Norman T. Roule
Norman Roule is a geopolitical and energy consultant who served for 34 years in the Central Intelligence Agency, managing numerous programs relating to Iran and the Middle East. He also served as the National Intelligence Manager for Iran (NIM-I)\n at ODNI, where he was responsible for all aspects of national intelligence policy related to Iran.
Understanding a Multi-Layered Crisis
The Cipher Brief: The tenuous ceasefire in the Middle East involving Iran may be collapsing. Iran has fired a fresh barrage of missiles at Israel, and reportedly, President Trump attempted to restrain Israel from retaliation. We have seen a growing number of reports that container ships and oil tankers are beginning to trickle out of the Strait of Hormuz, albeit sometimes under fire. At the same time, we have reports that the Administration’s negotiators are consulting nuclear experts to develop the next phase of talks with Iran. The situation is difficult to understand. Can you put this into perspective?
Roule: The best way to look at the current situation is to see it operating on several levels in parallel. The levels interact, but they can also progress independently. The situation is brittle, but each process has predictable elements because each level is maintained by a consistent set of actors whose strategic motivations are constant. The ceasefire, such as it is, concerns Iran itself and should not be considered to include Lebanon. This arena will remain a disruptive element over which the U.S. will have limited influence. Regarding the Strait of Hormuz, we should view it as a contested enforcement crisis sustained by a nominal ceasefire, with the post-strike and ceasefire diplomatic endgame not yet in sight.
The Strait of Hormuz and Maritime Pressure
The Cipher Brief: What is the current state of shipping in the Strait of Hormuz?
Roule: Iran continues to press ships to pay for passage through Iranian-designated routes or Iranian transit-control arrangements in and around the Strait and will continue to do so. There are credible reports that the Strait is mined, but this has not been publicly confirmed. Most ships appear to be moving through Omani waters, where the U.S. military is providing some level of informal protection, short of formal escort, as they pass through the Strait. The U.S. Navy has repeatedly and appropriately demonstrated that it will tolerate no threats by Iran and has destroyed Iranian drones and struck coastal radar or other military assets when they threatened maritime traffic or U.S. forces. These operations have likely constrained Iran’s actions. We should expect Iranian tests of the U.S. to continue, however, if only because Iran knows that even a small number of attacks will prevent most shippers from testing the route and will keep insurance rates prohibitively high for cargo traffic.
The Economic Squeeze on Iran
The Cipher Brief: Tell us about the impact of the blockade on Iran.
Roule: The impact is significant and almost certainly far greater than Iran is willing to admit, and growing every day. Before the blockade, Iran’s oil exports were commonly estimated at 1.4 to 1.8 million barrels per day, depending on whether one counts crude, condensate, refined products, and shadow-fleet flows. Oil and gas exports accounted for roughly 15 percent of GDP. Iran’s exports have fallen sharply, with current flows measured in the hundreds of thousands of barrels per day rather than pre-blockade levels. May crude and condensate exports will be well below 300,000 bpd. Unemployment is growing. Inflation is growing. Iran’s rial open-market rate now hovers around 1.7 million per dollar. The economic erosion and associated domestic political costs will be cumulative in a country that was already shaken by unprecedented nationwide unrest in December and January.
Iran's Regional Strategy
The Cipher Brief: What are Iran’s options to weaken the impact of sanctions?
Roule: We are seeing these play out in real time. Iran is using Pakistan, Caspian, Turkey, rail, and other land routes for limited trade leakage, but these cannot replace seaborne crude exports to China at scale. Tehran will also press shippers to pay for passage through waters it controls. Militarily, use missile and drone attacks on Kuwait, Bahrain, some of the ships transiting the Strait, and now missile strikes on Israel to show the limits of U.S. power, to split regional alliances, and to keep oil prices as high as possible. In terms of foreign engagement, the Foreign Minister must use travel to show Iran is not isolated, and the Quds Force needs to sustain its relations with proxies and to keep international attention on Israel, and influence U.S. public opinion against continuing the conflict.
The Future of Nuclear Diplomacy
The Cipher Brief: Tell us about Iran’s broader regional motives? What prompted Iran to attack Israel with missiles this evening? Why is Iran so focused on Lebanon?
Roule: The ongoing crisis prompted by the Iranian missile attack on Israel risks significantly changing the region’s strategic map, but before we talk about today’s developments, let’s unpack some of the other issues that led to it. I think that will lay a good foundation for understanding Iran’s motives in launching the missile attack and help explain these attacks and where the broader region is going.
First, neither the United States nor Iran wants to see a return to open hostilities such as those seen in the first weeks of the conflict. Tehran needs domestic stability, and Washington has no interest in another war in the Middle East. Therefore, the weight of the conflict, as well as the pressure tool for talks, shifted to the Strait of Hormuz because each side sees this lower-intensity battlespace as offering leverage without the risks of that broader conflict.
There are routine reports that a small number of ships are exiting the Strait, sometimes under fire from Iran. The ships are generally moving through Omani waters, but there are rare reports of ships choosing to travel through Iran’s side of the Strait. This flow is sufficient to allow Iran to demonstrate that it will deal with those countries that pay the price of passage, but also allows Washington to show a capacity to defend shipping willing to fall under its informal protective umbrella. Tehran continues to hope for an arrangement in which it can collect a fee for each ship. This plan has been soundly rejected internationally, and the U.S. has already sanctioned the entity the Iranians set up to manage the Strait due to its links to the Revolutionary Guard. Any company that pays a fee to Iran will risk U.S. sanctions.
We shouldn’t expect Iran to drop its demands on the Strait, however. Washington, on the other hand, sees its blockade of Iranian ports, coastal areas, and Iranian-linked oil shipments through the Strait as its best means of compelling Tehran to accept nuclear concessions. Neither side will easily give up this influence without substantial concessions from the other that would need to be tightly sequenced in a carefully orchestrated diplomatic deal that has yet to be arranged. For the U.S., the price would have to be a firmer commitment to nuclear concessions. Tehran will seek substantial financial inducements and likely long-term sanctions relief.
Second, as events play out, Tehran is converting geography, missile reach, and proxy survival into fresh coercive regional leverage and using nuclear engagement in a new game with very high stakes. Tehran sees its control of the Strait as giving it not only a stranglehold on the economies of its Gulf neighbors, but long-term global economic influence. Let’s spend a moment on this. In addition to the oil, distillates, and hydrocarbon products that have filled the headlines, the Strait is also home to at least seven major undersea fiber-optic cables that carry a critical share of Gulf international connectivity for the Gulf states. Together with energy targets, this would give Iran the ability to threaten the region’s oil, LNG, insurance, and freight, but also put at risk cloud connectivity, banking, military communications, energy trading, telecom networks, and Gulf economic diversification. Iran targeted cloud and data-center infrastructure, including facilities supporting AI workloads in the region, in drone attacks. This will become another avenue of threat, although Gulf states are already taking steps to harden these facilities. For the Gulf States, and for the world, the idea that we would allow a situation where Iran could threaten such an AI infrastructure tied to the global financial system at a time when the GCC states are investing heavily in data centers, cloud services, and fintech that would only expand the impact of that network should be of the greatest concern.
Returning to regional militias, it comes as no surprise that a regime dominated by the Islamic Revolutionary Guard Corps has made protection of proxies a pillar of its national security policy. Since the end of the Iran-Iraq War, the IRGC doctrine has been to rely on a palette of asymmetric tools – including proxies, missiles, and other asymmetric weapons – to achieve regional dominance. Militias provide Iran with a means to project power throughout the region and to influence shipping in the Red Sea. Although indeed, Iran’s proxies were severely damaged in recent years, they all survived. Iran’s humiliation at the time was that the proxies were neither able to serve as a strategic defense to Iran when needed, nor was Iran able to defend them in their hour of need. The current regime in Tehran has shown from its arrival that Lebanon, or rather Hezbollah, is a core national security pillar. If Hezbollah falls, the current regime cannot claim to be any more successful than its predecessor. What remains to be seen is whether this decision will affect unrest in Iran. In recent demonstrations, some protestors complained that the government spent more time on proxy issues than on national problems.
None of this means diplomatic talks can’t continue. Indeed, as history has shown over the past decades, Iran has had no difficulty pursuing lengthy diplomacy while pursuing similar programs. The Iran nuclear talks in the Obama administration continued during a period of Qods Force regional expansion. Despite the sometimes heated rhetoric on each side, Washington and Tehran have pursued diplomacy, passing draft proposals via Pakistan and, reportedly, messages via Gulf partners. Although slow progress is common in the world of indirect Iranian diplomacy, the security conditions of the new Iranian government, Tehran’s need to form a system under fire, and the very consequential nature of these issues for each side make the idea of fast talks in this case unrealistic in the extreme.
Each side also has some reason to believe economic and political pressures will compel its adversary to make concessions if only they can stand firm longer. Washington knows sanctions are gnawing at Iran’s economy. Tehran is watching oil and natural gas prices creep higher as inventories decline. This makes predicting the conclusion of talks difficult. Despite what is sometimes said in the press, the issues are likely well understood by each side. After all, they have been discussed for years in some cases. The first challenge will be to develop the mechanics of a sequenced series of steps to overcome the distrust between the two sides and to deal with domestic opponents of engagement in each country. Events and politics on each side throw the occasional wrench into the talks.
Challenges with any near-term agreement
The Cipher Brief: What happens if we do sign a memorandum of understanding (MOU) with Iran?
Roule: An MOU would only be the beginning of a longer process, and we shouldn’t be overly optimistic that the outcome will be as productive. Iran refuses to give up its right to domestic enrichment, and until it disbands the Quds Force, we can expect it to threaten its neighbors and the world with militias and terrorists. That is a recipe for sanctions and potential military action. It may be possible to remove Iran’s buried enriched uranium and increase IAEA access, but this will probably be a lengthy and complex diplomatic process as well.
The confidence-building stage in the MOU implementation would involve disbursing financial relief to Iran without the U.S. withholding the same at the last moment. For the U.S., financial relief will need to be managed in a way that will allow Washington to say that the funds are not being used to fund terrorism or missile proliferation. The Strait would need to be opened quickly and loudly, and the Trump administration would need to be able to point to progress in nuclear talks. Both sides would claim victory for their respective political bases, and Iran’s rhetoric would aim to humiliate the U.S. Inevitably, the strength of any MOU would be tested. With luck, the only test would be enduring the rhetoric of Iran’s hard-line officials, but more significant and challenging tests are possible. Last night’s example of Iran’s missile attack on Israel is a good example. Hezbollah or other proxies will continue their attacks.
When you put all of this together, we need to recognize that we are now in an era where Iran feels able to use a blend of conventional and proxy weapons against Israel and its neighbors more freely than at any time in the past. The concept of deterrence against Iran has been tested during this conflict, and new realities have been laid bare. I don’t think we have spent enough time thinking about what this means.
Israel, Hezbollah, and Escalation Risks
The Cipher Brief: So, let’s move to Israel and Lebanon. We realize this is playing out live. How should we look at this?
Roule: We are watching the real-world consequences of allowing Iran to destabilize the Middle East through its proxies. The chronology of this event is important because it shows what the future of the Middle East will look like unless we do something to change Iran’s role. Rocket fire from Lebanon into northern Israel prompts Israeli retaliatory airstrikes against Hezbollah-linked targets in Beirut. Iran then fires ten missiles against an Israeli airbase. Washington tried to constrain Israeli retaliation against Iran, but this was unlikely to succeed, even though it would be a disruptor in the nuclear talks. Israel’s Lebanon campaign in response to Hezbollah attacks will remain a variable that Tehran is using to link the U.S.-Iran track to Levant security. At the same time, Washington’s Iran channel does not control the Israel-Lebanon track, which will be subject to events in that arena and the actions of Israeli and Hezbollah actors.
Any Israeli Prime Minister would need to show their people, and Iran, that Tehran and its proxies cannot attack Israeli territory and escape punishment. That principle has been a firm element of Israeli security policy, especially since the October 7 Hamas attacks. Israel’s attacks against Iran included military targets and at least one petrochemical target of importance to the Revolutionary Guard. This strike appears constrained and contains a message that Jerusalem is prepared to damage more than military targets if Tehran continues. One suspects that Iranian officials have also adopted security protocols to enhance their safety. This will slow any talks that are underway, although it doesn’t appear that Israel attempted strikes against Iranian leadership.
What the Crisis Means for Energy Markets
The Cipher Brief: What are your thoughts on energy markets going forward?
Roule: Turbulence will remain a constant, but the market seems to have already accepted the idea that neither Iran nor the U.S. is interested in a broader conflict. Absent a significant change in conditions, that will likely continue.
Looking more broadly, the Iran conflict has made it clear that energy distribution security is now a permanent variable in energy markets planning. The direction and scope of energy, telecommunications, and transportation infrastructure budgets for the GCC will be major policy challenges in the coming years.
Next, I’m sure your readers have noticed the impact of the conflict was less severe than some initially predicted. A handful of factors contributed to this, including the fact that energy sources are far more diversified than they were a decade ago. In addition to the U.S., Brazil, Guyana, and even Venezuela are producing more oil than before. Riyadh and Abu Dhabi were able to increase production rapidly during the crisis because of wise, pre-crisis investments in infrastructure. Countries drew upon strategic reserves. China purchased less energy over the last few months. Europe and Asia made cutbacks. All of this bought time and space for markets. Nonetheless, Asia and Europe have already faced steep price increases, and the U.S. is likely to face the same if supplies do not improve in the coming weeks.
Lastly, in the medium term, a ceasefire or framework agreement between the United States and Iran will cap the panic premium, but it won’t eliminate the physical market premium. This will require a substantial change in supply. And this will require underwriters to return with lower insurance costs, ship traffic to normalize transponder use, inventory rebuilding, and Gulf crude and LNG moving routinely to markets globally. It will also take weeks following an agreement for the backlog of ships to work through Gulf ports and reach their destinations. This means price distortions in physical markets will linger even after an agreement.
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