TRADE THEORY IS TRANSPORTATION THEORY.

Higher transportation costs have the same effect as tariffs.  The academic study of international trade and finance generally considers a different class of problems than the academic study either of industrial location or of transportation.  In part that is because some problems of international trade and finance are tractable using a general equilibrium framework, while problems of industrial location and transportation involve nonconvexities that foul the works where general equilibrium is concerned.  Paul Krugman, qua regional economist (rather than in his court-intellectual-for-Democrats role) has done good work on urban and regional economics that exploits some of the insights from trade theory.

General equilibrium models of trade tend to abstract from transportation costs in contemplating the effects of tariffs or factor intensity or factor price equalization.  To a first approximation, though, we can evaluate the effects of space on wage and price differentials in the same way that we'd evaluate a tariff: prices differ by transportation costs, and a tariff has a further effect on price differences on the dock of the exporting country and offloaded at the importing country.  Heck, "tariff" refers both to a schedule of import duties and a table of transportation rates.

All of that to motivate the political economy of John Konrad's "What If the U.S. Navy Isn’t in a Hurry to Reopen the Strait?"  It's transportation economics: the cost of shipping a consignment through a war zone reflects a higher insurance premium.  That's where Captain Konrad's story begins to get interesting

.A sovereign nation positioned itself as the backstop for war risk insurance on the world’s most critical maritime chokepoint. The [Development Finance Corporation] facility, coordinated with US Central Command and Treasury, offers hull, machinery, and cargo coverage on a rolling basis to eligible vessels.

The United States now controls the on/off switch for the Strait of Hormuz. Not through naval firepower. Through insurance.

There's a lot of contemplation of things national security and international politics in the post that I am not sufficiently informed about to comment further.  An observation he makes deep into his thesis is spot on.  "One global price only works if there is a surplus of tankers to arbitrage differentials. Before the Iran strikes, that surplus was razor-thin. Now, with supertankers stuck in the Gulf, it is gone."  More costly transportation means more local production.  And where, dear reader, is that local production?

Brent is at $106 today. WTI is under $100. Domestically, diesel is stabilizing and natural gas prices are falling as LNG that would normally be exported stays trapped at home. Trump issued a 60-day Jones Act waiver and opened Venezuelan oil sales to U.S. companies via a new Treasury license for PDVSA. These are exactly the moves you make if you are trying to drive U.S. prices down while the global market fractures.

Tankers charge by the day, so long-haul routes become comparatively more expensive. Venezuelan crude on short Gulf runs becomes far cheaper for U.S. refiners than Middle Eastern crude routed around the Cape of Good Hope for European or Asian buyers.

Look at who benefits. The three most powerful industry lobbies in the U.S. are tech, Wall Street, and energy. Tech gets cheaper LNG for data centers. Wall Street gets volatility and panic to extract trading profits. Energy companies were just given Venezuela and renewed Gulf access.

Meanwhile, California has been closing refineries and blocking pipelines, forcing gasoline imports from South Korea on ships with dayrates that are skyrocketing. Govenor Newsom, the leading canidate for President in 2028, is irate. New England imports LNG and diesel by ship. If Hormuz stays closed, prices spike in those states. Deep blue states. Red state energy costs fall. Blue state costs rise. Europe capitulates on major policy disputes between now and the midterms.

Sometimes, it is the things that were poorly foreseen that emerge in a Fourth Turning.  Twenty years ago, we were all reading Thomas Friedman's The World is Flat.

He notes in one place that India's and China's development bid up the price of oil, and he raises the spectre of China working with oil-exporting countries that subsidize Islamofascists, as well as China's fear that the U.S. Navy could close the tanker lanes off Singapore, re-running the resource war that became the Pacific Theater. In another place he suggests that United States policy makers work more seriously at lowering the price of a barrel of oil, so as to de-fund those Islamofascists. If it's developing country demands that are bidding up the price of oil, there's little short of taming fusion that the United States can do to reduce the demand for oil as a fuel source; and that doesn't address the usefulness of oil as a feedstock for other chemicals or for plastics. More questions than answers.

Mr Friedman concludes with the suggestion that getting people not yet on the flat earth to buy into the idea of participating is our best long-term hope. As with any other such idea, the challenge will be in the implementation.

The role of China either in assuring the passage of ships through the Strait of Hormuz or in offering their own insurance for ships transiting those waters is a known unknown at this writing.