In consideration of tanker escorts, some ballpark figures.
- Estimated cost one Constellation class frigate: $1,300 million per hull. (or LCS at about $500 million per hull)
- Cost of one “supertanker” Very Large Crude Carrier (VLCC): $80-$120 million
- Value of cargo of one VLCC (at $100/bbl):
$20$200 million [corrected 3/12] - One Shahed 136 “kamikaze” drone: $0.02 – $0.05 million
- One anti-ship ballistic missile: $1-$2 million
- One contact mine: $0.0015 million
I know that the Trump administration tends to place a very low “value of statistical life” (well, the Trump EPA places a zero value), but with a crew of a frigate in the area of 200, and a crew for LCS around 50-70, Using the 2013 DoT $13 million, we have these costs at up to $2,700 million for a total loss.
From Reuters today:
LONDON, March 12 (Reuters) – The U.S. Navy, perhaps with an international coalition, will escort vessels through the Strait of Hormuz when it is militarily possible, U.S. Treasury Secretary Scott Bessent told Sky News in an interview on Thursday.
“My belief, that as soon as it is militarily possible, the US Navy, perhaps with an international coalition, will be escorting vessels through,” Bessent said.
I am hopeful that decisions about whether to escort tankers and other cargo ships through the Strait will be delegated to the professional military.
The average daily number of ships through Hormuz prior to the war as aomething around 120 to 140. If individual ships are each tohave an escort, that means we need a aimilar numner of escort vessels. In orderto do much good, escort vessels have to have air defense capabilities sufficient for their own protection and protection of the vessel they accompany. That’s a lot of well-armed escorts – more than we have in the Gulf, maybe more than we have, period.
Notice it wasn’t a naval officer who claimed we’ll be escorting vessels soon. It was a hedge fund manager who has never served in the Navy, the Coast Guard, the Merchant Marines or any uniformed service of any kind. Seems suspicious.
For the last few days, whenever I’ve checked in at CNBC, I’ve practically wanted to shout at the screen, “THE FIRST QUESTION OF EVERY INTERVIEW SHOULD BE, ‘ARE THE STRAITS OF HORMUZ OPEN OR CLOSED?’” If the guest doesn’t know the answer to that, then every other opinion is worthless.
And if they answer that the Straits are closed, the next question should be, ‘How is your analysis affected by how long the Straits remain closed?’ If they don’t have an answer for that, their analysis is worthless as well.
On another note, I’ve given a little thought to how I would approach this if I were dictator of Iran. Since the US is a net exporter of oil, presumably actual shortages in the US can’t be caused. And under those circumstances if I open up the Straits to shipping for everybody else, my leverage goes away. So my game would be to negotiate with everyone except the US, but string those negotiations out as long as possible, and hold out for as many concessions adverse to the US as reasonably possible – e.g., closing military bases in the Middle East, no government investment in the US, forbid the holding of US Treasurys as assets, etc. With T—-p blowing up alliances everywhere, Iran might be able to get very far with such a strategy, and inflict maximum financial pain on the US.
I’ve seen the argument that Iran’s extremely limited commercial importance to most countries – a result of embargos – has meant very few countries have had an incentive to back Iran, even if only verbally. In other words, no “carrot”.
Your point, it seems, is “stick”.
Maybe if a few countries without a commercial motive to help Iran would still stand up for international law and the rules of armed conflict and keeping one’s word, we wouldn’t be in this situation.
Very strange (but more logical than you might think) question. Let’s say that yesterday I was standing in the street nude. So some nice person gives me $10 to buy a T-shirt at Wal Mart. So I’m standing on a street corner, nude under the waist wearing a T-shirt, and I tell the bum next to me “I’m ‘less dependent’ on clothes than I was yesterday”. In a relative sense, what the hell does “less dependent” exactly mean??
Did anyone want to share with me, in a country which TALKS environmentalism and every Tom, Dick, and Harry drives a 5 ton American made garbage SUV, how exactly we are “less dependent” on oil than we were 20 years ago?? Show me the stats. That is a laugh riot.
I take tour point. I offer two others.
1) We were the world’s largest oil importer for much of the latter hald if the 20th century. We are now a net exporter. So we are now less dependent on oil imports, especially from the Middle East. Europe, Asia and Africa still import gobs if oil out of the Strait of Hormuz. Our war imposes costs and economic risks on the rest of the world far in excess of the risk imposed in us.
2) Oil accounts for a smaller share of GDP and a smaller share of our mix of energy than back in the bad old days. We can’t do without it, you are completely right about that (butsee point1). But high oil prices have a smaller impact on economic output, and in overall prices, than in the past.
Point 2 is true for losts of countries, but less true for countries which are heavy on goods production. It’s our war, but it’s their problem, relativel speaking.
New Deal Democrat: “THE FIRST QUESTION OF EVERY INTERVIEW SHOULD BE, ‘ARE THE STRAITS OF HORMUZ OPEN OR CLOSED?’”
The Strait of Hormuz is open for transit, Defense Secretary Pete Hegseth said. “The only thing prohibiting transit in the straits right now is Iran shooting at shipping,” he said. “It is open for transit should Iran not do that.”
Asked and answered. This boy genius almost makes you wish Donald Rumsfeld were back.
We may begin to see what the true cost of subsidizing middle east oil has been through the years. Its the biggest subsidy the us government has spent through the years. By far.
Off topic – private credit stess:
This week, private credit funds at both Morgan Stanley and Cliffwater have limited withdrawals.
Because private finance is private, we groundlings don’t have much information about these decisions. Cliffwater offered assurance that the fund in question is financially sound, but hasn’t opened its books to the public. We also don’t know why investors have increased withdrawals. Morgan Stanley’s shares fell 4% the day the withdeawal limit was announced.
Someone among the various banking regulatory institutions probably knows how much commercial banks have lent to private credit, but I haven’t seen any figures.
VLCC Cargo Value = $200 million, not $20 million. 2 mb capacity x $100 / barrel
Steven Kopits: Thanks, yes! corrected
Think of the opportunities to profit from the privatization of the pentagon! I’m sure Bessent’s personal benefit/taxpayer risk calculations are just fine. No wonder they need additional funding; forget the stockpiles as these guys will also pile into the right stocks.
Wall Street Bankers Offered Lucrative Access to Join the Pentagon
https://www.nytimes.com/2026/03/13/us/politics/wall-street-access-pentagon.html