The US Blockade Could Change Everything

Today’s letter is brought to you by Consensus Miami ! I’m speaking on the Mainstage at Consensus Miami this May 5-7 — the event the entire industry shows up for, from Wall Street, the White House, and all of Web3. 20,000+ decision-makers. 72% director-level or above. Three days where deals get signed, funds get raised, and the next cycle gets shaped. This year’s agenda tackles the three forces driving trillions on-chain and reshaping global finance: crypto at scale, institutional integration, and agentic commerce. You can’t afford to miss it. Use code POMPLIANO for 25% off your pass and join me there. REGISTER & SAVE To investors, The United States and Iran were set to solidify the ceasefire with a peace agreement negotiated in Pakistan over the last few days. Vice President JD Vance stepped up to the podium after 21 hours of negotiations and informed the world there would be no peace deal. Iran reportedly continues to refuse the US proposal, so the war is back on again. This time there is a big wrinkle though. Rather than allow Iran to close the Strait of Hormuz, the United States has decided to implement a blockade of their own. At first glance, this seems like a childish decision to merely claim victory in a skirmish, but upon further review there is strategic importance to the decision. For example, Iran has not completely closed the Strait over the last few weeks. Instead, they have prevented most ships from passing through the waterway and they have merely been taxing other ships. This selective enforcement has been a big financial boost for the Middle Eastern country, especially because Iran has also been exporting their own oil through the Strait at the same time. Rather than allow Iran to call the shots in the Strait, and continue to profit from their decisions, the United States blockade will rapidly cut off all economic benefit to Iran. FDD Senior Fellow Miad Maleki writes “The U.S. naval blockade of the Strait of Hormuz would cost Iran approximately $276 million per day in lost exports and disrupt $159 million per day in imports, a combined economic damage of ~$435 million per day, or $13 billion per month.” This level of economic loss should apply maximum pressure to the country, along with exasperate the pain for Iran’s allies such as China. The decision for Iran to weaponize the Strait of Hormuz never really made sense, because they couldn’t deliver on their threats in the way people thought. Hudson Institute’s Zineb Riboua writes : “Iran’s move to weaponize the Strait of Hormuz ranks among its most strategically reckless decisions. They cannot sustain control over it. Their military position does not allow for prolonged enforcement against determined opposition. More importantly, it was never a credible bargaining chip. Once escalated, it has to be relinquished without meaningful concessions. The only asset that has ever carried real negotiating weight is the nuclear program. The logic behind the move is also flawed. The expectation was to trigger a global economic shock large enough to force a halt in U.S. operations. That outcome has not materialized. Instead, it has accelerated the opposite dynamic. Regional and global actors are now investing in routes and infrastructure designed to bypass the Strait altogether. In trying to turn Hormuz into leverage, Iran is diminishing its long-term strategic value. Very stupid of IRGC.” You can read about the geopolitical implications to this decision elsewhere, so I want to focus our time on how this development will impact the US economy and American citizens at home. First, the United States has become the most popular girl at the bar when it comes to selling oil. There are hundreds of tankers from around the world that are rushing to the Gulf of America to purchase oil from us. Whether this was an intended outcome or not, America’s energy independence is quickly becoming a strategic asset that will drive significant revenue growth for our oil and gas industry, along with our country. Second, there could be short-term military and operational costs for mine clearance, escorting ships, and potential combat with Iranian forces. These additional costs will only put more pressure on the national debt, which will lead to further debasement of the US dollar over the long run. Third, oil prices will likely continue to be very volatile. The entire world is trying to figure out what the price for a barrel of oil should be, but the input costs, the available global supply, and the future prospects of production continue to change on a daily basis. There is consensus belief that a fully opened Strait will lead to lower oil prices, so a fully closed Strait will only continue to put upwards pressure on prices. Fourth, the US stock market will be volatile. There is lots of pressure on software stocks and the tech industry more broadly, while energy and oil company stocks have been outperforming in recent weeks. These trends could reverse if the war ends, but it seems like we are in a state of volatility for the foreseeable future. Lastly, there will be a mixed message in the domestic economy. As I wrote about last week, the US economy will continue profiting from higher oil prices , while American citizens feel the pain at the pump. This will feed the higher inflation narrative, especially as people brace for higher fertilizer prices, higher food prices, and higher shipping costs globally. There is no way to spin the negative impact on US households in the short-term. The big question becomes how transient this impact will be? Once the war is over, do prices come back down quickly? Do Americans get amnesia and forget about this episode if the stock market rips higher over the summer? How do the midterm elections play into the geopolitical options that President Trump and his administration are weighing? I don’t have answers to many of these questions. But it is clear that the US blockade is going to change the calculus for Iran in this conflict. They just went from being in charge to being cut off from the world. Regardless of what they say publicly, no one loses $13 billion per month and shrugs it off. Lets just hope that we see a true ceasefire as a result of this latest escalation. War is an ugly thing and no one wants to see innocent people dying. Hope you all have a great start to your week. I will talk to everyone tomorrow. - Anthony J. Pompliano Founder & CEO, ProCap Financial (Nasdaq: BRR) 🚨 ProCap Insights: Agentic Research for Investors Who Want To Make Money Last week, ProCap Financial launched ProCap Insights , the first agentic research offering in finance. 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