In Geopolitics This Week
Iran Formalizes Hormuz as a Sovereign Instrument, Ukraine’s Drone Campaign Continues to Cut Russia’s Oil Revenue, Iraq Authorizes PMF Combat Response, and other stories.
Iran Formalizes Hormuz as a Sovereign Instrument
Since March 13, the Islamic Revolutionary Guard Corps has established de facto control over vessel transit through the Strait of Hormuz. The IRGC’s Hormozgan Provincial Command routes commercial traffic through a Q-route between the islands of Qeshm and Larak, requiring vessels to submit ownership chains, cargo manifests, and crew lists before transit is authorized. Fees of up to $2 million per voyage have been reported in at least two confirmed cases, with payments settled in yuan outside Western financial infrastructure, though the arrangement remains ad hoc rather than systematically enforced. Iran’s parliament is advancing formal toll legislation and Tehran’s UN letter lists permanent recognition of Iranian sovereignty over the strait among five formal conditions for ending the war.
Iran's domestic legal position rests on its 1993 Law of Marine Areas rather than UNCLOS, a framework that, if actively asserted, would give Tehran a basis to regulate passage. In practice, this produces a two-tier access system formalized on March 26 when Foreign Minister Araghchi announced that China, Russia, India, Iraq, and Pakistan would be permitted transit as “friendly nations”, with Malaysia and Thailand added through separate bilateral diplomatic channels. For Western-flagged and Western-insured carriers, compliance with IRGC vetting and yuan payment places them between Iranian requirements and their own governments’ sanctions regimes, making transit commercially and legally prohibitive under current conditions. Germany, France, Italy, Greece, Spain, Japan, and Australia have all explicitly declined military involvement in reopening the strait. The result is a strait that now functions as an instrument of Iranian foreign policy, open to states that have maintained non-hostile relations with Tehran.
The toll regime’s durability depends on whether regional states absorb or resist it. The UAE, Saudi Arabia, and Bahrain demand full Iranian capability degradation and written Hormuz guarantees before any settlement. Qatar, Oman, and Kuwait are pushing for a swift end to the war, prioritizing economic damage containment. Gulf officials have begun reviewing force majeure clauses in current contracts as the economic cost mounts, and an Iranian strike on Prince Sultan Air Base has demonstrated continued capacity to reach deeply into the Gulf. The US has achieved sea denial, but sea control is a structurally different objective that kinetic naval superiority alone cannot deliver. The US government is developing a $20 billion sovereign reinsurance facility to backstop commercial transit insurance, though escort operations in the current threat environment carry considerable operational risk. The Houthis entered the war on March 28 and explicitly listed Bab al-Mandeb closure among their options.
Ukraine’s Drone Campaign Continues to Cut Russia’s Oil Revenue
Between March 23 and 28, Ukrainian forces struck Primorsk, Ust-Luga, and Novorossiysk, Russia’s three primary western export terminals, suspending loadings at each. Kirishi, Russia’s second-largest refinery owned by Surgutneftegaz, was struck twice within 48 hours and has since suspended all primary processing operations. The Slavneft-YANOS refinery in Yaroslavl was struck overnight on March 28, one of Russia’s five largest refineries. Combined with the Druzhba pipeline halted since January and European naval seizures of Russian oil tankers, roughly 40% of Russia’s total export capacity is estimated to be currently offline. Ukrainian-origin drones came down inside Estonia, Latvia, and Lithuania during the same period, all within 50 kilometres of the targeted terminals.
The fiscal picture is more complex than the infrastructure damage alone suggests. Oil and gas revenues account for approximately 23% of Russia’s federal budget, and January revenues fell 50% year-on-year. The Hormuz closure has, however, sharply narrowed the Urals discount: Indian buyers are now paying above Brent for Russian crude, and Russian oil revenues hit a four-year high in March at $270 million per day, partially offsetting the export volume losses. Analysis of the Russian fiscal formula shows this remains structurally insufficient, with state oil revenues at current Urals prices translating to roughly $4-7 per barrel for the budget against the $25 per barrel assumed in the 2026 plan. Ukraine’s strategy of re-striking facilities during repair windows keeps key sites offline across two to three-week cycles, preventing Moscow from converting the price spike into rebuilt export volumes.
Ukraine has extended both the geographic reach and the targeting discipline of its energy strike campaign. The Yaroslavl strike targets the fuel chain feeding Russian military logistics rather than the revenue chain funding the budget, opening a second line of pressure that export disruption alone does not address. The rise in oil prices narrows the economic damage but cannot substitute for physical export capacity, and Ukraine’s re-striking strategy is timed to prevent recovery before it occurs. Russia faces a compounding problem: export revenues falling as infrastructure is destroyed, domestic military fuel supply under direct attack, and a budget deficit expanding at a rate the oil price spike cannot close.
Iraq Authorizes PMF Combat Response
On March 23, US airstrikes in Anbar targeted PMF headquarters, killing operations commander Saad Duwai. A second strike on March 25 hit a military clinic at Habbaniyah, striking positions shared by PMF and regular Iraqi army soldiers. In response, Iraq’s National Security Council has authorized all security forces to respond to attacks without prior approval from central command. Baghdad simultaneously summoned both the US chargé d’affaires and the Iranian ambassador, filed a formal complaint with the UN Security Council against both. Iraq’s Ministry of Defence separately accused Washington of aggression against its regular army, sharpening the sovereignty claim beyond the militia framing Baghdad had previously maintained.
The authorization exposes the structural contradiction at the core of the Iraqi state. The PMF receives state funding and sits nominally under the Prime Minister as commander-in-chief, yet draft legislation advancing through parliament would grant it independent legal status, its own military academy, and a permanent seat on the National Security Council. This legislation is itself contested: factions within the ruling Shia Coordination Framework are resisting full PMF independence, calculating that total institutional autonomy would remove their own leverage over the commission. The decentralised combat authorization has handed operational freedom to units maintaining command relationships outside Baghdad, functionally making Iraq a belligerent in the regional war.
Gulf states have publicly demanded Baghdad prevent attacks emanating from its territory, and the pressure is structural rather than diplomatic. Iraq spent years rebuilding relationships with Saudi Arabia, the UAE, and Jordan as a counterweight to Iranian influence; the current trajectory reverses that consolidation, pushing Baghdad toward regional isolation. With the PMF firmly embedded in the state, Baghdad has no credible basis on which to negotiate its position with either belligerent. Iraq is absorbing strikes from both sides, losing regional standing with its neighbours, and watching its institutional authority fragment in real time, with no political consolidation to arrest any of it.
Monday, March 23rd
US Pursues Sahel Minerals Access Against Entrenched Rivals — Responsible Statecraft
Europe Accelerates Account-to-Account Payment Infrastructure — Geopolitical Monitor
Vanuatu Presses UN Vote on ICJ Climate Reparations Resolution — The Diplomat
Brazil and Paraguay Accelerate Itaipú Annex C Tariff Negotiations — Merco Press
India and Taliban Pursue Mining and Infrastructure Partnerships — Nikkei
Iraq’s Basra Output Collapses 73% as Storage Reaches Capacity — Reuters
Tuesday, March 24th
Vietnam Locks in Rosatom for First Nuclear Plant — The Diplomat
Warsaw Converts WWII Reparations into Capability Demand on Berlin — War on the Rocks
Iberian Renewable Density Shields Electricity Prices — Oil Price
Iran Imposes Strait Tolls as US Amphibious Force Approaches — Al-Monitor
Australia-EU Deal Opens Minerals Corridor — Reuters
Pyongyang’s AI Arms Push Collides with Hard Resource Ceilings — IISS
Wednesday, March 25th
EU Signs First African Defence Partnership with Ghana — Africa News
UK Signs Typhoon Training Contract with Turkey — Defence Industry Europe
Bengal Fan’s Undrilled Blocks Draw Western and Chinese Rivalry — The Diplomat
Canada and Norway Move to Capture Gulf Supply Gap — FT
Israel Announces Expanded Ground Operation in Lebanon — Reuters
Pakistan’s Hormuz Exposure Drives Islamabad Mediation Offer — Asia Times
Thursday, March 26th
Ukrainian Drones Halt 40% of Russia’s Oil Export Capacity — Oil Price
Turkey Relays Backchannel Messages Between Washington and Tehran — Responsible Statecraft
France and Vanuatu Open Sovereignty Talks Over Pacific EEZ Dispute — The Diplomat
Baghdad Authorizes PMF Combat Response — FPRI
Thailand Secures Hormuz Transit Without Toll Payment — Reuters
Atlantic–Sahel Energy Corridor Faces Compounding Pressure — Geopolitical Monitor
Friday, March 27th
China Detains Panama-Flagged Vessels in Canal Port Dispute — Reuters
North Korea and Belarus Sign Friendship and Cooperation Treaty — AP News
Caspian Sea Decline Degrades Transit and Shifts Naval Balance — Jamestown
Gulf States Reassess US Security Architecture — Oil Price
Iran Fortifies Kharg Island Against Amphibious Assault — ZeroHedge
Europe’s Response to Energy Crisis Fractures Into National Policies — Stratfor
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