Name: WSJ Opinion: Iran Strikes the United Arab Emirates as Fighting Intensifies
Uploaded: 2026-05-04T19:49:00Z
Duration: 22 min 13 s
Description: President Trump moves to escort ships trapped in the Persian Gulf through the Strait of Hormuz, and Iran answers by firing on tankers and hits the U.A.E. What are the President’s options as a showdown in the Strait of Hormuz looms? Plus, Spirit Airlines shuts down, leaving thousands out of a job and questions about what could have prevented the end of the low-cost airline.

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President Trump moves to escort ships trapped in the Persian Gulf through the Strait of Hormuz, and Iran answers by firing on tankers and hits the U.A.E. What are the President’s options as a showdown in the Strait of Hormuz looms? Plus, Spirit Airlines shuts down, leaving thousands out of a job and questions about what could have prevented the end of the low-cost airline. Photo: Christopher Arbisi

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President Trump moves to escort ships trapped in the Persian Gulf through the Strait of Hormuz, and Iran answers by firing on tankers and hits the U.A.E. What are the President’s options as a showdown in the Strait of Hormuz looms? Plus, Spirit Airlines shuts down, leaving thousands out of a job and questions about what could have prevented the end of the low-cost airline.

WSJ Opinion: Iran Strikes the United Arab Emirates as Fighting Intensifies

Paul: Spirit Airlines shuts down over the weekend, tossing 15,000 employees out of work and losing a low cost competitor to the big four US airlines. We'll give you the backstory on what led to this failure. Plus, President Trump moves to escort ships trapped in the Persian Gulf through the Strait of Hormuz in what he calls a humanitarian operation. But Iran doesn't seem to think it's humanitarian at all as it fires at tankers and hits at the United Arab Emirates on Monday. Are we looking at more escalation in the Gulf?

Narrator: From the opinion pages of the Wall Street Journal, this is "Potomac Watch."

Paul: Those are our topics for today. Welcome, I'm Paul Gigot, here on "Potomac Watch," a daily podcast of Wall Street Journal opinion. And I'm here with my Confederate world watchers, economic watchers, Gulf watchers, Elliot Kaufman and Allysia Finley. Welcome to you both here on studio. Good to have you here. Let's talk about the Spirit failure first, Allysia. Not merely a bankruptcy, that happened in November of 2024. This is a liquidation. It's gone. It shut down. Locked the doors, no more flights. Trump had tried to float a rescue, government rescue with the government, but he wanted a government stake in the airline. And I think that, my understanding is the bond holders just said, "We'll take our luck with liquidation." You know, better than with Donald Trump taking a 90% stake or whatever he wanted.

Allysia: Right, they would've been severely diluted. So they figured that if with the liquidation and recall, this is the second bankruptcy has gone through in less than two years, first one actually restructured some of the debt and thought, well, maybe by restructuring some of the debt, you know, extending some of the maturities and such, that might help it actually survive. However, the fundamental issues of its business model have persisted, and then the jet fuel, spike in jet fuels really was the catalyst for the now liquidation. Now the creditors do seem to believe that by, you know, auctioning off its assets, and its assets include, you know, the planes, obviously, but also very valuable gates.

Paul: Gate rights at airports.

Allysia: Gate rights at airports which many other airlines want to get a hold of because there really are, there's a fin. These are essentially a finite resource. And because of that, they may actually go. Are affected a pretty high price and that could be used to repay the bond holders.

Paul: Bond holders. Let's listen to Sean Duffy, Secretary of Transportation, talk about what happened here.

Sean: Spirit tried to merge with JetBlue, the Joe Biden, Pete Buttigieg administration, and DOJ tanked that deal. Immediately after that, they filed for bankruptcy. They were having financial problems. Martha, they filed for bankruptcy again last year. They were bleeding money. And so this was in the workforce some time. They were gonna, I have to liquidate. And so again, I'm proud of the American airlines that have stepped up to take care of the passengers of Spirit, making sure they can get home. The employees of Spirit have special access to apply for jobs with other American airlines. So again, I've stepped in, worked with the CEOs, and again, this could have been chaotic.

Paul: Well, it may not be chaotic, but it's not great for the employees, that's for sure. But let's talk about his point about the antitrust. We've been writing about this for some time, Allysia, and you've been writing about this for some time. The Justice Department tried to file a lawsuit to block the merger offer that JetBlue made for Spirit Airlines in 2023. And they won in court in 2024. Federal Judge William Young, in a decision that acknowledged the weaknesses of the weakness of Spirit Airlines and acknowledged that a combined Spirit and JetBlue would form a more formidable competitor for the big four. But he said nonetheless, because they offered some low fares on some routes, he would block the merger. Well, we deplored that at the time, and it looked bad at the time, but now it looks really awful, that decision.

Allysia: Right, and the decision to sue and to challenge this, and this is partly a result of this mindset and ideology, that any kind of consolidation within industries or businesses is necessarily anti-competitive. When in fact, allowing JetBlue to merge with Spirit and both of them, by the way, were struggling to compete, as you say, with these, the big four, partly 'cause they had many fewer gates, pilots, planes, and all of that by allowing them to bind, they would've become a more formidable competitor. Now, JetBlue also kind of wanted to change Spirit's business model a little bit. Upgrade some seats, you know, Spirit's known for having a very tight and tight seats with very little leg room. So making that.

Paul: Not my favorite airline.

Allysia: Yeah, yeah, exactly. I would not or many people would not wanna fly on it except for the dirt cheap fares. But JetBlue had proposed to do, make some changes that would've made the combined, made them more competitive. Now the judge, as you said, blocked it on the grounds that on certain routes, it would eliminate one competitor and therefore, be anti-competitive. Now this is just an example of how the Justice Department and the left kind of tried to gerrymander markets. 'Cause they didn't say, oh, overall it'd be less competitive just on these routes.

Paul: On these routes and the judge for.

Allysia: Accepted that.

Paul: Yeah, so I think the core problem here as a public policy matter was that his attempt to revive this New Deal version of antitrust policy. Lena Kahn, who was running the FTC under Biden, Jonathan Canner was the antitrust division. Timothy Wu was in the White House. He's an academic who's been arguing for that, the consumer theory of antitrust, which is if it helps consumers, a merger can be good. They dislike that, and they wanna go back to this Brandeisian view, which goes back to the New Deal and Justice Brandeis, which was, but basically views almost all mergers with skepticism. And this goes to show you what happens when you let theory, in my view, what theories of antitrust unhinged to the actual business realities can do. And it's a wonderful, awful test case study of those consequences. And you know, let's hope that some of the Trump administration who have been somewhat enamored of this view now drop it.

Allysia: Well, and it's not the only one. We saw iRobot, the maker of the Roomba vacuum cleaner, go bankrupt not long ago. Now it had, Amazon had proposed acquiring it, and it drew a lot of opposition from Biden administration. There was never a formal lawsuit challenge, but Amazon abandoned the deal because they just realized that there was no way the regulators were gonna approve it. And as a result, what happened was, the company failed and was acquired by a Chinese competitor. And you could.

Paul: Ingenious moves.

Allysia: Yeah, you could pick up some other examples. I wouldn't be surprised if there's now a challenge to this TEGNA Nexstar broadcast merger on similar grounds that these, both these broadcasters are, you know, in a declining business. They're trying to become more competitive. So they're trying to merge. Now you have liberal AGs suing to block Maygon and Junction. I wouldn't be surprised in another few years if you see one or both of those businesses fail as a result.

Paul: All right, let's turn to the Gulf. Elliot, you got the Persian, you got the President Trump's decision over the weekend to have the US Navy escort merchant ships that have been tracked in, trapped in, in the Gulf through the Strait of Hormuz. Monday morning, the US announced that two commercial ships had moved through without incident, but apparently, but it sure looks like not everybody is moving through. Some of these ships were attacked, other ships were attacked and the United Emirates had a missile warning and said one of its facilities was attacked. Now this suggests that the Iranians are calling Trump's bluff here on the move to escort ships.

Elliot: Well, Trump tried to present this, as you said earlier, as a humanitarian gesture. He wasn't breaking the Iranian blockade, which sounds aggressive. No, he was helping stranded ships and crews that had been stuck for two months now.

Paul: And we're running out of food, they said.

Elliot: And so there is a humanitarian point here, but there's also, of course, a strategic point. And that's that blocking the Strait is Iran's best leverage. And the regime was not going to sit idly by while that leverage evaporated. And so Iran had claimed that it hit US warships. It seems that is not true. US military denied that. Iran subsequently claimed, well, we fired warning shots. Okay, so that's not quite the same thing.

Paul: It sure isn't.

Elliot: But it does seem to have had success hitting a few commercial vessels and also striking with drones at Fujairah, which is the end point of the Emirati pipeline that allows it to bypass the Strait for more than a million barrels per day.

Paul: So oil prices are very volatile. They go up and down based on the latest news or for that matter, the latest Truth Social posts by Donald Trump. But this morning, they popped and they popped pretty substantially on the news. If, one of the questions about this Iranian action is, is this the leadership or is this some, you know, rogue elements of the IRGC, the Islamic Revolutionary Guard Corps, just firing away? Hard to tell, but nonetheless, the targets, it doesn't make any difference to, right? And the message it sends, I think to the world is Iran still believes it can control the traffic in the Gulf and still believes it can charge a toll and it's going to try. So the question becomes even with the blockade that the president has, when you get this kind of escalations, President Trump, Elliot, have to respond with a resumption of attacks.

Elliot: It's a serious question now, and it's one that Iran has forced on him. And I think if he does not respond, then he allows a new status quo, which is to say a ceasefire can exist while Iran blockades the Strait. And any movement of commercial ships is an American violation of the ceasefire, when in fact, that has it exactly backward. When the ceasefire was first announced on April 7th, President Trump explicitly said it is subject to the complete reopening of the Strait of Hormuz. Iran's foreign minister subsequently affirmed that, that ships will be able to pass through the Strait. As we know, Iran reneged on that immediately. And so Iran now wants to try to claim the US is somehow violating the ceasefire. That's simply turning reality on its head when it's the one firing missiles and drones at neutral ships and neutral nations.

Paul: Allysia, let me ask you about the oil markets here. We had the oil prices pop today, but one of the big questions is Iran's ability to hold out here if this blockade holds. They've been putting every oil barrel produced in every canister, in every hole in the ground, every place they can to store because they want to keep producing. They want to shut in wells. If, because they can't send their oil out on these, in these tankers. Now, do we have any sense of how long Iran can hold out here before it does have to really start shutting down wells and before the pain starts to hit financially?

Allysia: Well, I think the fact that it's lashing out and escalating like it is, does suggest that it is probably running out of room in some, many of these storage facilities that's using, you know, as you say, anything it can find, any holding tanks that it can to prevent shutting in wells. And the reason why it doesn't wanna shut in wells is that can do permanent damage to the infrastructure and oil fields. It may not be able to retap those wells. Now the rest of the region has shut in about nine million barrels a day of production.

Paul: So Saudi, Kuwait.

Allysia: Saudi, Kuwait, yeah, right, in the region. Now that's almost half of the production that travels through the Strait of Hormuz. Now that can actually be brought back online with some difficulty in cost and time. Now the issue with the Iranian oil fields is they're just much older and they haven't invested as much in upgrades and such. And so it would be much harder for them to recover from any kind of shut-ins. And then separately, you also have the issue that it's not able to sell. It's crude currently. It's been, what had been selling it to mostly to China, which had helped fund the stream. And as a result, then you could get an accelerating spiraling currency crisis.

Paul: In Iran.

Allysia: In Iran, right. With further inflation, which could breed more protests. They already talked about rationing of fuel domestically, which obviously shows that they're very tight 'cause they cannot export or they cannot import refined fuels is another issue.

Paul: Elliot, what are your sources telling you about the Iranian ability to hold out here? Obviously the IRGC is not subject to democratic consent. So, and they probably have, they won't suffer the same way the public does from rationing and any dollar that comes in from any other illicit exit path through, except through the Gulf, they'll take for themselves. But is this a matter of days, is it matter of weeks, is it matter of months?

Elliot: Well, I'm hearing that there's real uncertainty on that question, which is why I think most analysts and most watchers of this in Jerusalem, in Washington were thinking that the blockade, well, it can do real harm to Iran's regime and really pressure it. It probably wouldn't be enough by itself on as fast a timeline as you would need to get the sort of concessions that we are looking for on the nuclear issue, on the Strait as well. And so when you think about it, how do you get the Strait open? You can sit and wait, but we also pay a major economic price from the Strait of Hormuz being closed. And so how long are we willing to wait? Well then you start thinking, we have some other tools here that we can use, namely a massive military advantage to try to accelerate that timeline. And so if you wanna open the Strait, you might have two choices, really. One, give Iran what it wants in the nuclear negotiations, or two, use US military power to reopen the Strait by force. And right now, the US hasn't been escorting ships, but it's been establishing a sort of defensive shield with warships aircraft in the area. It might be forced into an even more intensive operation.

Paul: Well, the decision by the president on the weekend to escort some commercial ships was almost a tacit admission that there is some pain being felt around the world from the fact that the Strait is closed. He mentioned I think fertilizer for example, which is, you know, the petrochemicals that are used in fertilizer being blocked and that's creating real hardship around the world for food production. So the president wanted, I think, to open that up. The Iranians don't want that because that reduces the pressure on the rest of the world and on the US. So the, it looks, if Iran continues to say, oh, sorry, you can, nothing can come through if our own oil can't get through, you're looking at a showdown here coming soon, a real tough decision by the president to escalate or escalate in one of two ways. One, bomb the heck out of the rest of the Iranian regime, including some of its oil production facilities, maybe in stages, where you say, we'll take out a little bit of Kharg Island. If you don't do a deal, next time it'll be more or do what you suggest, which is the very aggressive escorting of all vessels through or standing down, as some people are suggesting, the president could do and saying, hey, not our problem. You know, the Strait of Hormuz is your problem, China, your problem Europe, your problem Japan and South Korea because you get the bulk of your oil from through there or get a big chunk of it. The problem with that is it will look like an American stand-down and a Donald Trump defeat.

Elliot: Right, and make no mistake about it, Iran suffers more from these dueling blockades.

Paul: Mhm.

Elliot: But Iran, by some estimates, has already lost 40%, four-zero percent of its GDP, pre-war GDP. If that rises to 45 or 50, that's massive. But it has already suffered these costs and born these costs and it hasn't budged at the table yet. And so a blockade alone may not be enough to move them on these issues. From the US, I think you are looking at both more intensive escorting of ships and also military escalation. I say escorting because if Iran is able to successfully hit commercial vessels, even just a few of them each day, that could be enough to chill or even kill off all commercial traffic. And then what is the US doing?

Paul: And that's the case, Allysia, because of insurance. Nobody's gonna insure a ship that has a high probability of being attacked.

Allysia: Well, that's right. I mean that's the bigger problem, or one of the bigger problems the Trump administration had proposed to do some kind of, to provide its own insurance to these vessels. But even that, you know, they were struggled to get some uptake. Uptake is people and companies and shippers still don't wanna take the risk that their ship is gonna get blown up or their, you know, their human casualties could as well. So even separate of that, I think that there's a risk of having to try to test the Iranian waters and see what they're gonna do.

Paul: Yeah, well, big decision coming up here for president of the United States, so, all right, Elliot, thank you Elliot, or, and Allysia, thank you. We'll leave it there for today on "Potomac Watch." We're here every day on our daily podcast. Thank you for listening.

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