ambiguity of the MOU, specifically articles four and five, which basically says that Iran kind of

orchestrates and control, I'm going to say control, but basically, you know, has authority over the straight to open the straight up. And if you read the PGSA instructions, you have to apply to go through the routing. Now, there's no cost, there's no fee yet. I mean, that may be 60 days out from the MOU. But basically it says you have to go ahead and register with the PGSA. And what the Iranians want, and again, it should be noted that the PGSA is run by the Islamic Revolutionary Guard Corps, the IRGC. Both. of which are sanctioned an entity. So if I'm a commercial firm, if I'm ever lovely, if I work for Evergreen Marine, I can't really work with the PGSA. I can't even talk to them because if I do that,

that's a sanctioned entity. I'm going to come under a U.S. sanction. So it's kind of a catch-22. You can't work with the Iranians because of the structure they got set up and because of the U.S. sanctions. So you've got to run through the U.S. channel. And the problem is we don't know why the Iranians are targeting these ships. We believe that one of the initial issues had the do with the breakdown of the MOU initially with Lebanon, but that got resolved very quickly, we think. And now these most recent attacks create the ambiguity. And every time we have this, Aaron, every time you have ambiguity in shipping, this creates problems. It raises insurance costs and it makes shipping companies question whether or not they should be going in. One of the big things

we were watching for isn't just the exiting of ships, but the entrance of ships, because that's the key thing. Getting the ships out is great. But if you've got to get ships back in to start loading, and one of the things we started watching was ports were opening up. Kuwait, Qatar, Bahrain, they were starting to reopen their terminals and they were actually fixing contracts to move cargo out. And that was the good sign. That's what everybody wanted to see. Well, just to hazard a guess at the Iranian motivations, I mean, obviously, I don't know why it was those two specific ships and not a couple other ships, but we were just talking about the Persian Gulf Strait Authority's website, which you point out says you have to register.

there's some insurance you have to get. It's free for now. Looks like maybe after 60 days for the MOU, it won't be free, but there's a bunch of stuff you have to do in both of these ships, along with a bunch of other ships, presumably because they were going through the Omani route and because, as you pointed out, the RGC is a sanctioned entity and connected to the PGSA,

and I guess the PGSA also is specifically sanctioned. Maybe you couldn't clarify that as well. Okay, so it is. So in any event, they haven't filled out the paperwork. They're not registered, and so this is Iran essentially, enforcing the regulations that it is broadcasting. Now, it's enforcing them in an incredibly bloody-minded, dangerous,

you know, even murderous way, despite the fact that it seems like, luckily nobody was killed this time around. But that's what it is. It's enforcement of this scheme. And at several points over the course of the days between Thursday and the present, like after that first attack on the container ship, there was essentially an Iranian statement to the effect of, Remember, you need to register.

You know, ships that are not registered are not under our protection. Then just yesterday, Sunday, the foreign minister or Oranchi, again asserted essentially that Iran has the right to administer the strait of removes. So, sitting where I said, I mean, of course, I don't know why it was those two ships specifically, but sitting where I said, the broad message being sent here seems pretty clear, and it's about the control of the strait itself. No, I think you're exactly right. I think the question about why the PGSA does their actions is a really interesting one. And I think it's a root cause here that we need to be examined. The problem is, of course, the dialogue between the U.S. and Iran isn't always the most conducive to discuss this. And shipping kind of gets themselves caught in the middle of this.

You read the PGSA forms and like you, I've gone on that webpage and looked at their forms. And we're both now on a watch list. I guarantee you on that. But one of the things you see is it doesn't really give you any clear indication of what would be a rejection, why they would, you know, reject you. And again, why these two ships were targeted. Everlovely is a Taiwanese ship for a Taiwan company. So maybe that has something to do with it.

Kiku is a very large crude carrier that's moving oil. Maybe that was an issue there for targeting where it was going to be loading from. One of the big things is trying to get the resumption of flow going again through the strait. So I think shipping right now being targeted by the Iranians is very much trying to assert their authority through the straight. And I think that's one of the big issues. that they want to do. And again, it's the ambiguity of that MOU, in my opinion, that doesn't really clearly give a tit for tat, you know, hey, remove the U.S. blockade, open the straight-of-horn moves. And what's interesting is the U.S. hasn't done anything to stop the free flow of Iranian oil at all.

Matter of fact, it's removed sanctions on Iranian oil. It is very conducive for the Iranians to do it. We've seen Karg Island, their facility, up in the Persian Gulf, loading at full capacity right now. we're seeing ships go in. Iranian tankers are going in with no problem through the area. We're still seeing some ships use the Iranian channel coming in and out, which is an indication that they're working with the Iranians. So I think the Iranians are trying to, once again, assert, and what was really interesting too, earlier in the week, we had a statement come out from both Oman and Iran together about a potential future, you know, control of the Strait of Hormuz, that it's in both states' interests, and it explicitly talked about the potential of there

could be fees in the future for transiting through the strait. And that's not just Iran, that's Oman. Right. And so you saw, you know, that first round of American strikes failed to deter the Iranians who took that shot at the tanker over the weekend and the second round of American strikes. And at this moment, the Iranians haven't taken a third shot at a ship. They did, again, the foreign minister did assert yesterday essentially that their policy is that they control the Strait of Hormuz.

But to your point that, you know, the blockade is lifted. Iranian oil is flowing out of the region for sale. Sanctions have been waived for a period of 60 days so that they can go ahead and sell that oil. Meanwhile, they have effectively, shut down is probably too strong because I know I saw reports that the U.S. Navy escorting ships through as we speak, but it's a fairly small number of ships. So they have radically lowered again the amount of traffic coming through the strait. And this to me seems to play to their benefit in a couple of ways. One, they do have it as a strategic goal to assert control over the straight going forward. And so this is a step in that

direction if things continue down this path. And ultimately they are not one way or the other persuaded or coerced from continuing down this path. But two, Sal, you know, I'm struck by, you know, these negotiations between the United States and Iran that were supposed to be in Switzerland, over the weekend, they're supposed to be focused on the nuclear issue, which the MOU largely punts on. The MOU basically punts on the nuclear stuff and gives the Iranians a bunch of economic benefits up front in order to get the straight open, really, as the basic logic of the document. Well, now, when these technical talks reportedly reconvened tomorrow in Qatar, what's the subject going to be? I suspect the subject, a lot of the conversation is going to be

about the Strait of Hormuz. How could it not? And so the Iranians are very good at this. instead of moving the ball forward in the negotiations, moving on to the nuclear issue, which is the Trump administration's desire to get to some sort of resolution there, in the end, you're kind of going back and renegotiating stuff that the administration has already said is settled. And so you're kind of going in circles on the negotiations. Iran is still earning revenue, and they're still successfully holding the global economy hostage. Well, if you're the Gulf states, are you more concerned about an Iranian nuclear weapon, or you're more concerned about Iranian control of the strait.

And I would argue they're more control about the straight. That's their back door. That's what they need. If you're Kuwait, Bahrain, Qatar, this is your only access. Even Iraq, you know, the southern fields of Iraq have to go out that way. And even the Saudis are having the issues with their capacity. They can't get as much oil through the pipeline to Yambu as they can out of the terminals of Rastan and Oro. And you're the UAE.

You obviously want to make Abu Dhabi and Dubai open for business. You don't want drones flying overhead. It's a huge issue. And so the Iranians know they have found themselves almost like a conventional nuclear weapon in terms of economics. And that is the straight. And that's what they're wielding here. And one of the problems I think the U.S. needs to understand is they can launch strikes to their blue in the face along the coast of the Strait of Hormuz. It doesn't mean that Iran will not, you know, drag a drone out, launch it, and be able to hit a ship.

And that's the problem because the risk associated to commercial shipping is different than risk associated to the military. military. All you need is to be able to launch a drone and that's going to create the risk associated, which is going to cause cost to go up. It's going to stymie the straight. And the biggest problem isn't the fact that we're seeing, you know, the return of shipping to the Strait of Hormuz is we don't have a steady flow. And what we're having is kind of this kind of peaks and troughs where we get a little bit out and then none out. And this is the problem. It creates instability in shipping. And instability in shipping in trade creates greater cost, inflation. It's all those issues that we're seeing.

And Iran learned this from the Houthi. The Houthi showed us this lesson plan two years ago. When you look at the fact that, you know, usually there's 22,000 ships a year go through the Bob El Mandab. That's the straight there between Africa and the Arabian Peninsula. They attacked 150 ships over two years. They hit 24 of them, you know, four ships sunk. they didn't have to hit a lot of ships to cause 10% of global trade to be disrupted. That's what the Iranians learned.

And you can hit them all day long, but they're going to be able to get a drone out and be able to launch attack. And you're never going to be able to solve this issue militarily. It's going to have to be something else, political and economic. And that's what Iran is using. This is their political element that they can bring to bear every time in the negotiations. I've heard it suggested that there are military solutions. to the straight problem, not to reduce the amount of incoming fire to zero, which I grant I think is beyond anyone's capacity, but to securing the area. And, you know, some versions of those operational schemes are very robust.

They involve U.S. troops seizing islands in the strait. I mean, essentially a return to war with Iran and very substantial outlay of military assets, very expensive, very protracted. And it does seem like the administration has little to no interest in doing that. Let me ask you this out, and I realize you're the shipping guy, you're not the energy markets guy, but I always enjoy your commentary on all kinds of subjects. Isn't it odd? I think it's odd, and I don't understand, that we're sitting here at the end of June. This has all been going on since the end of February. And energy prices are okay. You know, the global economy is not in tatters.

We've seen reports. I've seen reports of some regional issues in South Asia, for example, in Southeast Asia. earlier in the conflict, but the kind of the really catastrophic predictions about the effect that the closure of the Strait of Hormuz, you know, one-fifth of global oil, 10% of all maritime traffic, or not the traffic is probably the wrong metric, but, you know, 10% of global shipping. You know, effectively stopped there for several weeks, now limping back along. Where's the catastrophe? fee. Where's the global economic shock that, frankly, I was kind of expecting?

Well, I think if you just look at oil, for example, one of the things when you look at the market before February 28th was there was more oil afloat and in storage than at any time since 2020 when all of a sudden COVID hit and everybody had excess oil because everybody wasn't driving. So the market kind of prepared for that. We saw probably more oil afloat than ever before. And so you created kind of a cushion within the marketplace. There's always oil. afloat. I mean, we're talking about in the range of hundreds of millions of barrels of oil. And that's because the market is such that that oil is going to be sent to places where the cost is the best. And so you're sitting on a load of oil and you may send it to China, may send it India,

wherever it's going to be the most economical. And what we saw was a lot of loading. I mean, if you look at the ports in the Persian Gulf, prior to February 28th, nobody looks prior to February 28th. But when you look, I mean, the amount of oil that was flowing out of there was massive. I mean, everybody had the spigots wide open. And other things, and other things, elements took place too. China, for example, really cut back on its consumption of oil. And that's because China has kind of really retuned some of its energy to be able to shift to other types of energy when they need to. And everybody assumed China was going to be the one that suffered the most, and they really didn't. And matter of fact, one of the things they were able to do is curtail. And they have also

been able to flood the market with some certain commodities, aluminum, for example. Everybody expected this to be a big problem. We looked at a lot of little areas. But they They were able to do it. Japan delved into their strategic petroleum reserve. Now, they're, they're depleting theirs quite a bit. So they have a finite amount of time before they run into trouble. The U.S. opened. This is great for the U.S. We're going to go ahead and shift. One of the big things was we were getting 250 million barrels of oil out of the Persian Gulf into the United States. I have a problem with the narrative from the U.S. talking about we don't get anything for the Persian Gulf. We did. Well, just prior to that, we opened up

Venezuela. Venezuela now was all of a sudden wide open. It takes, you know, it takes somewhere in the range of 52 days to sail from Houston to Shanghai. It takes about 30 days to go from Rostaninoa to Houston. Well, guess what? Venezuela is less than a week away. If you can get your oil from Venezuela versus going to Saudi Arabia, well, then you can move oil a lot faster. Your tankers can make shuttle runs. You can move it. So there was a much more fungible element to the energy market. The problem you have, if you're watching very closely right now, is stores in the United States, particularly in refined products. Gasoline, diesel, and jet fuel is plummeting. It's going down. It's actually at the lowest level because it's being pulled out of the U.S. at record numbers,

because we're kind of taking up the slack. And that's the thing. Just because you shut down the flow doesn't mean you get that instant. We saw the instantaneous shock. We saw that at the fuel pumps. You saw when your cost to fuel your car went up and diesel fuel and airlines went up in cost because of jet fuel. We saw that, but now over time you start seeing the depletion numbers start coming in. And this is the problem. Until the Persian Gulf can get back to a steady flow coming out, it's not meeting the demands on the world marketplace. And what we're seeing is a reduction in the total amount of oil being produced per day. And that's going to have a cumulative effect and that's the problem. It's very hard to see the long-term impact. I know I should eat right.

I know I should always eat right and do everything and exercise. The problem is, you know, I don't see that until the long-term. The short term is what we're kind of in the short, midterm right now. It's that long-term impact that we've got to be prepared for over the next year. So in other words, the worst may well be yet to come here. I think, I don't know if it's going to be the worst, but it's definitely going to be an impact that we probably haven't seen yet. And the other problem you have too is in developed economies, those economies that are much more robust, they're going to be able to get the resources, the commodities, are going to pay more for it. They're going to be able to get it. The problem you have is underdeveloped, poorer countries that don't have that

ability to do it. And that's when you mentioned Africa, Asia, those are the economies that are the most hit. It's one of the reasons why you saw India and Pakistan working very early on to try to get the first ships out of the Persian Gulf over to them, because they're the most dependent on Persian Gulf oil because it's literally their back door. That was the easiest transportation for them. So that when we're selling oil to India, that's great. And we're like, okay, well, we'll sell them millions of barrels of oil to India. The problem is, that's a long sea voyage. And it costs more money in India. And India's per capita is much less than the rest of the United States and the world. It gets more expensive as those gas prices go up and up. We can absorb an extra dollar a barrel.

We don't like it, or dollar a gallon. We don't like it, but we can do it. Other countries can't do that. And that's going to be a big problem. So let me ask you to kind of get at your crystal ball here as we wrap up and just help us think about the future in the Strait of Hormuz. And, you know, as it connects to all these other issues, we've been discussing. What do you see as the major scenarios, the major possibilities, you know, what you think is likely or unlikely to happen? Just help us think about, you know, the second half of 2026 on this subject. Well, I think one of the big problems is, quote Shakespeare, once you unleash the dogs of war, it's very hard to put them back on the leash. And that's what the Trump administration is finding out. I'm a historian.

There are tons of books written about how wars start. There are tons of more books written about how wars are fought. There are very few books written about how wars end because ending wars are very, it's very messy. It never ends cleanly. You don't have the surrender on the deck of the battleship Missouri. That's of rare occasion. You never have that. The problem is any end to a war is a compromise. And compromise in the Trump administration and many administrations is not acceptable because you want to win. You want to be a winner. You want to have kind of victory. And the problem is there's not going to be a clear-cut victory here.

Iran has the one power here, which is the Strait of Hormuz. And even, I mean, even, again, go to that military scenario, the problem with the Strait of Hormuz is the straight of Hormuz is just one part. The Persian Gulf is big. And Iran is there all the time. They're always over your shoulder. You have to control the entire Persian Gulf. and Iran runs that entire northern part of the strait, and they can always exert their power on this. I think eventually what we're going to see is a resumption of trade into the Persian Gulf,

but it's going to be a fraction of what it was pre-war, very much like what we're seeing in the Red Sea. We're going to get trade going through. It's going to be expensive because there's going to be additional cost to go through. There's going to have to be more protection for shipping in the area, which means the Gulf states are going to have to reprimed. prioritized. We already see that with some of the countries making big purchases in defense weaponry and equipment. The UAE, for example, with South Korea, there's a big huge transition going on between those two countries. I think the U.S. has to make a decision, is it going to

return back into the Persian Gulf? We've seen forays by the U.S. Navy into the Persian Gulf, but we haven't seen a full commitment back in. I think that's an interesting one. Is the U.S. going to be back in there? Or is the U.S. going to do what the British did and, you know, retreat from east of Suez and kind of vacate that area and leave Iran to fill that power gap? And I think that's the major issue. Shipping will always go through. Shipping's like, you know, it's like water on the sidewalk. It's going to find the cracks. It's going to get in there. Commodities and goods will be moved. But the other danger that I keep coming back to, and we've talked about this before, is this rising challenge of freedom of the seas. You know,

one of the post-World War II things we had is you can move goods freely on the world's oceans without really any hindrance. And for 85 years, that's been the play. That's what we've seen happening. Now it's being challenged. And it's not just the Persian Gulf. It's the Red Sea. It's the Black Sea. We're seeing the Russians and the Swedes arming ships in the Baltic right now. We've got bumper boats between the Philippines and China and the South China Sea. We're really starting to see a bit of a challenge. And so that global, you know, kind of commons that has existed where you can move freely on the world's ocean with a Panamanian flag or a Liberian flag, that may be the big difference. And it's going to be interesting to see how this develops here over the next year.

Because I got to say, even if tomorrow, even if we get a peace deal between B.B. Netanyahu, President Trump and the Ayatollah, shipping is damaged into the Persian Gulf. You've damaged that ability to do it. Some shipping is not going to return for fear that this. can start again tomorrow because the same people are still in power. So there's no reason that it can. And I think one of the things we keep seeing is like the U.S. can launch strikes tomorrow. The Iranians can launch strikes tomorrow. Even with a ceasefire, it doesn't matter. This is a dangerous environment. It's going to be a war risk area going forward for the least the foreseeable

future. You make a really good point about the U.S. Navy going back into the Persian Gulf. I feel like this doesn't get enough attention right now that the M.O.S. despite the ambiguity of its language pretty clearly pertains to commercial shipping and is basically silent on the question of the U.S. Navy, which, to my knowledge, maybe you can tell me what, if any, operations there have been on the surface going into the Persian Gulf, because I think a lot of the guarding of ships or guiding of ships happens through American aviation. But, you know, if Iran asserts the right to control the strait, presumably that means they assert the right to prevent. foreign navies from sailing through it. That's not explicit in the MOU, but I could see reading that document and coming away with that as an inference of the

Iranian understanding of the situation, which is one more sort of extraordinary situation where it's hard to give much credit to, you know, the administration or any American commentators are saying, this is just going great. This is exactly as planned. What could be better?

No, I mean, literally before February 28th, you had a mass evacuation of U.S. naval vessels from the Persian Gulf. I mean, they pulled out everything. They pulled out, you know, the Coast Guard cutters that were based in Bahrain. Everything was out. And so there was that big kind of, you know, exodus out. And now, you know, we've had a couple of forays of destroyers going in. You know, the most recent was probably in the beginning of May when they brought out those two American ships,

that three U.S. destroyers went in and probably escorted them out. But as far as we know, there's been no official mention at all of American ships returning back in. And again, that gives de facto control over to the Iranians. They're exerting something very similar to what the Turks do over the Turkish straits with the Montreau Convention. May remember when Russia invaded Ukraine, there was a lot of talk about, well, maybe NATO should go up in the Black Sea and defend shipping. But the Turks said, no, it's like we're not going to allow any warships to transit because under the Montro Convention, we can control that. There's no such convention here, but the Iranians are kind of siding the Montro quite a bit. And they're saying, we want that kind of authority over the Straits.

now Turks control both sides of the strait. The Turkish straits are much different. Nowherst, the Basperus and Dardanelles is, you know, a half mile wide at some point. You need pilotage. It's a really difficult channel to go through. This is a bit different. But if the Iranians can keep, remember, the U.S. Navy was ever present in the Persian Gulf during the Iraq war, we brought aircraft carriers into the Persian Gulf. I mean, we had massive presence of the U.S. We brought submarines into the Persian Gulf. This time, the U.S. Navy is out. And I'm not saying the U.S. Navy can't go back in. They can. They can force their way in and do it. But I think it's a conscious decision right now not to push that. And if the Iranians are running that narrative, that makes them look pretty powerful. If they can

keep the perception of the U.S. Navy out of the Persian Gulf, forced him to evacuate Bahrain, the 5th Fleet base, that's a significant victory that they can claim. And I think the Americans have to be very conscious of the perception of that, not just to the Iranians, but to the Gulf states too. Well, maybe the Navy can pay the insurance rates being advertised by the Persian Gulf Strait Authority, which you've made this point as well on your show, and I just wanted to emphasize it here because it was an excellent point. If you read through those insurance, the description of what you're getting insured for when you get your PGSA insurance, I mean, it's such a laughably obvious protection racket. And I don't want to cast any aspersions on anyone's, you know, families here. Sal, both you and I come from, you know, working class immigrants to the United States. yours, at least some I gather from the Mediterranean region, mine were Northern European. Nevertheless,

I feel like there are plenty of small business owners in major American cities who in decades past would get approached and asked to contribute to a general fund for security for the neighborhood. And if you didn't contribute, well, your security wasn't guaranteed. And it looks very much like what's going on right now from the Iranians in the Gulf. Now, if you read the PGSA statement and what they protect you from is like a list of what the Iranians have done to shipping over the past, you know, decade. And so it is very much a protection extortionist racket in many ways. And, you know, my Italian heritage makes me laugh that, okay, this is very mafia sounding like is what the Iranians are trying to make you do. And again, it's also

insurance. It's classic, but it's also shipping. The Iranians are very interesting in that they guise a lot of what they do in terms of commercial shipping through legal process. Some of the shipboardings and seizures they did back in 2019. And even recently, they will always make the case. Listen, we had an adjudication in an Iranian court. This ship was found guilty of this. And therefore, we have a right to seize it. And again, the United States Navy has been doing very similar things with Venezuelan tankers, with these unregistered tankers. And so the Iranians are always very careful. They have a very deep in history of maritime NITC, which is their shipping firm, does a lot with very little few ships.

very old ships, but they still move a lot of cargo for them. And again, I think that's a big play that they're doing. They're trying to guise this as legality. And one of the interesting things I've mentioned is Persian Gulf straight authority is not the Iranian straight authority. It's Persian Gulf. I think one of the things they're trying to do is give some legitimacy to it by bringing Oman and potentially the other Gulf states in to create maybe a regional director over the Persian Gulf. And to me, that's the danger move. That is the move because if they, they can get some legitimacy with the Sultanate of Oman and some other Gulf states, then all of a sudden that changes the kind of the factors up. And now fees are much different than tolls. And fees are things

that they can start exerting and control over the strait. Salmer Cagliano, the show is called What's Going On with Shipping? I can't say enough nice things about your commentary and the help you've given us all in understanding these situations here in the Gulf, but also more broadly at C these last few months. And I'm grateful to you, as always, for coming on School of War. Thank you so much. Aaron, thank you for having me. I appreciate it.