Brett Erickson

Managing Principal, Obsidian Risk Advisors
Board Member: DePaul Biz & Seton Hall IR
Expertise Featured in: See Banner
[email protected]

[Brett Erickson @BrettErickson28]

I see many people claiming that Iran is “equally losing” this war because the United States has so thoroughly damaged their economy. An economy that was already in a bad spot prior to the war. But how true is this?

There are a few data points worth highlighting that show Iran may emerge FAR stronger economically… despite the ~$160B on damage caused by US bombing and the blockade.

If we look at the exchange rate of the Rial to the USD, many want to point to the current rate:
1,917,000:$1USD

But take a closer look, and you’ll see that this figure is not so straightforward.

At the start of the war, the Rial was trading at 1,720,500:$1. When the blockade reached its peak, it hit 1,819,000:$1.

Then came the MOU… and it strengthened massively, dropping from the 1.82M to 1,532,000:$1USD.

Stronger than it was BEFORE the war. And the only reason it ticked back up after this is because the MOU was destroyed.

This can similarly be observed with Iran’s inflation rate. While many want to claim that Iran is experiencing “hyperinflation”, the textbook definition of this would be 50% inflation month over month. In June, Iran’s inflation that month was 7.2%. But here’s the problem…

Under the MOU, and in July, Iran’s inflation HALVED to 3.6% month over month… OOPS!

Now we can clearly see that there is massive economic benefit to Iran emerging victorious in this conflict. CONFIDENCE they will not be attacked again plays a huge role.

But then add to this the likely economic concessions they will receive to include likely ~$100B of frozen assets, the unsanctioning of their oil sales, fees imposed on the Strait of Hormuz, and potentially additional sanctions being lifted?

Just from these, it can be reasonably calculated that Iran will unwind ALL damages from the war in less than a year, and then be making additional revenues every year following… alongside the immense power that comes from controlling the Strait… alongside the economic confidence that comes with knowing no country DARES to attack Iran again… alongside the massive increase of domestic support for the Iranian government after defeating “the Great Satan”…

Is Iran going to become Luxembourg any time soon? No. But even WITHOUT making any nuclear concessions (which would be an INSANE boon to their economy) that would see secondary and likely primary sanctions lifted, Iran will emerge from this war in a STRONGER economic position than they entered it.

Regardless of the bombing. Regardless of the blockade.

Stronger.

[Brett Erickson @BrettErickson28]

Reposted as Cuba faces its THIRD blackout this MONTH…

The United States has gone WAY TOO FAR!!!

[Brett Erickson @BrettErickson28]

@Sa44775Sahra I doubt Iran is “allowing” oil

[Brett Erickson @BrettErickson28]

Because I do my best to be fair and objective in the Iran War, I think many are underestimating how much oil is actually reaching the global markets. Enough towing the damage? Certainly not.

But… it’s more than people think.

[Brett Erickson @BrettErickson28]

Because I do my best to be fair and objective in the Iran War, I think many are underestimating how much oil is actually reaching the global markets. Enough towing the damage? Certainly not.

But… it’s more than people think.

[Brett Erickson @BrettErickson28]

@grok @myndmaven @Iranikish @grok what was it MONTH OVER MONTH, not year to year point to point. The June to July inflation vs May to June

[Brett Erickson @BrettErickson28]

I see many people claiming that Iran is “equally losing” this war because the United States has so thoroughly damaged their economy. An economy that was already in a bad spot prior to the war. But how true is this?

There are a few data points worth highlighting that show Iran may emerge FAR stronger economically… despite the ~$160B on damage caused by US bombing and the blockade.

If we look at the exchange rate of the Rial to the USD, many want to point to the current rate:
1,917,000:$1USD

But take a closer look, and you’ll see that this figure is not so straightforward.

At the start of the war, the Rial was trading at 1,720,500:$1. When the blockade reached its peak, it hit 1,819,000:$1.

Then came the MOU… and it strengthened massively, dropping from the 1.82M to 1,532,000:$1USD.

Stronger than it was BEFORE the war. And the only reason it ticked back up after this is because the MOU was destroyed.

This can similarly be observed with Iran’s inflation rate. While many want to claim that Iran is experiencing “hyperinflation”, the textbook definition of this would be 50% inflation month over month. In June, Iran’s inflation that month was 7.2%. But here’s the problem…

Under the MOU, and in July, Iran’s inflation HALVED to 3.6% month over month… OOPS!

Now we can clearly see that there is massive economic benefit to Iran emerging victorious in this conflict. CONFIDENCE they will not be attacked again plays a huge role.

But then add to this the likely economic concessions they will receive to include likely ~$100B of frozen assets, the unsanctioning of their oil sales, fees imposed on the Strait of Hormuz, and potentially additional sanctions being lifted?

Just from these, it can be reasonably calculated that Iran will unwind ALL damages from the war in less than a year, and then be making additional revenues every year following… alongside the immense power that comes from controlling the Strait… alongside the economic confidence that comes with knowing no country DARES to attack Iran again… alongside the massive increase of domestic support for the Iranian government after defeating “the Great Satan”…

Is Iran going to become Luxembourg any time soon? No. But even WITHOUT making any nuclear concessions (which would be an INSANE boon to their economy) that would see secondary and likely primary sanctions lifted, Iran will emerge from this war in a STRONGER economic position than they entered it.

Regardless of the bombing. Regardless of the blockade.

Stronger.

[Brett Erickson @BrettErickson28]

@abdu Thanks for your continued support! I notice!

[Brett Erickson @BrettErickson28]

It will almost CERTAINLY involve releasing of frozen assets up front too. Iran had 60m barrels stockpiled on vessels during the original MOU that served to their benefit, now they have like… 5M. It’s not justifiable to go back to pure MOU, not to mention to oil waivers being mostly neutered now due to unreliability

[Brett Erickson @BrettErickson28]

@TankerTrackers I’ve seen the name like 7 times now and I keep reading it as Benghazi 😭

[Brett Erickson @BrettErickson28]

FDD saying the quiet part out loud:
“That isolation will keep showing up in Iran’s economy as businesses, even in friendly countries, refuse to risk trade and investment there given sanctions and war risk”

… so just to clarify, you’re saying that the PRIMARY REASON Iran’s economy is going to struggle is because of US sanctions, and war risk… from the U.S.

Man, it’s almost like the United States is actually the problem here!

(Also, Iran is ahead of schedule on their oil revenues this year by almost two full months, their inflation HALVED month over month in July, and during the MOU, Iran’s Rial strengthened to better than pre-conflict levels…)

[Brett Erickson @BrettErickson28]

@dervish2115 Oh most certainly I would not moderate myself or stifle my honest opinion.

[Brett Erickson @BrettErickson28]

It is likely that in the future I will move from private sector consulting into the public policy space to focus on foreign policy and national security with a think tank. Where that will be is yet unclear.

[Brett Erickson @BrettErickson28]

@TitusArch88 Agreed. That would be utter insanity.

[Brett Erickson @BrettErickson28]

Iran would be fools to return to the MOU. They won’t, because they’re not fools, but let me briefly explain why this would be so absurd.

Under the original MOU, Iran received ONE up front concession: oil sanction waivers.

These were effectively neutered by the United States when they revoked them without notice, and added escrow accounts during the 10-day wind down period.

Why is this significant?

This is because the oil waivers are inherently predicated on countries believing that they can purchase Iranian oil AND have it seen through to delivery. They are gambling their supply on Iran’s ability to legally deliver said oil.

Washington, by revoking the waivers, proved PERMANENTLY that any future sanctions lifting on their oil is not durable. Not trustworthy.

This ensures that it is not a meaningful concession in the future.

In addition to this, the ONLY reason Iran accepted so little up front is because they had stockpiled ~60M barrels of oil on vessels inside of the blockade line before the MOU. This meant that once the MOU was signed, and the blockades were lifted, Iran could RAPIDLY export this oil outside of the blockade line, knowing that if it was reimposed, this was essentially $7B they could reap regardless.

This time however, the United States has struck vessels seeking to load oil post-MOU destruction. Now, Iran does not have that same incentive to lift the blockades with so few up front benefits… particularly because they’re in a STRONGER position now than they were before.

As a result, Iran will almost certainly need IMMENSE asset unfreezing upfront before any blockade is lifted. By most estimates, Iran has ~$100B to $120B of frozen assets in other countries locked up by U.S. sanctions.

Iran has repeatedly stated that they plan to recoup a significant portion of this UP FRONT in any new MOU.

[Masoud Pezeshkian @drpezeshkian]

تفاهم‌نامه‌ای که امضا شد حاصل خرد جمعی اعضای شعام بود و همه اعضا با آن همدل‌اند. باور دارم این تفاهم‌نامه مرکز ثقل روابط خارجی ما در آینده خواهد بود. باید بکوشیم دشمن را وادار کنیم به آنچه امضا کرده پایبند بماند. امنیت کشور، منطقه و هم‌پیمانان ما با این تفاهم‌نامه ارتقا می‌یابد.

[Brett Erickson @BrettErickson28]

@NeilBoltonRSPL @MachariahWangu1 Well no, I’m sure pipelines will (and are) being built, but to act as though that solves any problem is naive at best

[Brett Erickson @BrettErickson28]

The Gulf countries FEAR Iran. This is irrefutable after the events of the past week. Saudi, the UAE, Qatar… they know that Iran can hit them at will.

This is one of the greatest points of leverage now for Iran, and it essentially locks Trump in to the dueling blockades as the only strategy now.

Iran has proven to the world, and more importantly the GCC, that U.S. military defenses are incapable of defending their most important economic infrastructure against a $30,000 drone.

This newfound power… control… is something that will greatly diminish the United States’ global standing for years after this war. The damage to US reputation as a defensive partner will last for DECADES as a result of this failure.

All that Trump has now is the dueling blockades. All eyes should be solely fixated on the Omani Route. Many people are underestimating the traffic moving through here. While it is certainly nowhere close to enough… the mainstream reporting is only focused on AIS visible transits, and that’s missing a big piece of the puzzle.

With the Gulf countries now absolutely TERRIFIED of Iran, Washington’s only hope is to establish a SAFE corridor through the Omani channel. All indications point to the fact that they are militarily incapable of doing so, but if there is anything to watch right now…

It’s the Omani Channel.

[Brett Erickson @BrettErickson28]

@onthishillwedie @JavierBlas Correcto

[Brett Erickson @BrettErickson28]

@veryvirology I’m pretty sure we don’t have the drones for that

[Brett Erickson @BrettErickson28]

Holy desperate…

[BRICS News @BRICSinfo]

JUST IN: 🇺🇸🇮🇷 US military asks troops for "creative and unconventional" ideas to punish Iran, CNN reports.

[Brett Erickson @BrettErickson28]

@HFI_Research More Russian waivers would “semi-unlock” new barrels

[Brett Erickson @BrettErickson28]

@WindwardAI Sir, I know math is hard, but 24 to 56 IS more than doubling

[Brett Erickson @BrettErickson28]

@vrathragna44

[Brett Erickson @BrettErickson28]

Cuba, for the 3rd time this MONTH, and 6th time this year, has experienced a total collapse of their power grid.

Just last month, I published in The Hill and op-ed that discussed how the extremity of the economic warfare being waged by the United States on Cuba is WILDLY out of proportion to the “threat” that they pose to the United States.

To be abundantly clear, Cuba poses ZERO threat to the United States. That doesn’t mean that they are incapable of causing the tiniest bit of harm, but if that is your barometer for launching all-out economic warfare that shuts down hospitals, causes MILLIONS to fall into a humanitarian crisis, and KILL people… you need to reexamine your moral compass.

This is unacceptable, and it is clear that Lil Marco and Dementia Don are pursuing yet again more regime change, human lives be damned.

ANYTHING FOR THE CRUMBLING EMPIRE!

No. As Americans, as HUMANS around the world, it is our DUTY to speak out about this. You can no longer plausibly deny that the United States is slaughtering civilians in Cuba as a result of OUR blockade (oh, the IRONY!!!), OUR sanctions, our villainy.

We need to speak out together. We cannot remain silent while the United States directly causes a humanitarian crisis in Cuba.

Please, like this. Comment. Repost it. Follow my account. This MATTERS people. We need to work TOGETHER to push back on this atrocious behavior from the United States.

WE CANNOT STAY SILENT!

[Brett Erickson @BrettErickson28]

@JoshYoung Old photo from my understanding

[Brett Erickson @BrettErickson28]

Pezeshkian’s recent statements about returning to the MOU read differently to me than it seems many others.

I do not believe for a MOMENT that Pezeshkian, nor Iran, plan to return to “THE MOU”… but moreso AN MOU.

A deal. Some kind of deal, compared to perpetual war.

That is key here because many inside of Iran increasingly believe Trump to be fundamentally incapable of honor. Integrity. To be a RELIABLE counterparty in any arrangement.

And in many ways, I believe Pezeshkian is taking the RIGHT approach here.

I think many in Iran DO actually risk overplaying their hand in the instance in which they are entirely unwilling to accept a deal, regardless of the terms of said deal.

I get it, I understand WHY they believe Trump is an entirely unreliable partner, but I also believe that a good deal is a good deal. I believe that Pezeshkian is saying here:
“IF we get an undeniably great deal, we need to accept such a thing as victory.”

And he is RIGHT in this instance. Let me spell it out in a more straightforward way:
Iran gets $20B of upfront cash.
Iran gets $50B of upfront cash.
Iran gets $200B of upfront cash.
Iran gets $500B of upfront cash.
Iran gets $2T of upfront cash.

Look, at some point… that’s a GOOD friggin deal right there. Now what figure is “an undeniably good deal”? That is for Iran to decide. But that is what I believe Pezeshkian is saying in his recent statements.

Not “let’s return to simply to the prior MOU”, but instead he is saying, “IF an MOU is offered that puts forth overwhelmingly positive terms for Iran, it is better to take said deal that refuse outright any deal merely to hurt Trump”.