Can the U.S. Make Hormuz Irrelevant in Two Years? Testing Bessent's Claim

Treasury Secretary Scott Bessent told reporters on September 1 that the Strait of Hormuz would become “a worthless piece of water” within two years, according to The Hill and OilPrice. The statement landed as Brent crude crossed $91, ship traffic through the strait had fallen to roughly five vessels per day, and LNG spot prices in Asia hit a five-month high. On September 3, Bessent went further, describing Iran as being in “death throes” as he announced the European Union’s decision to join the US-led campaign to isolate Tehran financially.

Bessent is not just predicting an outcome. He is describing a strategy the administration has already committed to, and the Venezuela oil deal signed the same week, the ongoing SPR draw, the pressure campaign on South Korea to join Hormuz naval patrols, and the accelerated domestic shale push are its instruments. The theory: flood global markets with Western-hemisphere and allied supply, reroute LNG around Hormuz via the Cape of Good Hope, and build enough redundancy that a strait closure barely registers on the price index.

Four things would have to happen simultaneously for that theory to work inside two years.

The four pillars

The first is US and Western-hemisphere crude production rising enough to compensate for roughly 20 percent of globally traded oil that normally flows through Hormuz. US crude output is at record levels, but translating wellhead volumes into delivered barrels requires takeaway capacity, refinery configuration, and shipping logistics that move on multi-year timelines. Chevron’s $7 billion Venezuela expansion, announced last week, is structured as a five-year program to double output, not a two-year emergency surge.

The second pillar is a rebuilt Strategic Petroleum Reserve large enough to cushion a six-to-twelve-month Hormuz closure across the IEA membership without triggering panic draws. The SPR is at depleted levels following sustained releases, and the current Hormuz disruption is exactly the kind of event the reserve was designed to address. Using it now makes the two-year target harder to reach, not easier.

The third is LNG rerouting infrastructure adequate to supply Asian buyers around the Cape of Good Hope at competitive prices. Asian LNG prices surged to their highest level since 2022 this week. Qatar and the UAE have begun conducting ship-to-ship crude transfers in the Gulf of Oman to avoid transiting the strait — a workaround that adds cost and time but does not resolve the underlying capacity problem. Japan’s largest tanker operator warned this week that disruptions could extend into next year.

The fourth pillar is Asian import diversification: China, Japan, South Korea, and India would need to reduce their dependence on Gulf crude fast enough that a Hormuz closure stops producing price shocks for their economies. Al Jazeera reported Thursday that Asian refiners are accelerating domestic storage buildouts in response to this crisis. That response is rational, but it is also an acknowledgment that the diversification is not yet complete. Building and filling strategic reserves takes years.

Where each pillar stands

On shale production, the financial signals point toward continued scarcity rather than coming abundance. Hedge fund Citadel is seeking to acquire US shale production assets, Reuters reported Thursday. Capital moves into shale when producers expect prices to stay elevated. It does not flow in when the market anticipates surplus supply undercutting returns.

On the SPR, US crude inventories are falling as draws continue. The Energy Department’s plan to swap Venezuelan heavy crude for light American crude would theoretically help rebuild the reserve over time. But the Energy Secretary’s own timeline for doubling Venezuelan output runs across multiple years, not two. The administration is spending a strategic asset it would need to have full to make the Bessent thesis viable.

On LNG rerouting, Qatar is the swing producer that matters most. The emirate was removed from Fitch’s negative ratings watch this week, reflecting eased direct risk to its LNG facilities. Qatar has simultaneously been working to broker a diplomatic reopening of the strait. Doha wants Hormuz open, not obsolete. An LNG producer whose exports flow through the strait has no interest in infrastructure that routes permanently around it.

On Asian diversification, Reuters reported September 1 that the naval blockade is suppressing Iranian oil exports more effectively than years of sanctions. The same disruption producing that result is also driving Dubai crude toward $100 and Asian LNG to multi-year highs. The diversification strategy is supposed to prevent those outcomes. Right now, it is not.

The contradiction the markets are pricing in

A Hormuz closure that barely registers would look like stable LNG prices, a flat shipping index, and secondary trade routes absorbing diverted volumes without strain. The current data shows the opposite.

The Panama Canal restricted traffic this week in response to the Hormuz disruption, which means rerouting pressure is already spilling into secondary chokepoints. The Baltic Dry Index has broken out to the upside, repricing the global cost of moving bulk commodities. South Korea, under US pressure to join Hormuz patrols, pushed back against initial reports that it had already committed. The coalition Bessent’s strategy needs is not assembling cleanly.

And the administration is conducting daily strikes on Iranian tankers inside the very strait it says will be strategically obsolete. US forces struck three Iranian crude carriers on September 5, with Central Command confirming the action was in response to IRGC missile strikes on US warships. This morning, the IRGC claimed missile strikes on additional US ships. Both sides are escalating through a chokepoint Bessent has declared irrelevant.

That is not inherently disqualifying — the administration could be right about the two-year endpoint while fighting a near-term kinetic battle to hold position. But the escalation cycle is consuming strategic resources, including SPR drawdowns and military assets, that the Bessent thesis depends on being available to build the alternative infrastructure.

Three numbers to watch

Asian LNG spot prices are the clearest leading indicator. If they fall from this week’s multi-year highs through October as rerouting capacity expands, the supply diversification thesis is tracking ahead of schedule. If they hold elevated through the northern hemisphere winter — when Asian demand typically peaks — rerouting capacity is insufficient.

Chevron’s Venezuela output curve is the second number. The company committed $7 billion over five years. If the administration can produce credible data showing Venezuelan production accelerating on a two-year timeline rather than five, the Hormuz obsolescence thesis gains traction. Normal infrastructure buildout timelines in Venezuela’s Orinoco Basin are not favorable to that reading.

The SPR level is the third. Bessent cannot make Hormuz irrelevant while drawing down the only domestic reserve that could substitute for Hormuz flows during a closure. If the SPR begins rebuilding while Brent holds below $90, the strategy is working. If the reserve keeps falling while oil stays above $90, the administration is financing a war through the asset it needs to make the war unnecessary.

Bessent is probably right about the long-run direction. The United States is building the energy architecture to reduce its dependence on Hormuz over time, and the Venezuela deal, shale production growth, and LNG export capacity are all real policy levers. The two-year timeline, measured against this week’s market data, reads as a political statement about ambition rather than an energy sector forecast about delivery.

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