Ray Dalio, the founder of Bridgewater Associates, has flagged a dire warning on the US-Iran war. According to him, the Strait of Hormuz will be the ultimate deciding factor on who wins the war — not just the price of oil. It will determine whether the US-led global order survives.
In a lengthy post on X, Ray Dalio laid out the scenario where Iran gains control of the Strait of Hormuz, which has emerged as one of the most crucial talk points of the war between US-Israel and Iran.
“If Iran is left with control over who can pass through the Strait of Hormuz, or is even left with the power to negotiate… The United States will be judged to have lost the war, and Iran will be judged to have won,” Dalio said.
He argued that Iran using the Strait of Hormuz as a ‘weapon’ would be perceived as US not having the “power to fix this situation.”
“The consequences of allowing Iran to shut down the most important strait in the world, through which the right of passage must be ensured at all costs, would be hugely damaging to the United States, its allies in the region (especially its Gulf allies), countries that depend most on its oil flow, the world economy, and the world order,” he said.
Comparing a US failure to that of the fall of the British Empire, Dalio noted that if America does not gain control of the Strait of Hormuz and keep it open along with a consortium of other countries, “it doesn’t matter. President Trump and the U.S. will have lost.”
Referring to patterns from 500 years of history, Ray Dalio argued that a “decisive final battle” will be the ultimate decider on whether an empire falls or survives, and the shift thereafter.
“Watch out for allies and creditors losing confidence, the loss of its reserve currency status, the selling of its debt assets, and the weakening of its currency, especially relative to gold,” he wrote.
“Conversely, when the world’s dominant power demonstrates its military and financial strength, that bolsters confidence in it and the willingness to hold its debt and currency,” Dalio added.
Why Strait of Hormuz matters
If Iran gains control of the Strait of Hormuz to threaten American allies and the world economy, everyone will be “hostage to the Iranians”, as per Dalio.
“Donald Trump will be perceived to have picked a fight and lost. He will have left U.S. allies in the region with a huge problem, and he will lose credibility, especially given what he has said,” he said.
According to Dalio, it will be very difficult for the US and Israel alone to ensure the safe passage of ships without making sure Strait of Hormuz is cut out from Iranian control. He predicted a ground battle to do so.
“The outcome is existential for the Iranian leaders and the largest and most powerful segment of Iran’s population. To the Iranians, this war is very much about revenge and commitment to what matters more than life,” he said.
Existential battle
Ray Dalio compared the stakes of Iran and US in the conflict, calling Tehran’s war existential while Americans will be worried about high gas prices.
“They are willing to die as a demonstrated willingness to die is essential for one’s self-respect and showing the devotion that brings about the greatest reward—while Americans are worrying about high gas prices and America’s leaders are worrying about midterm elections,” he said.
Dalio’s comments comes at a point when the Strait of Hormuz has become the focus of the ongoing US-Iran conflict, with Iran trying to block ships carrying oil and gas from passing through the area.
The final battle
The US on Tuesday hit Iranian missile sites near the critical waterway with 5,000-pound bunker buster bombs in its first major military action in the Strait of Hormuz. Meanwhile, Trump has expressed his dissatisfaction over the past few days about countries rejecting his call to send their military powers to regain the control of the strait.
Dalio described the current situation as a conflict with no diplomatic exit.
“While there is talk of ending this war with an agreement, everyone knows that no agreement will resolve this war because agreements are worthless. Whatever happens next—i.e., leaving Hormuz in Iranian hands or taking control away from them—is likely to be the worst phase of the conflict,” he said.
He predicted that a ‘final battle’, which will make it clear who won and who lost still lies ahead.
“This “final battle,” which will make crystal clear which side won and which side lost control, is likely to be a very big one,” Dalio said.
