Straitjacket: Iran's Chaos War Strategy

On Tuesday, we warned: "We've been expecting a pullback due to excessive bullish sentiment, but now we expect a 10% correction from the high. It's hard to imagine that the IRGC won't use drones and speed boats to maintain their effective blockade of the Strait. If they are successful in doing so, the correction could be closer to 15%."

When the war started, our initial thought was that it might be a short one, given that Iran's government had been decapitated during the first hour of the war. On Tuesday, we had second thoughts about the length of the war. The Iranian regime had prepared for the war by adopting a chaos strategy, launching missiles and drones not just at US and Israeli targets, but at its neighbors as well. The strategy includes shutting down the Strait of Hormuz to all shipping. By causing all this pain, Iran's regime hopes that it will pressure its adversaries to negotiate a ceasefire that keeps the regime in power.