Director's Cut - Dr Iraj Abedian: Hormuz stand-off could cost SA more than pain at the petrol pump

Seven months into the Iran war, economist Iraj Abedian tells Alec Hogg that Donald Trump has lost more than the battle for the Strait of Hormuz: he's lost America's standing as the world's dominant power. Abedian explains why the narrow waterway carries a third of global oil, why the mullahs are more afraid of each other than of Washington, and why South Africa's tilt toward Iran through BRICS looks like a costly misjudgement. He also has a warning for the Gulf states banking on American protection, and for the rest of us watching from the sidelines..Edited transcript of the interview.Alec Hogg: As we record this, it's only three weeks until I'm going to be seeing Dr Iraj Abedian in the Drakensberg, and not just me — another 350 members of the Business Tribe will be there as well. It's going to be quite an occasion. Iraj will then be updating us, no doubt, on his latest views on what's going on in the country of his birth. But today there's so much happening in Iran, we're going to get his insights as well, our resident expert on the subject.Iraj, as always, so good to be seeing you and chatting with you. Something that was supposed to be quick and over in weeks is now over a hundred days. I'm not sure of the exact number, but it just continues to drag on — from peace talks and the oil price falls, to end of peace talks and the oil price surges. Maybe we can just kick off on where we are at the moment. There seems to be a stand-off now on the Strait of Hormuz. Tell us what the Strait of Hormuz is, please, and then why it's so important, and why it should be affecting the oil price — and indeed Donald Trump's state of mind.Iraj Abedian: Thank you very much for the opportunity, Alec. Good to see you again. At the moment, the status is literally a tug of war over nothing else but the Strait of Hormuz. The strait is significant for a number of reasons. It's a very narrow strait between Iran and Oman — a passage of about 33 kilometres wide, of which less than half is fit for ocean liners and big tankers. So it's a narrow, very significant waterway through which about 30 to 35% of the daily supply of global oil passes. Sometimes less, sometimes more, but that's the lifeblood of countries like the United Arab Emirates, Saudi Arabia, Kuwait, Bahrain and Iraq — and most significantly Iran, because over 95% of Iran's exports, and anything between 95 and 98% of its imports, come through the Strait of Hormuz. Iran has been trying to diversify to another port, but as we speak, that is a critical choke point for the entire region.The historic significance is that Kuwait, the UAE, Bahrain, Oman and Qatar were all once part of the Iranian empire, if you like. So there's a lot of political, cultural, religious and historic points of reference among these nations — their lives have always been intertwined, their families going back generations, not unlike South Africa and Zimbabwe, or South Africa and Lesotho. The colonial power in the Middle East and Persian Gulf was the UK, and it drew up these lines. These nations were tribes led by different tribal authorities or emirs, and they've never really been independent for long — the most recent independence, Bahrain's, dates back less than 60 years.So the significance isn't just about 30 to 35% of global oil. It's petrochemicals, fertiliser, aviation fuel and so on. This has been an issue since the 1980s, when Iraq invaded Iran and the strait was blocked at that time. But back then, the West — Israel included — was on Iran's side, and helped enforce a blockade in Iran's favour to create a choke point against Saddam Hussein. The history has turned the other way round now: Iran is at the point of claiming its historic ownership, or control, of this significant global trade choke point.Alec Hogg: You make a lot of interesting points there, but the one that landed with me was that it's also where Iran gets its imports from. So presumably, if the Strait of Hormuz is closed, the imports Iran needs aren't coming in either. How relevant is that to the Iranian economy?Iraj Abedian: Absolutely critical. If the strait is blockaded for whatever reason — insecurity, or God forbid tankers are burned and sunk in that narrow strait — even if people want to trade, it becomes physically and logistically impossible until it's cleared. For the Iranian economy, this is critical. That's why, somehow, the Trump administration foolishly assumed that whatever they did to Iran during the war, Iran would never block the strait itself. President Trump said as much — he couldn't believe they were attacking their neighbours and blocking Hormuz, when it's literally like choking your own throat while pushing pressure on others. Iran is a vast country with many neighbours, but from a trade point of view, closing Hormuz costs it less than 5% of its import capacity, and even less of its export capacity.Alec Hogg: So was Trump surprised, clearly?Iraj Abedian: No — interesting enough, the threat of this happening if America struck again had been there for some time. Remember, this attack came on the back of a 12-day war last June, then six or seven months of grumbling and negotiation before war actually broke out again in late February. In that period, strategists in the Islamic Republic were pretty vocal that if America struck again, they'd give them a lesson and regionalise the war — not keep it confined to Iran, Israel and America, but make sure Saudi Arabia, the UAE and Kuwait got involved too. Which is exactly what has happened. I said at the time — I think I mentioned this at the March conference — that this war would not be quick or confined. It was going to spread, and all of us around the globe would feel it. Unfortunately, that's turned out to be the case.Alec Hogg: I certainly felt it yesterday at the petrol pump. It's usually about a thousand rand to fill my tank — yesterday it was nearly R1,400. I can imagine how cash-strapped consumers, people watching every cent, must be feeling that impact.Iraj Abedian: Alec, that's just you and I feeling it at the pump. Our farmers are feeling it dramatically — some going bankrupt. Shipping and transport companies too, and we came close to aviation in Europe grinding to a near-standstill. As we speak, one of the biggest threats to the global economy is that if this Hormuz stand-off can't be resolved, we go back to shortages of aviation fuel and, most significantly, food production, because of fertiliser.Alec Hogg: You started by saying the Americans had a different approach when this began. It's almost forgotten now that 40,000 Iranians lost their lives in the protests — that was what motivated much of the world to support, if not endorse, America and Israel taking action against the regime. That hasn't worked out. Judging by what Gideon Rachman wrote in the Financial Times today, it looks like they may be going back to a regime-change strategy. First — why was that original issue forgotten? And second, is regime change even in prospect?Iraj Abedian: When the Americans started their attack, they had three demands. First, the nuclear threat — they wanted to resolve enrichment and collect the enriched uranium. Second, they wanted to get rid of the proxy groups, in order of priority: Hezbollah in Lebanon, the Iraqi proxies, and the ones in Yemen. Third, they wanted to negotiate and limit the range of Iran's missiles, because Americans were realistically aware Iran could reach their regional bases and beyond into the Indian Ocean. Those were the three causes for war.Separately, the Iranian nation had an uprising after the December 2025–January 2026 collapse of the currency, which disrupted the economy completely — inflation ran away, and trade became impossible because wholesalers couldn't replace stock at more than double the price. The United States, as the Chinese say, never misses out on a good crisis: it aligned itself with the popular uprising, assuming the system was now vulnerable, that all it had to do was remove some leaders to achieve its aims.That calculation proved horribly wrong. From the start, the US had no consistent strategy — it kept changing. First they jumped on the bandwagon of Iranian discontent, then it became about enriched material, then the proxies got bolted on. As Trump's strategy evolved on the run, his emotional reactions caused more disruption. At the very start he was seen as aligning with the human rights of the Iranian majority — no nation likes being invaded, but because of more than 40 years of tyranny, people tolerated it initially. Yet within weeks, Trump was talking about destroying Iran off the map and wiping out its culture, alongside the destructive impact on civilian infrastructure, roads, factories. A million jobs lost, a million families out of income. People got angry.People are mourning tens of thousands of dead that remain unaccounted for. Numbers like 30,000, 40,000, 50,000 get thrown around, but we shouldn't reduce people's lives to mere numbers. The reality is people are mourning, angry, with no protection, and their own government is their most dangerous enemy. Over 25,000 bombs have been dropped on a country that is 10% larger than South Africa geographically — but concentrated on Tehran and the big cities, where most of the population lives. The trauma, the economic loss, the uncertainty — that's the consequence of a war fought without a coherent strategy.Alec Hogg: So what are the people of Iran feeling — caught between a regime willing to sacrifice so many of its own people, and a so-called white knight that's acting more like a dark knight and making things worse?Iraj Abedian: He's neither dark nor black — he's an unstable red knight, promising things based on flimsy assumptions. His administration has such a shallow understanding of the region's culture, particularly Iran's. Iran has 2,500 years of social and political existence, having battled Romans, Greeks, Chinese, Afghans, Turks and the British — a rich history of managing invasions. Geography has also always favoured the Iranian people, since Iran's terrain isn't friendly to invaders. Anyone who knew Iran's history wouldn't have pretended you could build strategy as you go — which is exactly what Trump did. Within three weeks he'd lost the Iranian population's goodwill and hasn't regained any of it. People who thought he was a white knight saw he had his own agenda. That's been a very sad outcome for a people suppressed for 40-odd years, now more suppressed, jobless and facing an unknown future.Alec Hogg: Given that Trump's non-strategy hasn't succeeded, and Rachman's FT piece suggests regime change is back as the primary plan — is that more likely to succeed than what's gone before? And would it bring the Iranian people onside?Iraj Abedian: How do you trust someone who hasn't kept a single word over the past two or three years? He was negotiating with the Iranian government while attacking it. He sets deadlines, then changes them. He sets a strategy, then forgets it. And how do you trust someone who's said more than once that he'll destroy the culture, that nothing will be left, that they'll be annihilated? These are statements that suit Texas but aren't a way to win over sentiment in the Middle East. Nobody in that region regards him as a trustworthy partner — not just in Iran.So the failure isn't just that America has lost this war and failed its stated targets — more importantly, it has lost its stature as a superpower. Ironically, from a historic point of view, I find this rather positive: you have two superpowers, America politically and economically and Russia militarily, both bogged down in what they each thought would be short, special operations. Putin promised the Russian people four to six weeks; now we're seven months on, and this is going to be a long, torturous engagement — not just for those governments, but for the people of Iran and the region. The Arab neighbours are as hurt in terms of future prospects as Trump is.Alec Hogg: Many South Africans have emigrated to Dubai — the UAE has been almost a magnet, with many South African businesses there. Then there's Qatar, where Sasol has a big gas-field investment, and Kuwait, with a lot of relationship ties to South Africa. And a little further away, Israel. What does all this mean for those countries and the region as a whole?Iraj Abedian: It means they have to abandon sole reliance on American protection. America's standing is all but shattered, and this is, in my view, the beginning of the fall of the empire in a literal sense. Arab states — Egypt, Saudi Arabia and others — need to think beyond relying on others for protection and build their own integrated, collaborative regional security pact. Over the past three or four weeks, Pakistan, Egypt, Turkey and Saudi Arabia have been intensely engaged in a new security dispensation — a Middle Eastern NATO of sorts. These arrangements take a lot of detailed financial and military work, but the acknowledgement is there: America can no longer be trusted, nor is it able to guarantee protection. War and military domination — by America, China or Russia — is no longer a sustainable means of control in an interdependent global economy. Stability now has to be built on a more collaborative footing, cognisant of the shared interests of nations, regardless of east or west, black or white.In that context, the Middle East now has to carve out a new security pact among local players — not China, Russia, the US or the UK. The US still has eight military bases across Kuwait, Saudi Arabia and others — to what good? Dubai built its brand as a global logistics and investment hub, but it's now the most vulnerable of these nations. Dubai and the UAE received more missiles and drones from Iran than Israel did, and that speaks to the real, longstanding existential threat both Israel and Iran feel toward each other — a threat the rest of the region is now absorbing more damage from than either of the direct antagonists.Over the past 30 years, these Gulf states have used oil and petrochemical wealth to build extraordinary development projects. I remember Dubai as a desert town, much like a town in the Karoo. Today it looks like something else entirely. Now, governments and investors there have to shift mindset — coexist with neighbours, most importantly Iran in the short term, and re-engineer their security and economic development. For now, they're losing capital, expertise and companies, which is very unfortunate.Alec Hogg: So would this new "METO" get together and negotiate a peace with Iran, independent of whatever Israel and the United States want?Iraj Abedian: It's not that simple. Israel won't sit silent — it's already aligned with the UAE and, further afield, India. So the entire jigsaw of alliances is being rearranged. On one side you have India, the UAE, to some extent Qatar, and Israel. Qatar and Saudi Arabia have long-standing family disputes, so Qatar won't be a reliable partner in a joint pact with Saudi Arabia. Pakistan and Saudi Arabia already have a bilateral security arrangement, and there's talk of extending it to Egypt, with Turkey wanting in too. If they can bring Qatar in, there'll be more than enough coherence among these nations, backed by the military power of Egypt and Pakistan — Pakistan being a nuclear power in regional terms, a meaningful counterweight to Israel, which is also nuclear-armed. So expect a redrawing of regional alliances. These are very early days — I have no idea how it ends — but the US clearly has to rethink the consequences of its failure in this war.Alec Hogg: Before we move off the US — what about the fact that its arsenal has been depleted? It's used so many missiles that some military analysts are saying this opens the way for China to move on Taiwan, since America no longer has as much left to defend Taiwan with. Do you think that's realistic — or could Taiwan have its own surprise for its big neighbour, given how badly the big powers have fared against smaller ones lately?Iraj Abedian: There's no question the broader geopolitical chessboard includes China, Taiwan, Russia and Ukraine alongside all this. To the extent that the US military has shown it can't impose its will and get away with it, Trump's "Make America Great Again through power" approach has proven a complete miscalculation — misplaced in history. This isn't what the Portuguese or Spanish did 200 years ago; that model belongs to a different age, not the 21st century. Russia has learned its lesson too. China is the real winner here — it benefited from the Ukraine war, and now from the Iran war, and I think it will play an interesting game from here, scoring points off the United States. Once this settles, the mega geopolitical chessboard tilts toward China, and the US is in a weak position — not just because its arsenal will take years to replenish, but because even replenished stockpiles aren't as useful as Ukraine has shown against Russia. Russia has the biggest tools; Ukraine builds drones and wipes out targets at a fraction of the cost. Iran did the same — cheap, affordable missiles and drones used to attack American bases across the region, effectively. Yes, they needed to send large numbers, but only about 5% need to land to cause damage, and each Iranian drone costs a fraction of an American counter-missile. War is no longer about tanks and planes — it's far more complex in an age of interdependence and accessible technology.Alec Hogg: As an outsider, it strikes me the mullahs must be feeling their oats right now — believing, almost like the Afrikaners in South Africa did for so long, that they're God's chosen people and that's why this far better-resourced "evil empire" hasn't prevailed and is, in fact, losing. What does that mean for the Iranian people and the country's future?Iraj Abedian: It's a tragedy at the moment, but we have two defeated political groups here. The Iranian regime is no less defeated than the American one. Trump was selling the obsolete notion of nationalism and Making America Great; the Iranian regime has been selling the fetish of religious fundamentalism — also defeated. They may have beaten back American strategy, but they haven't won people's confidence — their legitimacy is at its weakest ever. Worse, factions within the regime are fighting each other more fiercely than they're fighting America. Following their daily exchanges, you'd think these factions were more hostile to each other than to Trump.This comes back to my earlier point: the mullahs believed God was on their side, but they can't provide for their own people. Hospitals are short of critical medicine, food prices are up and availability is down. If God were truly on their side, four provinces — a stretch of over 2,000 kilometres to the Persian Gulf, the country's breadbasket and the source of much revenue, imports and exports — wouldn't be cut off from the mainland, with roads, communications and transport destroyed. The mullahs are feeling their own pain too, but they define success differently: success, for them, is simply still standing, no matter how many have died or how many millions will suffer and lose their futures — as long as they're still standing in front of "the Great Satan." But when people go to the shops and face triple-digit inflation, and don't know when they'll next find medicine, the story the regime used to sell no longer lands. Nobody's listening. So the regime has lost emotional allegiance even among its own ranks, never mind the wider population. We now have two defeated regimes whose strategies proved wildly out of step with the reality of their own people, the wider region, and humanity's broader interests.Alec Hogg: So where does that leave South Africa? We have exposure to Iran through our government inviting it into BRICS, and through one of our biggest companies, MTN, which holds 49% of a major Iranian cellphone network. Where does that leave this country and its exposure?Iraj Abedian: It's unfortunate — I've said this before — that South Africa bet on a partnership, at the wrong time and unnecessarily, that was bound to end up here. Instead of being an independent, impartial nation focused on our own developmental needs, we've landed in a camp that puts us in the bad books of the Americans, for good reason or bad. At the same time, Iran won't be in a position to look after its own needs for the next 30 years, never mind being a good partner to anyone else, given the scale of destruction. America may have lost this war strategically, but it hasn't failed militarily — it has damaged Iran badly, and reconstruction is likely a 20-to-30-year project.South Africa ended up not on the side of the Iranian people, who are suffering under this regime regardless of whether America wins or loses — tens of thousands of political prisoners, daily executions, alongside food and medicine shortages. It's not a good look, and it's not compatible with South Africa's stated values or its economic interests over the medium term.Alec Hogg: And your own family, people you know in Iran — how are they seeing the future?Iraj Abedian: Connectivity has been restored, so we're in touch. They're suffering, like everyone else. My mother is a good example — bedridden, 85 years old, and struggling to find medicine. Prices have gone up five times since January, if you can even find what you need. Luckily she doesn't currently need medicines that aren't available. But from what I hear, it's a nation that's highly angry, highly depressed, disappointed, and feels deceived both by its own government and by the West's talk of human rights, which hasn't shown up in any meaningful way over the past nine months, or the past ten years.Alec Hogg: How do they see the future?Iraj Abedian: Uncertain. When I ask my family and friends, they say, "We've got used to living with this uncertainty." I ask how they'll manage, and they say they don't know either — they'll manage somehow. I'm not a psychologist, so I can't fully describe the state of a human being who has nothing but internal belief and strength while everything around them is destruction, joblessness and daily hardship, under a government that remains relentless in its suppression — daily hangings, making examples of men, women, young and old, poets and politicians, anyone suspected of sympathy toward the invasion or toward forces seen as destabilising the regime. They're killed or imprisoned, sometimes within hours of a verdict. I get updates almost daily: so-and-so had a verdict against them, then two days later, so-and-so was executed. That's the state of that society. I can hear it, but I honestly can't relate to it.Alec Hogg: How do you think this ends, given Trump is under enormous pressure and doesn't want to be seen as a loser? He's said he won't put boots on the ground, yet most analysts say breaking the impasse and taking the Strait of Hormuz would need something like 600,000 troops. Do you see this becoming a Vietnam?Iraj Abedian: It could be worse than Vietnam, because Vietnam didn't have global consequences for petrol prices, farming, food production and aviation. It was regionally confined. Iran's geography, and the modern economy's dependence on energy, fuel and fertiliser, makes this a different order of magnitude — not just for America and the Republicans, but for the global economy. The rest of the world can't just sit back and analyse. Europeans, for example, have largely abandoned the Iranian people and the wider region because they dislike Trump's attitude on Greenland and NATO — but they need to rethink that. Trump may be erratic, but what's happening affects their present and future too. Governments everywhere, including South Africa, have to recognise this as the first case of a truly global crisis illustrating the interdependence of nations. That's the one genuinely interesting outcome of this failure across the American, Russian and Iranian regimes — it shows we can't be bystanders analysing from a distance, because it will affect our tomorrow too. That's the futility of war in this age.How it ends increasingly depends on those bystanders rethinking their own role, regardless of which side they favour. Sadly, humanity doesn't have a ready collective solution — it never has. Even the United Nations and the League of Nations were limited, largely solving problems between European and developed nations. This crisis has globalised the challenge: how do we avoid this kind of confrontation, which doesn't belong to this age, and how do we bring it to a close together? Left to Mr Trump alone, it's simple: escalate, escalate, cause more damage, and Iran's regime will do the same in return — more damage, more devastation, and more consequences for the rest of us.Alec Hogg: Dr Iraj Abedian — economist, entrepreneur and academic, Iranian by birth, South African by adoption — will be at BNC#9 next month with more insights. Thank you, Iraj. You've opened my eyes today, and I'm sure the eyes of many members of the Business Tribe.Iraj Abedian: My pleasure. Thank you.Alec Hogg: I'm Alec Hogg, from BizNews.com.Transcript lightly cleaned for ASR errors and readability. Content and meaning unchanged from the original recording.

Director's Cut - Dr Iraj Abedian: Hormuz stand-off could cost SA more than pain at the petrol pump

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