President Donald Trump has alternated between threats to obliterate Iran’s economy and claims that the U.S. is in talks with the regime, giving investors whiplash as Wall Street tries to figure out how much longer the war will take.
Meanwhile, Trump is sending more troops and warships to the Middle East as Iran’s control over the Strait of Hormuz remains firmly in place.
For Firas Maksad, managing director for the Middle East and North Africa practice at Eurasia Group, that sets up an inflection point for Trump by mid-April, when all that additional combat power will be in place. By then, Trump’s latest timeline for the war lasting two to three more weeks will converge with his stated option to “take the oil in Iran.”
“The president is going to have to make a decision whether he wants to go all in or whether he wants to take an off-ramp,” Maksad told CNBC on Thursday. “And I think the domestic standing here in the U.S., the energy impact, but also Iran’s residual military capabilities are going to be key factors.”
Indeed, despite the U.S. and Israel decimating Iran’s military, it still packs enough punch to keep the Strait of Hormuz closed with its missiles and drones. And on Friday, Iran shot down a U.S. F-15 and A-10, forcing the airmen on board to eject.
Two crew members have been recovered while another remains in Iran, with search-and-rescue teams frantically trying to find him. Failure to bring him back safely could escalate the war even further.
But even before the U.S. planes were shot down, Trump was preparing for escalation. The USS George H.W. Bush aircraft carrier is headed for the region. With the USS Gerald Ford due to rejoin the Iran war after undergoing repairs in Croatia, there will soon be three carriers in the fight.
At the same time, several thousand ground troops are assembling. The 11th Marine Expeditionary Unit and paratroopers from the 82nd Airborne Division are en route, and the 31st MEU is already in the Mideast.
“Every time the president has chosen to deploy military assets—whether it was in the 12-day war against Iran some year and a half ago, or whether it was against [Nicolás] Maduro and Venezuela, and then the lead-up to this war—he’s actually used those military assets once they’re in theater,” Maksad pointed out.
Still, markets largely rallied over the past week on hopes that the war could end soon, easing supply pressure on global oil markets.
Unless the Strait of Hormuz reopens quickly, oil prices will soar even higher as physical shortages take hold. In fact, countries in Asia, which get most of their energy from the Persian Gulf region, have already started rationing supplies.
While Trump’s statements about negotiations with Iran seem erratic, Maksad said he sees a “clear, discernible” communication strategy.
“It’s in the interest of the administration to try and manage oil prices, manage the markets, keep them under control in order to prosecute this war longer and further degrade Iran’s military capabilities,” he explained. “So if we see a lot of back and forth in terms of what the administration is signaling, it’s part of that strategy of actually trying to manage the markets. It’s not necessarily indicative of where the president is going. I’m watching the military deployments much closer than I’m actually watching and indexing around what the president is saying.”
