Through the fog, however, one point has always been absolutely clear: the closure of the Strait of Hormuz is a major disruptor in the world economy, and the effects are already being felt worldwide.

Retail fuel prices were the most obvious and most immediate effect, with nearly every country experiencing a price surge on par with the 2022 hyperinflation cycle. In the US gasoline and diesel prices surged by more than $1 and $1.50 per gallon, respectively from the start of the war. Germany saw retail diesel prices climb by €0.59 per liter (€2.23 per gallon) by the beginning of April, and gasoline price rise by €0.36 per liter (€1.36 per gallon). Even early in March, before the full impact of the closure of the Strait of Hormuz had been felt in energy markets, China raised its gas and diesel prices by 695 yuan and 670 yuan per metric ton.

If a product is related in any way to petroleum and fossil fuels, its price has risen significantly, with percentage price increases in double digits across the board.

China, the world's leading importer and a growing chemicals exporter, is quite possibly the country feeling the greatest impacts from these price surges. Every price hike is a cost increase to China’s manufacturing intensive, export oriented economy.

This war is between the US and Iran, yet the biggest winner or the biggest loser could very well be China, nominally a neutral nation and not a party to the conflict.

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Iranian Hypocrisy Over The Strait Of Hormuz

That China raised fuel prices almost immediately after the start of the war gets right to the heart of the perverse irony over Iran’s illegal and hypocritical stance regarding the Strait of Hormuz. By closing the Strait, Iran sent a massive inflation pulse into the economy of its main customer.

China accounts for at least 80% and perhaps more than 90% of Iran’s pre-war oil exports. All those exports were at least disrupted when Iran closed the Strait.

Yet at least publicly, Iran seems unaware of its role in this. Instead, the current leadership atop the regime of Supreme Leader Mojtaba Khamenei, including Parliament Speaker Mohammed Bagher Ghalibaf, fatuously point a finger of blame at the United States, such as Ghalibaf did with his usual bellicosity yesterday.

Even Iran’s Foreign Minister, Abbas Araghchi, seemed oblivious to the double standard Iran advances with its accusations against the United States.

Iran accusing the US of “warmongering” in the Strait is, of course, absurd. The US is not the nation that told ships they could enter the Strait, only to fire on them. That was something Iran did on April 18.

For all of Iran’s pretentious accusations against the United States, there is no dispute which nation closed the Strait of Hormuz. Iran did.

There is also no dispute that closing the Strait of Hormuz is a violation of international law. The United Nations Convention on the Law of the Sea (UNCLOS) explicitly declares in Article 38 a right of transit passage through all such waterways.

In straits referred to in article 37, all ships and aircraft enjoy the right of transit passage, which shall not be impeded; except that, if the strait is formed by an island of a State bordering the strait and its mainland, transit passage shall not apply if there exists seaward of the island a route through the high seas or through an exclusive economic zone of similar convenience with respect to navigational and hydrographical characteristics.

Article 44 further restrains states bordering these international water ways from restricting or regulating traffic through them.

States bordering straits shall not hamper transit passage and shall give appropriate publicity to any danger to navigation or overflight within or over the strait of which they have knowledge. There shall be no suspension of transit passage

Nor is this simply my interpretation. Singapore’s Foreign Minister Vivian Balakrishnan argued substantially the same points during an appearance at CNBC’s CONVERGE LIVE event on April 22.

“With respect to both America and China, we have told both of them we operate on the basis of UNCLOS,” he said, referring to the United Nations Convention on the Law of the Sea.

Article 44 of UNCLOS states that “States bordering straits shall not hamper transit passage ... There shall be no suspension of transit passage.”

“The right of transit passage is guaranteed for everyone. We will not participate in any attempts to close or interdict or to impose tolls in our neighborhood,” Balakrishnan said.

Prevailing legal opinion also does not give Iran any grace on the matter. UNCLOS is to ensure freedom of navigation through the world’s strategic waterways, and Iran is determined to prevent freedom of navigation in the Strait of Hormuz. These positions are not legally compatible.

We should pause to note that neither the US nor Iran have ratified UNCLOS, although Iran has signed the Convention, and the US separately agrees with many of the principles contained therein. While neither the US nor Iran is technically bound by UNCLOS as they would be had they fully ratified the treaty, there is no serious argument to rebut the understanding that both countries are in broad agreement with UNCLOS’ position on freedom of navigation, which Iran’s Strait closure unquestionably violates.

If Iran actually espoused the freedom of navigation principles of UNCLOS, the Strait of Hormuz would never have closed and this situation would never have come to pass.

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China In The Middle

Iran’s hypocrisy and blatant treachery in the Strait of Hormuz is arguably a complicating factor for a country such as China.

On paper China is an ally of Iran. It presumably helped rebuild and rearm Iran’s defenses after the Twelve Day War last summer.

At the same time, China also is nurturing good diplomatic relations with the other nations in the Persian Gulf, and just recently, in a phone call with Saudi Crown Prince Mohammed bin Salman, openly endorsed freedom of navigation in the Strait.

Xi said that the normal passage through the Strait of Hormuz serves the common interests of regional countries and the international community, adding that China supports regional countries in building a common home marked by good-neighborliness, development, security and cooperation, mastering their own future and destiny, and promoting long-term peace and stability in the region.

As I noted a few days ago, such stances could indicate China was losing patience with Iran’s intransigence over the Strait.

It is worth noting that “normal passage” arguably refers to the pre-war status quo in the Strait, which did not include Iran assessing tolls on ships passing through it. Such tolls are, of course, an explicit violation of the UN Convention on the Law of the Sea, which codefied pre-existing international understandings on the principles of freedom of navigation.

It is also worth noting that China buys oil from more than just Iran, and its shipments of Saudi crude are down 10% from pre-war levels.

Shipping data from multiple sources indicates China’s normal imports of Persian Gulf oil have been disrupted to a significant degree, even if they haven’t been completely cut off.

Interestingly enough, China may also be turning the war and the closure of the Strait of Hormuz into a short-term revenue generator, exploiting arbitrage opportunities that have emerged thanks to the surge in benchmark oil prices and selling out of its strategic petroleum reserve while the prices are high.

“What has been happening in the last two or three weeks is actually they have been aggressively selling crude oil,” Mercuria CEO Marco Dunand said at the FT Commodities Global Summit in Lausanne on Tuesday. “They’ve taken out a lot of demand from various countries and offered aggressively in tenders.”

Dunand said there are a variety of possible explanations for the selling. They include the release of oil inventories within China, continued sales of Iranian oil in the weeks after the war started, and possible optimism that the Strait of Hormuz would reopen quicker than it has so far.

China is a net importer of oil, which means it cannot continue to sell its oil inventories indefinitely. Marco Dunand estimates China can continue to sell crude out of its reserves for another three weeks, after which it needs to recalibrate its strategy should the blockade of the Strait still be in effect at that time.

Ironically, that three week endpoint is also about the time frame when Iran’s inability to export oil starts to have outsized effects. Because Iran is unable to export the same volume of oil it has in the past, its available storage capacity is starting to fill up. Analysts at JPMorgan project that Iran will exhaust their storage capacity sometime in the next three weeks.

Onshore storage sits around 86 million barrels, currently just over half full at roughly 47 mb. That leaves about 40 mb of working capacity, which, in market terms, translates into roughly 22 days of export cover if flows are fully choked off. Layer in the four Iran-linked VLCCs still sitting inside the Strait of Hormuz, and you add another 8 mb of potential floating relief, stretching that window toward 26 days.

But the system does not wait for tanks to hit the brim before reacting. Production does not fall off a cliff, it bends under pressure. In practice, upstream adjustments begin earlier and build progressively. The rule of thumb embedded in the JPM framework is that Iran would need to start trimming output after roughly 16 days of a full export blackout, with curtailments accelerating from there until they converge toward full export volume shut ins, around 1.9 mbd, closer to day 30.

Day 1 of that “full export blackout” arguably is when President Trump announced the US blockade of Iranian ports (but not the Strait itself) on April 12. As of this writing, 10 of JPMorgan’s 16 days have already elapsed, leaving only 19 days until Iran hits the full export volume shut in point at day 30.

When wells are shut in, pressure build-up and other environmental forces can damage them, either permanently reducing their daily output or requiring significant overhaul upon reopening to restore the wells to previous production levels.

If the JPM estimate is correct, if Iran has to start shutting in wells starting sometime next week, and if Marco Dunand’s assessment of China opportunistically selling down its oil inventories is correct, in about three weeks a second and longer lasting oil supply shock hits all major economies, and especially China. Removing China’s oil sales and Iran’s oil production for the foreseeable future would be a double-digit percentage loss of current oil production globally.

China is exploiting its geopolitical position between the US and Iran for maximum short-term revenue, but that maneuver could hamper its long-term position should the Strait of Hormuz continue to be blockaded at least by the United States. By the time China needs its strategic inventory, it will have already depleted at least a portion of that inventory.

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China’s Petrochemical Shock

As I discussed last week, China is experiencing at least one major supply shock in the form of sulfur and sulfuric acid.

What tripped media concerns over sulfuric acid was China’s recent announcement, first reported on April 10, that it is suspending exports of sulfuric acid, owing to shortages within its own industries.

Particularly relevant is China’s apparent justification for the export ban: it needs to conserve the chemical for its own supply chains and manufacturing industries.

While sulfur prices have come down some for China, relative to pre-war pricing China is still paying 55% more than before.

Yet it is not merely for sulfur and sulfuric acid that China has seen tremendous price surges.

Polyethylene prices have surged nearly 20% since the war began, and at one point flirted with a 40% increase.

Styrene has risen some 30% since the war began, and initially had surged by just over 50%.

Bitumen is currently sitting at just under a 25% increase, after touching 40% towards the end of March.

China is a major consumer of all three industrial chemicals, and many more besides. These chemicals are all refined products from various crude oils. China either imports the crude and refines these compounds itself, or it imports these compounds from a number of countries, including those in the Persian Gulf.

China’s reliance on not just imports of crude oil but also imports of petroleum refined products is also being thrust into the spotlight by the awkward reality that China is importing record volumes of ethane from the United States as a result of the war and the Strait of Hormuz being closed.

Shipments of US ethane are expected to rise to an all-time high of 800,000 tons in April, according to Chinese consultant JLC, which would be around 60% higher than the monthly average. Some companies can switch to using ethane, helping them offset disruptions to the supply of naphtha and liquefied petroleum gas from the Middle East after the effective closure of the Strait of Hormuz.

Ethane is one of the minor fractions of natural gas and a by-product of liquified natural gas (LNG) production. When Iran targeted Qatar’s LNG production facilities at Ras Laffan early on in the war, forcing Qatar to shutter most of the facility, nearly 20% of world LNG supply was removed. One of the other products Ras Laffan produced was ethane.

While prices of US ethane have overall fallen since the war began, in recent days the prices have begun climbing again.

China’s need is clearly the United States’ gain when it comes to ethane.

Equally clear is that China is experiencing multiple price and supply shocks, all of which directly impact the vital export sector of China’s economy. The goods China produces to sell overseas are getting considerably more costly to manufacture, at least in the short run.

On the surface, these price shocks arguably look like good news. The scarcity and resultant price surges has caused China’s Producer Price Index to show positive growth for the first time literally in years.

While the emergence of even some factory gate inflation in China is arguably a relief, given the deflation that has hung like an albatross around China’s economic neck in recent years, a sudden energy inflation shock, if it endures over time, can produce what some “experts” want to call “bad inflation” but is really stagflation.

Just as it is in the United States, stagflation for China is when a price shock collides with a moribund economy.

Is China about to have its deflation crisis compounded with a stagflationary shock? Much depends on how long the Strait of Hormuz remains closed and energy prices elevate.

No matter how long the Strait remains closed, China remains very much in the middle between Iran and the United States in this war, and the two countries’ dueling blockades suggests being in the middle means China gets run over from both directions.

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Crisis Or Opportunity?

In some narratives, the war with Iran represents an opportunity for China. Not only is its economy getting a long-desired boost on inflation, but rumors of Persian Gulf countries attempting to sidestep Iranian interdiction of their cargoes by trading in yuan rather than dollars persist. Broadening the utility of the yuan in global commerce is seen by many as an essential step in “de-dollarization”.

In other narratives, China is getting hammered by price and supply shocks, stressing an already distressed economy. That stress is seen as a likely catalyst for what appears to be a rise in social unrest, although the extent and impact of that unrest is difficult to ascertain.

What is certain is that China is significantly impacted by the war with Iran, and not in demonstrably good ways. As a rule, price and supply shocks are not considered to have a positive impact on a nation’s economy. China is experiencing multiple price and supply shocks as a result of the war, and will continue to experience those multiple price and energy shocks.

Much of the data surrounding those shocks supports the stress narrative: Youth unemployment rose in March, along with regular unemployment, suggesting the producer price rise has not yet been accompanied by any significant job creation. Labor costs continued to rise in March, extending a trend reversal from a years-long decline that produced a record low in June of 2025.

Weak or no job growth is one sort of sub-par economic indication which sets up the context for a stagflation scenario to unfold. Just as in the US, we cannot yet conclusively describe current economic conditions in China as “stagflation”, but there is little doubt that China, already mired in deflation, is at elevated risk for stagflation.

Whether that is what evolves in China’s economy depends entirely on the duration of elevated energy prices, which in turn hinges on when and how the Strait of Hormuz is finally reopened.

That is one of the outcomes we know will happen eventually. The Strait of Hormuz will reopen for the simple reason that, with 20% of the world’s oil supply flowing through it, the world economy cannot abide it being closed indefinitely.

Similarly, we know there will be talks. No matter which scenario one espouses for the war with Iran, every scenario ends with the principals sitting down at a negotiating table.

What we still do not know is what the agenda for those inevitable talks will be. Both sides reject the talking points of the other, making formal negotiations difficult.

We also do not know when the Strait itself will be reopened. If there are talks soon, there is at least a chance the Strait will be reopened soon. Reopening the Strait is a prerequisite for getting energy prices back towards pre-war levels; the longer the Strait is closed the more energy prices are likely to trend up and not down.

The longer the Strait is closed the more China is compelled to draw down its strategic petroleum reserves.

The longer the Strait is closed the greater the likelihood Iran’s oil production will suffer a major quasi-permanent reduction. Given that China has been buying the bulk of Iran’s oil production, the loss of Iranian production means China has to replace relatively low-cost Iranian oil with more expensive market-priced crudes.

That last point would mean that China is facing increased oil prices no matter how the war with Iran turns out. An energy price shock could become permanent higher energy prices for China. That would not be a positive outcome for China’s economy.

The fog of war makes any sort of prediction about the outcome of this war problematic. We simply do not know how this war ends. While the United States arguably has already won the war from a military perspective, having smashed most of Iran’s military assets, geopolitical victory has not yet been achieved.

This war could end with China among the countries with enhanced geopolitical power and influence.

This war could also end with China as well as Iran losing geopolitical power and influence to the United States. If President Trump succeeds in de-nuclearizing Iran and forcing the Khamenei regime to abandon pursuit of nuclear weapons, that would be an indisputable geopolitical victory for the US, and a corresponding setback for China, which likes to position itself as America’s principal geopolitical adversary.

This war could end with China’s economy enduring more significant shocks and body blows than the US economy. China may already be enduring more economic shocks and body blows than the US—the data certainly compels us to entertain that possibility. Those shocks and body blows may even put China into a final economic death spiral which will stress Chinese society past the breaking point—China’s pre-existing economic weaknesses make that a very real possibility.

Will China number among the winners or the losers when this war with Iran finally does end? It is too soon to answer that question with any finality, but the data we have to date does not favor China emerging from this war better off than before.

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Just about every “expert” analysis has been wrong.

Consequently, when even alternative media outlets such as ZeroHedge puts out yet another “doomsday” headline about the Persian Gulf, we are well advised to regard what follows with more than the usual skepticism.

The chemical in question is sulfuric acid, a major byproduct of oil refining, particularly refining of heavy “sour” crudes with high sulfur content.

Goldman analysts Kyle Shaffer and Amanda Ross provided clients with a broad overview of industrials and natural resources amid energy disruptions in the Gulf area. In the note, they stated that the well-known Gulf energy shock is set to disrupt LNG production in Qatar for years to come. However, they also highlighted another emerging supply crunch that has received far less attention: sulfuric acid.

“Some long-lasting consequences have also started to emerge, including a 3-5 years production loss for LNG facility in Qatar, a 6-12 month re-starting time for some aluminum facilities in the Gulf, and shortage of sulfuric acid which can potentially impact future production for copper and lithium” Shaffer and Ross said.

Even a cursory glance at commodities prices shows that anything coming out of the Persian Gulf has seen major price appreciation since the start of Operation Epic Fury. To the extent that industrial chemicals are shipped from Persian Gulf refineries, it is a given that, at present, those chemicals are not being shipped from Persian Gulf refineries.

How significant is the loss of Persian Gulf sulfuric acid? Depending on the analyst, it is anywhere from very significant to presenting a national security threat.

Any supply dislocation of a key industrial chemical is obviously a costly event…but for whom? When not every cost is shared equally around the world, who pays the most and who pays the least can be more significant than the cost itself.

Update

With Iran just this morning declaring the Strait of Hormuz fully open, an additional question which will have to play out is how quickly will the supply dislocations ease and pre-war normal shipping flows be restored to the Persian Gulf?

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Beware The Narrative

The constant caveat in reading all reporting about the war in Iran, and really any war, is to beware the narrative. Media outlets all veer towards propaganda and deliberate bias—a sad reality of modern journalism that is also why All Facts Matter exists.

As one reader has remarked:

It’s pretty much impossible to follow the various narratives. I read so many Substacks that are referential to some media environment. Most people I know don’t watch MSM (cable news) and some read Liberal elite papers, some read Conservative elite papers. But even within the ideologies there is more divergence. And you can’t even get into it when the Substackers start treating their Substack algorithmic silo as understood by the audience. I read stuff referencing people I’ve never heard of like its assumed that everyone has read that piece.

Getting harder every day to organize around narrative construction like that.

With bias a near constant fixture in what passes today for journalism, we owe it to ourselves to both be aware of any outlet’s narrative lens and to remain focused on the facts without regard to the narrative lens.

For every media outlet, it is imperative to look past the headlines. Even narrowly focused outlets are prone to provocative and even misleading headlines. An article in “Mexico Business” which covers much of the same territory on sulfuric acid as ZeroHedge, appeared the other day under this headline:

Reading into the article itself, we find the lede well and truly buried almost at the end:

While Mexico is not among the most affected countries, tighter global supply and rising prices could increase input costs for domestic industries, particularly mining and fertilizers, reinforcing the country’s sensitivity to external supply shocks in critical industrial chemicals.

China’s sulfur export ban does raise economic risks for Mexico, but only a little.

These sort of media manipulations are why I often advise readers to “trust nothing. Verify everything.”

That being said, what is the story on sulfuric acid? What is the impact of the war with Iran on sulfur and where is it being felt?

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Persian Gulf Blockade Is Hitting China Hard

What tripped media concerns over sulfuric acid was China’s recent announcement, first reported on April 10, that it is suspending exports of sulfuric acid, owing to shortages within its own industries.

Particularly relevant is China’s apparent justification for the export ban: it needs to conserve the chemical for its own supply chains and manufacturing industries.

China’s move to conserve sulfuric acid supplies during the peak crop-planting season will put further pressure on the market. That squeeze will hit the copper-mining industries in key producers such as Chile, the Democratic Republic of Congo and Zambia.

Acuity first reported the Chinese ban on Thursday, saying the restriction could last throughout 2026. China’s Ministry of Commerce didn’t immediately respond to a request for comment.

The need to conserve contradicts other reporting we have seen about China, some of which has assessed China as having the resource depth to fend off oil supply disruptions for months.

Yet, its supply buffer of an estimated 1.2-1.3 billion barrels of crude in strategic and commercial stockpiles could last up to four months, Rush Doshi, director of the China Strategy Initiative at the Council on Foreign Relations, told CNBC on Monday, when oil prices briefly hit $118 per barrel.

“China has taken the last 20 years to reduce some of its dependence on maritime oil flows,” Doshi said.

If China has ample reserves of crude, why is it feeling the need to restrict exports of a byproduct of heavy crude refining?

Corporate media does not say.

Yet the data shows that China is paying dearly for sulfur right now, as the war with Iran has pushed what China pays for sulfur up more than 65% just since the start of the war.

The impact to China of the current surge already exceeds the price spike when Russia invaded Ukraine in 2022.

Why is China suspending sulfur exports? With their cost for sulfur running nearly double from just before the start of the war with Iran, China is hoarding the chemical. China does not want to see the price its manufacturers pay for sulfur going any higher.

China may have four months’ supply of crude in reserve. That does not mean it has four months of sulfur as well. Based on current pricing as well as China’s export ban, we must conclude that China does not have much of a sulfur reserve.

Perversely, the ban may not solve China’s problems, and may even make them worse. While sulfur is particularly useful for smelting industrial metals such as copper, exporting sulfur has been a means for Chinese smelters to defray other costs and keep their operations profitable. The export ban may actually hamper China’s copper production.

For China’s copper smelters, the policy shift could accelerate production cuts. Smelters had relied on strong sulfuric acid prices over the past year to offset a sharp decline in treatment charges caused by a shortage of copper concentrate. However, increased domestic availability of acid following the export halt may cap or reverse price gains, weakening that support.

“Acid prices may slow down their rising pace or even flip into a fall, but neither is good for us,” said an official with a Chinese smelter.

Spot treatment charges for imported copper concentrate in China fell to a historic low of minus US$77/t on April 10, compared with minus US$76.7 a week earlier and minus US$28.6 a year ago, according to Argus data. The negative margins reflect intense competition for limited concentrate supply, leaving smelters increasingly dependent on byproduct revenues

With or without a sulfur export ban, closing the Strait of Hormuz is producing significant and broad price shocks throughout China’s industrial sectors.

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Not Just China

Digging even further into the industrial chemical market, it is readily apparent that several parts of the world rely on Persian Gulf refinery output for large portions of their sulfur supply.

According to BusinessAnalytiq, however, the price impacts of losing Persian Gulf sulfur production vary widely.

China and Asia are feeling the worst price shocks, with India not far behind.

The US, on the other hand, is feeling much less impact, and is unlikely to feel much more of a pinch for the foreseeable future.

Contrast that with Chile, which buys over a million tons of sulfuric acid from China every year, the price has risen 44% in just the past month. The chemical plays a vital role in copper production, and Chile is the world’s number 1 producer of copper.

Disruption of sulfur production in the Persian Gulf or from Persian Gulf oil stocks will likely impact a variety of industries worldwide. Sulfur, and particularly sulfuric acid, has a number of industrial applications.

Primary Industrial Applications:

• Fertiliser Production: 65% of total consumption for phosphate rock dissolution

• Metal Processing: 20% for copper leaching operations and other metallurgical processes

• Chemical Manufacturing: 10% for intermediate compound synthesis

• Specialised Applications: 5% including battery production and petroleum refining

As Africa sources much of its sulfur consumption from the Middle East, the surge in sulfur prices is hitting countries with large resource extraction economies—Zambia and the Democratic Republic Of Congo in particular—extremely hard.

The longer the Strait of Hormuz is closed, and the longer Persian Gulf oil production is offline, the more challenging the sulfur supply situation gets for these countries.

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Not The US

The disparity in sulfur prices shown above brings us back again to the caveat about narratives. Recognizing the bias within media narratives is crucial to making sense of media reporting on any issue.

While ZeroHedge is focusing on overall global industrial impacts, America’s military thinkers at West Point see potential military and national security concerns arising from the supply dislocation.

While the United States produces significant sulfur domestically, the near-total disruption of shipping through the Strait of Hormuz, which accounts for approximately 50 percent of global seaborne sulfur trade flows, has compounded an already tight market. US sulfur prices have increased 165 percent year-over-year to over $650 per metric ton; and now the price has surged by 25 percent just since the Iran war began. This makes domestic procurement fiercely competitive, while also threatening the import of specific ultra-high-purity grades required for advanced manufacturing. It is squeezing one of the most consequential inputs to modern industrial power.

The West Point narrative bias is clear, and it emphasizes immediate logistical and pre-logistical impacts without regional differentiation. While logistics is hugely important to successful warfighting, what matters most is having better logistics than potential adversaries.

As with all commodities, all markets have some exposure when there is a supply rupture. That is certainly the case with sulfur. Just this month US sulfur prices have surged 34%.

Yet a price surge is not the same as a supply dislocation. One point the West Point narrative brushes past is that the US is itself a major producer of sulfur—it is the number 2 sulfur producer in the world, after China.

Even more significantly, virtually all the sulfur the US does import comes from right next door, in Canada.

As the Strait of Hormuz does not lie between the US and Canada, it is safe to say that the war with Iran is not disrupting physical supply chains for sulfur.

We should also note the quantities of sulfur the US imports: 999,718,000 kilograms is just under 1.1 million tons. The US produces domestically ~8-8.6 million tons of sulfur, which means the US imports between 12% and 13% of its annual sulfur demand.

The price of sulfur in the US is up because the price of sulfur is up worldwide, but the US still has physical access to nearly all the sulfur it uses. The same is not true for Africa, nor is it true for Asia (including China).

Hence the extreme price differentials between sulfur prices in the US and sulfur prices in China. China is grappling not just with a price shock but a supply shock. The US is experiencing only the price shock.

The difference becomes clear when we consider last month’s Producer Price Index data. Virtually all the inflation surge the United States experienced within producer prices in March was due to energy-related products, and fuels especially.

Outside of energy-related products, there was not a lot of inflation in March, and even some disinflation.

Thus far at least, the inflation impact of the war with Iran is still narrowly confined for the US. That could change, and if the war lasts long enough it almost certainly will change, but as of this writing it has not yet changed.

That lack of broad inflation so far in the US economy highlights the particular advantage the US has with respect to Iran and the Middle East: the US is considerably less reliant on the Middle East than is Europe or Asia. Even a cursory glance at price surges for oil and gas both here and in Europe illustrates that, for natural gas especially, the price differentials are quite significant.

Dutch TTF natural gas is still up nearly 40%, and that’s after talks and rumors of talks have calmed markets down. US natural gas has actually declined in price.

Even West Texas Intermediate crude is up less than its European counterpart, Brent Crude.

Diesel prices show the same disparate impact from the war with Iran:

Energy inflation is bad in the US, but it’s worse in Europe.

The same is proving true for industrial chemicals such as sulfur/sulfuric acid. There is a cost burden from the war that is being felt by the US, but it is being felt far more in China, in India, and in Europe.

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A World Problem

The economic reality of the war’s impact is still very much what I pointed out a few days ago:

Whether Starmer or any other world leader agrees with Donald Trump on the war itself, Iran’s closure of the Strait of Hormuz is far more a UK issue, a France issue, an India issue, than it is a US issue. Even if one concedes that Operation Epic Fury is not “Europe’s war”, the closure of the Strait is indisputably Europe’s problem.

The economic fallout from the Strait’s closure was never going to be limited to just oil or diesel, even if those are the commodities that get noticed first. Yet, as we are seeing with sulfur and sulfuric acid, the dislocations brought on by the closure of the Strait of Hormuz are felt to a far greater degree nearly everywhere but the United States. In nearly every regard, the US is experiencing far smaller economic impacts than the rest of the world.

Does this make ZeroHedge’s take on sulfur production inaccurate? Arguably, it does.

Yes, global sulfur production is disrupted. Yes, sulfur prices are up significantly even in the US. These aspects of the war and its consequences are undeniable.

Yet what ZeroHedge overlooks, what the military thinkers at West Point gloss over, is that the cost from that rupture is falling on different parts of the world to different degrees. What ZeroHedge overlooks, and what the military thinkers at West Point gloss over, is that the US has the curious good fortune to be bearing the smallest portion of the overall costs from Operation Epic Fury, the war with Iran, and the current blockade of the Strait of Hormuz.

In a race to the bottom of global sulfur supply ruptures, the winning position is to come in last. At present that position belongs to the United States.

Closing the Strait of Hormuz is imposing a number of supply shocks and dislocations on the global economy. There is a cost to each of those supply shocks and dislocations.

So far, the burden of those costs is falling on just about everyone’s shoulder’s except the United States’.

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“We have been at it now for 21 hours, and we’ve had a number of substantive discussions with the Iranians. That’s the good news,” Vance said. “The bad news is that we have not reached an agreement, and I think that’s bad news for Iran much more than it’s bad news for the United States of America.”

With regards to the war and to the broader impasse between Iran and the United States, not a lot has changed over the past few days. My assessment of the state of affairs in the Persian Gulf is broadly the same as it was four days ago:

All scenarios are still on the table. The ceasefire could collapse today, tomorrow, or next week. The Khamenei regime could collapse today, tomorrow, or next week.

There is, however, one notable shift, and we shall have to see how it plays out: President Trump is threatening to impose his own blockade on the Strait of Hormuz.

Is this a collapse of the ceasefire? Not yet, if only because as of this writing there are no new reports of air strikes, missiles, or drone attacks from either side. I will not be surprised if that changes even within the next few hours.

Will this change the strategic calculus in the Persian Gulf? It could. How the blockade unfolds will determine its ultimate impact. For now President Trump’s message to Iran is clear and unequivocal: If the United States’ demands are not met, Iranian oil will not flow.

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21 Hours Of Talking Without Resolution

As diplomatic negotiations go, the Islamabad talks were put together with blinding speed—and collapsed with equally blinding speed.

We must remember the ceasefire was declared less than a week ago, when Donald Trump and Iranian Foreign Minister Abbas Araghchi jointly accepted a Pakistani ceasefire proposal, and agreed to the talks.

Yet even before the talks began, Iran put out some extraordinary claims on what agreements had already been made (or not made)—including an assertion that the US agreed to release some $6billion in frozen Iranian assets.

That claim was quickly denied by the US, and there have been no independent reports of any frozen Iranian funds being released to the Khamenei regime.

The denial of such claims did not stop the head of the Iranian delegation, Parliamentary Speaker Mohammad Bagher Ghalibaf, from doubling down on them during the runup to the actual talks themselves.

While we cannot say if Ghalibaf genuinely believed those claims to be true or was merely attempting to gain leverage in the negotiations, we can say that the effort produced no leverage against the US negotiating team of Vice President JD Vance, Special Envoy Steve Witkoff, and Jared Kushner, President Trump’s son-in-law. In remarks made prior to leaving Islamabad, JD Vance made it clear that Iran did not agree to meet US “red line” conditions for peace.

As I have noted previously, the US “red line” conditions are easily and succinctly stated:

• Iran will not enrich uranium

• Iran will not pursue nuclear weapons

• Iran will not develop long range ballistic missiles

• Iran will not maintain its network of terror militias across the Middle East

• Iran will not close the Strait of Hormuz

• Iran will not threaten Arab states in the Persian Gulf

While we do not know what was actually said during the negotiations themselves, there is little reason to presume the US position on any of that has been altered.

With that as a backdrop, we perhaps should not be surprised that President Trump chose to respond to the failure of the talks by blockading the Strait of Hormuz.

Regardless of how much control Iran has or does not have over the Strait of Hormuz itself, there is little doubt which navy can control the egress to the Strait into the Gulf of Oman. The United States Navy will now be interdicting shipping traffic out of the Strait of Hormuz, thereby cutting off even Iran’s oil exports.

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Did Trump Anticipate This?

While it is purely speculation on my part, I do wonder if the Trump Administration had not been preparing all along for the talks to fail.

While the talks were ongoing, the Trump Administration announced the US Navy was beginning minesweeping operations in the Strait to clear out the Iranian mines.

CENTCOM said USS Frank E. Peterson and USS Michael Murphy transited the strait and operated in the Persian Gulf in a broader mission aimed at removing mines previously laid by Iran’s Islamic Revolutionary Guards Corps.

“Today, we began the process of establishing a new passage and we will share this safe pathway with the maritime industry soon to encourage the free flow of commerce,” said CENTCOM commander Gen. Brad Cooper.

President Trump, in typical Trumpian fashion, was even more braggadocious, not only calling out Iranian failures in reopening the Strait but also the failures of other leading nations to step up and help defend internationally recognized rights of transit passage through the Strait.

All this he posted to social media as the Islamabad talks were getting underway—whatever else one wishes to conclude about Donald Trump’s social media postings, one thing seems clear: Donald Trump was not worried about the Iranians agreeing to reopen the Strait because the US Navy was already starting to reopen the Strait.

One reason the US was doing this was advanced by the New York Times, and has not been refuted by the Khamenei regime: Iran does not know how to locate or remove its own mines from the Strait.

Iran used small boats to mine the strait last month, soon after the United States and Israel began their war against the country. The mines, plus the threat of Iranian drone and missile attacks, slowed the number of oil tankers and other vessels passing through the strait to a trickle, driving up energy prices and providing Iran with its best leverage in the war.

Iran left a path through the strait open, allowing ships that pay a toll to pass through.

Iran’s Islamic Revolutionary Guards Corps has issued warnings that ships could collide with sea mines, and semiofficial news organizations have published charts showing safe routes.

Those routes are limited in large part because Iran mined the strait haphazardly, U.S. officials said. It is not clear that Iran recorded where it put every mine. And even when the location was recorded, some mines were placed in a way that allowed them to drift or move, according to the officials.

If that report is true, then Iran’s claim of control over the Strait is ultimately illusory.

If that report is true, then Iran cannot guarantee safe passage through the Strait to any ship, regardless of whether or not it pays a toll. If Iran does not even know where the mines are, it does not know what the safe sea lanes are.

The New York Times reporting relies on unnamed US officials, and provides no solid provenance for those assessments, but Iran has not said or done anything to rebut the reporting. While we do not know the New York Times is correct on this, neither can we assume the New York Times is wrong.

If the New York Times reporting is at all factual, then the failure of the talks could suit President Trump just fine. If the US Navy succeeds in clearing the mines and reopening the Strait while maintaining a blockade in the Gulf of Oman, Iran’s strategic leverage collapses.

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Oil Prices—Iran’s Real Target?

While the geopolitical calculus over the Strait of Hormuz remains very much an exercise in speculation, what is not a speculation is the impact these events have had on energy prices.

Even with the encouragements of the Islamabad talks getting underway, spot prices for diesel contracts are as of Friday trading still 44% above pre-war levels.

Not only are energy prices up, but significant differentials have emerged between European benchmark energy contracts and American ones, especially for natural gas.

Nor is that the only energy price differential to emerge. Since the war began, Arab “heavy” (or “sour”) crude—the crude type from which diesel is extracted—has gained a significant price premium both over benchmark oil prices for Brent crude and West Texas Intermediate.

Iran’s heavy crude has not had the same price appreciation.

While it is too soon to assess exactly how this shift in pricing—the Arab premium did not exist prior to the war with Iran—will impact global energy economics, if this becomes the “new normal” for oil prices, there will be significant impact.

Even without this shift in oil pricing becoming more or less permanent, the present reality remains that the Strait of Hormuz is not open to commercial traffic, with some two thousand vessels trapped within the Persian Gulf.

Even though Iran nominally has declared the Strait of Hormuz open, most of the Strait’s 20 million barrels per day of oil flow is currently blocked, and the few oil pipelines in the Persian Gulf region cannot even begin to compensate for the disruption in flows of seaborne crude.

At present, more than 90% of normal traffic through the Strait is idled on side or the other, waiting for the US and Iran to sort out their differences.

With Persian Gulf oil as well as natural gas still bottled up in the Persian Gulf, unable to safely transit the Strait, a substantial portion of global energy flows have been taken at least temporarily offline.

This reality has not gone unnoticed by the Arab states. As the Islamabad talks were heading toward their unsatisfactory conclusion, the UAE oil minister Dr. Sultan Al Jaber posted on X defending the Strait as an international waterway and condemning any attempt by Iran to close or regulate it.

Was this part of Iran’s strategy all along? Have they closed the Strait and attacked Arab oil and natural gas production infrastructure precisely to alter the pricing dynamics of the Persian Gulf?

To answer that question now would be pure speculation. However, during the Islamabad talks, an account on X purportedly belonging to Iran’s new Supreme Leader Mojtaba Khamenei posted a sovereign claim by Iran to the Strait.

Whether that social media posting represents the official stance of the Khamenei regime is uncertain. Still, the posting is in line with earlier regime commentary on the status of the Strait and Iran’s claimed “rights” over it.

Has Iran used the war as an opportunity to improve its own export position in the Persian Gulf by disrupting oil production by the Arab states in the region? We cannot dismiss that possibility.

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What Comes Next? Mostly Questions

As has been true throughout this war, we cannot say with certainty what will unfold next.

Will oil prices surge again when trading resumes after the weekend? At least for the immediate term, that is a likely result.

Will the Strait of Hormuz reopen? Eventually it must, but there is no way to ascertain any definitive timeline as to when.

Presumably the US Navy will continue minesweeping the Strait to remove Iran’s rogue mines. Presumably the US Navy will also interdict traffic coming out of the Persian Gulf in much the same way it interdicted shipping to and from Venezuela previously. That would mean that oil flows will resume not when Iran says they will but when the US says they will.

Until the Strait reopens, global energy flows and petrochemical logistics will remain disrupted. While not necessarily the energy apocalypse some are predicting, the longer the disruption prevails the greater the impact it will have on the global economy.

Here in the United States, retail fuel prices have surged, and diesel especially is flirting with highs last seen during the 2022 hyperinflation cycle.

With the failure of the Islamabad talks, we can safely presume that retail diesel prices will continue to move higher at least for the next few days and possibly weeks.

Already the impacts are reverberating into the wider US economy, with the March inflation numbers surging. With no prognosis for a reversion to pre-war energy price levels, within the US inflation will almost certainly rise again in April, driven primarily again by energy prices.

The impact of the diesel price surge on the world’s economies is likewise certain to severely negative. Diesel is the primary fuel for trucking operations worldwide. The cost for that fuel has increased worldwide by roughly 50% in the span of just a few weeks. Transporting goods overland is quite a bit more expensive today than it was just a month ago, and there is every reason to presume it will be more expensive a month from now than it is today.

That is a logistics shock which, while unlikely to completely halt global commerce, is quite likely to create new logjams not unlike the post-COVID supply chain ruptures experienced in 2021 and 2022, and which further contributed to the 2022 hyperinflation cycle globally.

The immediate economic ramifications of the Strait’s continued closure are fairly straightforward. These are things we know must happen because these are the consequences of Persian Gulf oil not being allowed to flow.

Less certain is what other nations besides the United States will do in response. Virtually all nations have affirmed that the Strait of Hormuz is an international waterway, yet the United Nations Security Council has been unable to pass even a resolution to that effect, much less one calling for the Strait to be reopened by force if necessary.

Geopolitically, what we have now are mainly questions.

Are the nations of the world content to sit passively on the sidelines while 20% of global energy flows are effectively cut off? So far, they have been.

Will the US blockade of Iranian traffic out of the Strait of Hormuz bring enough global pressure to bear that other nations will be forced to take stand and do something, either with the United States naval effort or against it? Prior to this war, I would have speculated the answer to be “yes”, but the willingness of even America’s NATO allies to remain uninvolved in protecting energy flows which demonstrably impact their economies far more than they do the US economy makes that presumption extremely problematic.

The larger and still unanswerable question coming out of this war: what is the future of the current maritime trading order which is the foundation of nearly all the world’s economies? Can global commerce proceed smoothly when vital waterways are vulnerable to the whims of various regional powers and conflicts?

Corollary to that is what force protects those vital waterways? Can any force protect them?

As regards the propriety of the war itself, and of Operation Epic Fury, Iran’s responses and obvious duplicity just prior to the Islamabad talks leaves another awkward question hanging: what is the alternative?

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We know this because, when it came to the war with Iran and Operation Epic Fury, self-anointed “expert” after self-anointed “expert” made their predictions, gave their projections, and what we have as of this writing was not what any of them anticipated.

Early yesterday evening, Donald Trump accepted Pakistan’s proposal for a two-week ceasefire.

A short time later, Iran followed suit.

As of this writing, we have the beginnings of a ceasefire and possibly peace between the United States and Iran.

As of this writing, the Strait of Hormuz is open for international shipping.

As of this writing, Persian Gulf oil flows are able to resume.

Will the ceasefire hold? We do not know.

Will the Arab states quickly restore pre-war production levels? That mightily depends on your definition of “quickly”. They will restore pre-war production levels, the only question is “when?”

We are still facing a dramatic surge in energy prices, and while the supply shock may be ameliorated at this point, we will see the beginning of that surge in the upcoming inflation reports. How much inflation are we going to get? We do not know and cannot say.

The analysts who predicted apocalypse, however, got it wrong.

The analysts who extrapolated a Trump win through the seizure of Kharg Island also got it wrong.

As I pointed out two weeks ago, all scenarios were still viable and still on the table.

Virtually every conceivable scenario for what happens next in this war remains very much on the table. Virtually every conceivable scenario could be what happens next in this war.

Which of those scenarios will we see unfold? Nobody knows.

The ceasefire scenario was the one everyone dismissed the most, and that was the scenario we were given.

All scenarios are still on the table. The ceasefire could collapse today, tomorrow, or next week. The Khamenei regime could collapse today, tomorrow, or next week.

Every prediction turned out to be wrong. Every “expert” making the predictions turned out to be wrong.

What comes next? I do not know, and neither do the “experts”.

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Energy Apocalypse Postponed

One of the more dire predictions that has emerged since Iran closed the Strait of Hormuz was that the world economy would crash in literally days.

The world is about to run out of diesel. This isn’t a hypothesis, a prediction, or a guess. It is a physical reality.

It will start with the poorest countries.

Laos will run out of diesel in three days (on April 5). It has zero refining capacity. It relies on imported diesel from Thailand. Already 40% of its diesel stations are closed. Cambodia and Myanmar will be next (on April 7). Then Bangladesh (April 9).

No one will notice, most likely. But on April 10, Pakistan will run out of diesel. Pakistan is a nuclear power with more than 250 million people.

They have eight days of fuel left.

Unless the Strait of Hormuz is fully re-opened, the world faces the largest humanitarian crisis since the Black Death of 1347-1353.

The price of diesel fuel has surged since the start of the war, that much is indisputable. Also indisputable is that, with the announcement of the ceasefire, diesel prices have declined dramatically.

Fuel shortages have also been a reported reality across Southeast Asia. Cities like Manila, in the Philippines, which normally has bustling traffic, is seeing much less traffic on the streets of late.

Those same fuel shortages are also prompting both China and the Philippines to reconsider their behavior in the South China Sea, as both countries would benefit from pursuing oil and gas exploration there.

But in a recent interview with Bloomberg, Philippines President Ferdinand Marcos Jr appeared to flag an interest in renewing joint oil and gas exploration with China in the South China Sea.

Filipino security analyst Chester Cabalza said there was an opportunity to tap into “huge deposits” of oil.

“We know we’ve been struggling with our relations with Beijing because of the 2016 arbitration,” he said.

“Some are saying that we should not close an energy deal with Beijing, because it means we are submitting on our claims in the South China Sea.

“But given the situation and the energy crisis … I think this is a wakeup call for us for how we should treat China.”

Is the world going to run out of diesel? Not yet, and, if the ceasefire holds, not for quite some time.

This does not mean there will not be shortages. The closure of the Strait of Hormuz has been hugely disruptive to oil production in the Persian Gulf. Iraq shut in as much as 70% of its crude oil production in early March after it ran out of oil storage capacity.

Crude oil production from Iraq’s southern fields has dropped by 70% since the start of the U.S. and Israeli war on Iran, with the average daily production at 1.3 million barrels, compared with 4.3 million barrels daily before the war began.

“Crude storage has reached maximum capacity, and the remaining output after the major cut will be used to supply the country’s refineries,” an official from Basra Oil Company told Reuters. The company is the state-owned entity that markets Iraq’s southern oil, which accounts for most of its production.

Around the same time, Saudi Arabia trimmed its oil output by 20%, and for the same reason—storage.

It will take time for the shut-in production to be restored, and that is assuming that the ceasefire holds and there is lasting peace.

Nor is it simply crude oil production that has been disrupted. Everything that comes from oil, from plastics to fertilizers, is disrupted, both because of the oil flows themselves and because the Persian Gulf states are major producers of a number of petrochemical products.

The Middle East accounted for over 40% of polyethylene exports in 2025, led by Saudi Arabia, and ships to nearly every region outside North America, the next largest exporting region.

Prices for plastics such as polyethylene (PE) and polypropylene (PP) have surged since the Middle East conflict began, tracking higher crude and feedstock costs.

“Global logistics have become uncertain, with up to 50% of polyethylene supply either offline, constrained or being impacted following the events in the Middle East,” said Dow CEO Jim Fitterling.

There is already a fuel and price shock unfolding in the global economy. It will continue to unfold for a while yet, and, as I observed yesterday morning, the shock will touch every sector of every economy.

Yet the world still has diesel. Unless (until?) the ceasefire collapses, the world will continue to have diesel. Barring a major turn of events, this worst case scenario will not come to pass.

The “experts” got it wrong.

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Kharg Island Not Taken—Yet

Equally misplaced were the predictions that US Marines would land on Kharg Island, seize the oil terminal, and shut down 90% of Iran’s oil exports.

Not only did that not happen, with a ceasefire in place it is not going to happen.

It is true that Kharg Island is where 90% of Iran’s oil exports are loaded.

As the data analytics firm Kpler detailed in a recent update, tiny Kharg Island — roughly eight kilometres long and five kilometres wide — is nevertheless the most critical piece of Iran’s oil economy.

“Iran has spent decades building pipelines from major inland producing areas to the island, turning it into the main collection, storage and loading point for crude before it moves to international buyers,” the update said.

That concentration leaves Iran extremely vulnerable. In the year before the war, 94 per cent of Iran’s crude exports left on tankers from Kharg. Any sustained disruption would immediately threaten most of the country’s export capacity, Kpler warned.

With virtually all of Iran’s oil exports flowing through Kharg Island, there is no doubt that seizing control of the island would cripple Iran’s economy in short order.

President Trump himself has hinted that he might order the seizure of the island, as part of a move to “take” Iran’s oil.

The US president told the FT in an interview on Sunday that his “preference would be to take the oil”, comparing the potential move to Venezuela, where the US intends to control the oil industry “indefinitely” following its capture of strongman leader Nicolás Maduro in January.

Speculation that an assault on Kharg Island was about to happen has been fueled by the deployment of units such as the 31st Marine Expeditionary Unit to the region, along with its floating base of operations, the USS Tripoli.

The U.S. Central Command said in a social media post that the USS Tripoli, which serves as the flagship for the Tripoli Amphibious Ready Group / 31st Marine Expeditionary Unit, arrived in its area of responsibility.

It’s the most updated of the amphibious warships, known as a “big deck,” which allows more room for F-35 Stealth Fighter Jets, Ospreys and other aircraft. The ship had previously been based in Japan when the order to deploy to the Middle East came almost two weeks ago.

While President Trump has consistently downplayed any desire to put “boots on the ground” in Iran, he nevertheless has moved some 50,000 troops into the Middle East—not enough for any sort of invasion of Iran itself, but enough for “small” operations such as the seizure of Kharg Island.

Commentators in corporate media outlets such as The Atlantic have played up the risks of an assault on Kharg Island, noting that the island is close to Iran and relatively far from US bases which could resupply any force sent to take the island.

But even without such tactics, the Iranians could make holding Kharg very difficult. The operation would likely take longer than 15 days, which is about how long an expeditionary unit can operate without logistical support. Kharg is far—140 miles—from American assets in Kuwait City, but very close to Iran’s coast. Resupply vessels would be exposed not only to cruise-missile fire but also to Iran’s “mosquito fleet,” which includes robotic drones, sometimes called unmanned surface vessels (Ukraine used similar devices to bottle up the Russian Black Sea fleet at Novorossiysk).

Kharg Island is a vital link in Iran’s oil economy. Kharg Island is vulnerable to an assault by shock troops such as the 31st Marine Expeditionary Unit. Kharg Island is difficult for a US force to hold.

Kharg Island is also still in Iranian control, and, assuming the ceasefire holds, likely to remain in Iranian control.

Predictions that Kharg Island was the next step in President Trump’s grand strategy were wrong. Predictions that US troops would get bogged down holding the island were wrong. Predictions that President Trump would turn off Iran’s economy like flipping a switch by taking Kharg Island were wrong.

Was taking Kharg Island necessary to force open the Strait of Hormuz? Not so long as Iran keeps to its side of the ceasefire bargain.

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What Comes Next?

Every analyst with projections and predictions aims to answer one simple question: “what comes next?” No matter what is being analyzed, no matter who is doing the analyzing, attempting to answer that question.

Looking ahead to see what might come next is fundamentally what I do with All Facts Matter.

The challenge is always recognizing where what is known ends and what is speculated begins.

We know that, as of late last night, futures pricing for Dutch TTF Gas—a main benchmark for natural gas pricing in Europe—is up some 70% since the start of Operation Epic Fury.

We know also that, as a result of the ceasefire announcement, crude oil prices have fallen from approximately 55% above pre-war levels to “only” 34%. We know that US natural gas prices have actually fallen over the course of the war—a demonstration of what US energy independence actually looks like.

We know that diesel futures pricing in the US and Europe followed crude oil prices down last night.

With diesel fuel contracts sill 40% above pre-war levels, the world is still looking at a significant price shock. A 40% jump in roughly six weeks is quite a price surge even for energy prices, which are routinely more volatile than prices for other goods (which is why inflation data separates energy prices from “core” prices).

We know that European inflation has already risen significantly during March, with the war with Iran a likely primary driver.

We know that energy inflation in Europe is the main contributor to that overall surge in consumer price inflation.

We can plausibly extrapolate that Europe will experience some economic turmoil as a result of this surge in consumer price inflation.

US inflation data for March is due out at the end of this week. We are almost sure to see similar effects within the US data. We can extrapolate that just from the fact that the Energy Information Administration has charted US retail gasoline prices up some 47% from the start of the year, and US retail diesel prices up some 62%.

We do not need to speculate if there is going to be a price shock hitting the US economy—we already have evidence that an oil price shock is hitting the US economy even now.

We can plausibly extrapolate that there will be a measure of economic turmoil in the United States from the swift rise in fuel prices. When fuel prices go up, everything gets more expensive, simply because it then costs more to move goods from supplier to consumer.

What we do not know is whether or not fuel prices are going to move higher.

What we do not know is whether or not oil prices are going to rebound and possibly climb even higher than before.

We do not know—and we cannot know—because we do not know—and cannot know—whether or not Iran will continue to keep the Strait of Hormuz open. We do not know—and cannot know—what the outcome of ceasefire and peace talks are going to be. We do not know—and cannot know—if the Iranian people are going to at last rise up and topple the Khamenei regime.

We did not know as late as yesterday afternoon if President Trump would give the go-ahead order for a massive bombing campaign against Iranian infrastructure. We did not know if there would be retaliatory Iranian strikes against the Arab states in the Persian Gulf.

Nobody knew what President Trump would ultimately do until he did it. Nobody knew what the Khamenei regime would ultimately do until they did it.

Nobody knows what either President Trump or the Khamenei regime will do next.

Over the past 72 hours the world has moved from Apocalypse Maybe to Apocalypse Soon and flirted with Apocalypse Now. As of this writing, the world appears to be at Apocalypse Later.

With respect to the war with Iran, that’s what we know.

With respect to the war with Iran, that’s all we can know.

Tomorrow may bring a peace breakthrough or it may bring a ceasefire breakdown. Both outcomes are plausible, and either outcome can be legitimately assessed as being probable.

Tomorrow may bring further reduction in oil, natural gas, and diesel prices, or it may bring a renewed surge in all three. Both outcomes are plausible, and either outcome can be legitimately assessed as being probable.

The ceasefire agreement gives us hope that we will have at least two weeks without war, but hope is all that it really gives us.

There will be “experts” who will assess with confidence what the ceasefire means, and how it will play out for the Persian Gulf and for the world.

What I assess is that all of those “experts” have already proven they have not a clue what they are talking about.

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Transcript:

Thank you very much.

My fellow Americans, good evening.

Let me begin by congratulating the team at NASA and our brave astronauts on the successful launch of Artemis II. It was quite something. It will be traveling further than any manned rocket has ever flown and will very substantially pass the Moon, go around it, and come back home from a distance that has Never been done before.

It’s amazing. They are on the way, and God bless them. These are brave people. We want to God bless those four unbelievable astronauts.

As we speak this evening, it’s been just one month since the United States military began Operation Epic Fury, targeting the world’s number one state sponsor of terror, Iran. In these past four weeks, our armed forces have delivered swift, decisive, overwhelming victories on the battlefield. Victories like few people have ever seen before.

Tonight, Iran’s Navy is gone. Their air force is in ruins. Their leaders, most of them terrorist regime they led, are now dead. Command and control of the Islamic Revolutionary Guard Corps is being decimated as we speak. Their ability to launch missiles and drones is dramatically curtailed, and their weapons, factories, and rocket launchers are being blown to pieces—very few of them left.

Never in the history of warfare has an enemy suffered such clear and devastating large-scale losses. In a matter of weeks, our enemies are Losing in America, as it has been for five years under my presidency, is winning, and now winning bigger than ever before. Before discussing this current situation, I also want to thank our troops for the masterful job they did in taking the country of Venezuela in a matter of minutes. That it was quick, lethal, violent, and respected by everyone all over the world.

After rebuilding our military during my first term, we have, by far, the strongest military anywhere in the world. And now we’re working along with Venezuela and our, in a true sense, joint venture partners. We’re getting along incredibly well in the production and sale of massive amounts of oil and gas, the second-largest reserves on Earth after the United States of America.

We’re now totally independent of the Middle East, and yet we are there to help. We don’t have to be there. We don’t need their oil. We don’t need anything they have, but we’re there to help our allies.

Tonight, I want to provide an update on the tremendous progress our warriors have made in Iran and discuss why Operation Epic Fury is necessary for the safety of America and the security of the free world.

From the very first day I announced my campaign for President in 2015, I have vowed that I would never allow Iran to have a nuclear weapon. This fanatical regime has been chanting, death to America, death to Israel, for 47 years. Their proxies were behind the murder of 241 Americans in the Marine barracks bombing in Beirut, the slaughter of hundreds of our service members with roadside bombs. They were involved in the attack on the USS Cole, and they carried out the countless other heinous acts, including the blood — just horrible, bloody atrocities of October 7th in Israel — something that most people have never seen anything like it.

This murderous regime also recently killed 45,000 of their own people who were protesting in Iran — 45,000 dead. For these terrorists to have nuclear weapons would be an intolerable threat. The most violent and thuggish regime on Earth would be free to carry out their campaigns of terror, coercion, conquest, and mass murder from behind a nuclear shield.

I will never let that happen, and neither should any of our past Presidents. This situation has been going on for 47 years and should have been handled long before I arrived in office.

I did many things during my two terms in office to stop the quest for nuclear weapons by Iran first. And perhaps most importantly, I killed General Qasem Soleimani in my first term. He was an evil genius, a brilliant person. A horrible human being, however, the father of the roadside bomb.

And he lived just horrible what he did. Iran would have been perhaps in far better, stronger position. He lived. We would have had probably a different conversation tonight. But you know what? We’d still be winning and winning big.

And then, very importantly, I terminated Barack Hussein Obama’s Iran nuclear deal, a disaster. Obama gave them $1.7 billion in cash. Green, green cash. Took it out of banks from Virginia, D.C., and Maryland. All the cash they had. Flew it by airplanes in an attempt to buy their respect and loyalty, but it didn’t work. They laughed at our President and went on with their mission to have a nuclear bomb.

His Iran deal would have led to a colossal arsenal of massive nuclear weapons for Iran, and they would have had them years ago, and they would have used them. It would have been a different world. There would have been no Middle East and no Israel right now, in my opinion, the opinion of a lot of great experts. Had I not terminated that terrible deal, I was so honored to do it. I was so proud to do it.

It was so bad right from the beginning. Essentially, I did what no other president was willing to do. They made mistakes, and I am correcting them. My first preference was always the path of diplomacy, yet the regime continued their relentless quest for nuclear weapons and rejected every attempt at an agreement.

For this reason, in June, I ordered a strike on Iran’s key nuclear facilities in Operation Midnight Hammer. Nobody has ever seen anything like it. Those beautiful B-2 bombers performed magnificently.

We totally obliterated those nuclear sites. The regime then sought to rebuild their nuclear program at a totally different location, making clear they had no intention of abandoning their pursuit of nuclear weapons. They were also rapidly building a vast stockpile of conventional ballistic missiles and would soon have had missiles that could reach the American homeland, Europe, and virtually any other place on Earth.

Iran’s strategy was so obvious. They wanted to produce as many missiles as possible, and they did, with the longest range possible. They had some weapons that nobody believed they had. We just learned that out. We took them out. We took them all out so that no one would really dare stop them. And they’re raised for a nuclear bomb, a nuclear weapon, a nuclear weapon like nobody’s ever seen before.

They were right at the doorstep. For years, everyone has said that Iran cannot have nuclear weapons, but in the end, Those are just words if you’re not willing to take action when the time comes. As I stated in my announcement of Operation Epic Fury, our objectives are very simple and clear.

We are systematically dismantling the regime’s ability to threaten America or project power outside of their borders. That means eliminating Iran’s navy, which is now absolutely destroyed, hurting their Air Force and their missile program at levels never seen before, and annihilating their defense industrial base. We’ve done all of it.

Their Navy is gone.

Their Air Force is gone.

Their missiles are just about used up or beaten.

Taken together, these actions will cripple Iran military, crush their ability to support terrorist proxies, and deny them the ability to build a nuclear bomb. Our armed forces have been extraordinary. In anything like it, militarily, everyone is talking about it.

And tonight, I’m pleased to say that these core strategic objectives are nearing completion.

As we celebrate this progress, we think especially of the 13 American warriors who have laid down their lives in this fight to prevent our children from ever having to face a nuclear Iran. Twice this past month, I have traveled to Dover Air Force Base. And it’s been something. I wanted to be with those heroes as they returned to American soil. And I was with them and their families, their parents, their wives, their husbands.

We salute them, and now we must honor them by completing the mission for which they gave their lives.

And every single one of the people, their loved ones said, please, sir, please finish the job. Every one of them. And we are going to finish the job, and we’re going to finish it very fast. We’re getting very close.

I want to thank our allies in the Middle East, Israel, Saudi Arabia, Qatar, the UAE, Kuwait, and Bahrain. They’ve been great, and we will not let them get hurt or fail in any way, shape, or form. Many Americans have been concerned to see the recent rise in gasoline prices here at home. This short-term increase has been entirely the result of the Iranian regime launching deranged terror attacks against commercial oil tankers in neighboring countries that have nothing to do with the conflict. This is yet more proof that Iran can never be trusted with nuclear weapons. They will use them, and they will use them quickly.

It would lead to decades of extortion, economic pain, and instability worse than we can ever imagine. The United States has never been better prepared economically to confront this threat. You all know that we built the strongest economy in history.

We’re going through it right now, the strongest in history. In one year, we’ve taken a dead and crippled country. I hate to say that, but we were a dead and crippled country after the last administration, and made it the hottest country anywhere in the world by far, with no inflation, record-setting investments coming into the United States, over $18 trillion, and the highest stock market ever, with 53 all-time record highs in just one year. It all positioned us to get rid of a cancer that has long simmered. It’s known as the nuclear Iran.

And they didn’t know what was coming.

They’ve never imagined it.

Remember, because of our Drill Baby Drill program, America has plenty of gas.

We have so much gas.

Under my leadership, we are number one producer of oil and gas on the planet without even discussing the millions of barrels that we’re getting from Venezuela.

Because of the Trump administration’s policies, we produce more oil and gas than Saudi Arabia and Russia combined. Think of that. Saudi Arabia and Russia combined.

And that number will soon be substantially higher than that. There’s no country like us anywhere in the world, and we’re in great shape for the future. The United States imports almost no oil through the Hormuz Strait, and won’t be taking any in the future. We don’t need it. We haven’t needed it, and we don’t need it. We’ve beaten and completely decimated Iran. They are decimated, both militarily and economically and every other way. And the countries of the world that do receive oil through the Hormuz Strait must take care of that passage.

They must cherish it. They must grab it and cherish it.

They can do it easily. We will be helpful, but they should take the lead in protecting the oil that they so desperately depend on.

So to those countries that can’t get fuel, many of which refuse to get involved in the decapitation of Iran, we had to do it ourselves. I have a suggestion.

Number one, buy oil from the United States of America.

We have plenty. We have so much. And number two, build up some delayed courage. Should have done it before. Should have done it with us, as we asked. Go to the Strait and just take it. Protect it. Use it for yourselves. Iran has been essentially decimated. The hard part is done, so it should be easy. And in any event, when this conflict is over, the strait will open up naturally. It’ll just open up naturally. They’re going to want to be able to sell oil because that’s all they have to try and rebuild. Resumed the flowing, and the gas prices will rapidly come back down.

Stock prices will rapidly go back up.

They haven’t come down very much, frankly. They came down a little bit, but they’ve had some very good days over the last couple of days. We’ve done, actually, much better than I thought. But we had to take that little journey to Iran to get rid of this horrible threat. With our historic tax cuts, where people are just now talking about receiving larger refunds than they ever thought possible, They are getting so much more money than they thought. That’s from the great, big, beautiful bill. Our economy is strong and improving by the day, and it will soon be roaring back like never before. It will top the levels that it was a month ago.

I’ve made clear from the beginning of Operation Epic Fury that we will continue until our objectives are fully achieved. Thanks to the progress we’ve made, I can say tonight that we are on track to complete all of America’s military objectives shortly, very shortly. We are going to hit them extremely hard over the next two to three weeks. We’re going to bring them back to the Stone Ages, where they belong.

In the meantime, discussions are ongoing. Regime change was not our goal. We never said regime change, but regime change has occurred because of all of their original leaders’ death. They’re all dead. The new group is less radical and much more reasonable. Yet, if during this period of time no deal is made, we have our eyes on key targets. If there is no deal, we are going to hit each and every one of their electric generating plants very hard and probably simultaneously. We have not hit their oil, even though that’s the easiest target of all, because it would not give them even a small chance of survival or rebuilding. But we could hit it, and it would be gone, and there’s not a thing they could do about it.

They have no anti-aircraft equipment. Their radar is 100 percent annihilated.

We are unstoppable as a military force. The nuclear sites that we obliterated with the B-2 bombers have been hit so hard that it would take months to get near the nuclear dust and we have it under intense satellite surveillance and control. If we see them make a move, even a move for it, we’ll hit them with missiles very hard again. We have all the cards. They have none.

It’s very important that we keep this conflict in perspective. American involvement in World War I lasted one year, seven months, and five days. World War II lasted for three years, eight months, and 25 days. The Korean War lasted for three years, one month, and two days. The Vietnam War lasted for 19 years, five months, and 29 days. Iraq went on for eight years, eight months, and 28 days.

We are in this military operation, so powerful, so brilliant, against one of the most powerful countries for 32 days.

And the country has been eviscerated and essentially is really no longer a threat. They were the bully of the Middle East, but they’re the bully no longer. This is a true investment in your children and your grandchildren’s future. The whole world is watching, and they can’t leave the power, strength, and brilliance. They just can’t believe what they’re seeing. They leave it to your imagination, but they can’t believe what they’re seeing, the brilliance of the United States military.

Tonight, every American can look forward to a day when we are finally free from the wickedness of Iranian aggression and the specter of nuclear blackmail. Because of the actions we have taken, we are on the cusp of ending Iran’s sinister threat to America and the world. And I’ll tell you, the world is watching. And when we do, when it’s all over, the United States will be safer, stronger, more prosperous, and greater than it has ever been before.

May God bless the men and women of the United States Armed Forces, and may God bless the United States of America.

Thank you very much, and good night.

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Late last week, Iraq announced it was declaring “force majeure” for all oilfields developed and operated by foreign oil interests. That same day President Trump issued an ultimatum to the Khamenei regime: surrender now or Iran’s power plants woud be destroyed. Iran responded by threatening oil and natural gas production across the Persian Gulf region.

Oil, which had been stabilizing around $100/bbl for Brent Crude, soared yet again. Stock markets in turn dropped dramatically.

Yesterday morning came the news that President Trump and the Iranians were “talking”, leading Trump to postpone any deliberate targeting of the Iranian power grid.

Such has been the chaos of Operation Epic Fury over the past few days, whipsawing from the fallout of war, to major escalation, to possibly a chance for peace.

Do we know how this war will end? No, we do not. We cannot extrapolate with any certainty along any lines to project a final outcome. How this war ends is not merely unknown, it is completely unknowable.

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Arab Oil Production At Risk

There was little doubt that the global economic fallout from this war was intensifying when the Iraqi Oil Ministry, in a letter dated March 17 and made public March 21, declared “force majeure” on all foreign-operated oil fields, ordering a complete halt to all production.

Iraq’s Oil Ministry sent a letter dated March 17, seen by Reuters, stating that navigation through the Strait of Hormuz has been severely affected by “unprecedented military activity,” causing storage capacity to reach its limits.

“The international partners were unable to nominate tankers to lift crude, preventing exports despite the state oil company SOMO being ready to load shipments,” the letter said.

“Based on the situation, the ministry ordered a full shutdown of production at affected concession areas, with no compensation arising from the measure under contract terms,” the letter noted.

Iraq’s oil output was promptly slashed by 70%, to 900,000 barrels per day.

Iraq’s declaration underscores one of the logistical realities of oil production: oil wells depend on being able move the oil to someplace else. When oil shipments are disrupted, not only does oil not get to its intended destination, but the backlog can quickly extend back to the wellhead, as oil storage capacity is filled. When there is no more spare oil storage, oil producers have no choice but to shutter at least a portion of production capacity.

While Iraq’s force majeure declaration was the most dramatic, it was not the first disruption of oil production attributed to the war. Earlier last week it was reported that Saudi Arabia had reduced its oil output by 20% because of the war.

Middle East Gulf oil producers have had to shut vast volumes of production ‌due to ⁠the blocking ⁠of the Strait of Hormuz, a narrow waterway between Iran and Oman, since the U.S. and Israel began airstrikes on Iran on February 28. Iran has said the world should prepare for oil prices at $200 a barrel.

It is one thing for oil tankers to be delayed on either side of the Strait of Hormuz. Such disruptions are, by their nature, temporary. All that is needed is a solution which can move tankers through the Strait.

It is quite another thing, however, when storage capacity at the oil terminals around the Persian Gulf is exhausted, and oil wells are obliged to stop pumping oil

While stopping the pumping process is fairly simple, restarting a stopped well is not nearly so straightforward. Once an oil well is shut down, a number of hurdles to restarting production tend to emerge, and will get worse the longer the well is shut in.

Some of those hurdles include precipitates such as paraffin, which can block the well itself. If the well is not filled with protective fluids, ground water and other external fluids can corrode and damage the well. There is even a risk of microbial contamination, necessitating particular care during well restart.

Iraq declaring “force majeure” over 70% of its oil production was tantamount to removing for the foreseeable future over 2 million barrels of oil output per day from global supply.

As I noted at the time of Iraq’s declaration, Iran’s asserting control over the Strait of Hormuz threatens Persian Gulf oil production in at least the near term:

An extended blockade of the Strait of Hormuz does not merely temporarily delay oil shipments. It threatens a long-term reduction in oil production capacity in the Persian Gulf, a reduction which will not be immediately eliminated once the blockade is even partially ended.

This is what Iran has done.

The near-term implications of Iran’s strategic decision regarding the Strait are nothing short of apocalyptic for the Persian Gulf. If Iran continues to retain control over the international waterway, Persian Gulf oil flows could stop altogether.

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“48 Hours”

President Trump, faced with Iran continuing to threaten not only oil shipments from the Persian Gulf but oil production itself, responded in typical Trumpian fashion, escalating matters by issuing an ultimatum to Iran, posted via Truth Social: reopen the Strait of Hormuz in 48 hours or the US will begin bombing Iran’s power grid.

Iran responded in almost laconic fashion, with the Mehr news agency releasing a statement that said simply: “say good-bye to electricity.”

The outlet wrote, “Say goodbye to electricity,” and said that “with the smallest attack” on the Islamic Republic’s power infrastructure, “the entire region will fall into darkness.”

The statement was accompanied by a map showing the locations of major Arab power plants, highlighting how they were all within range of Iranian drones and missiles.

After Iraq’s force majeure announcement, and the earlier Saudi shuttering of its oil production, the apocalypse being threatened collectively by Iran and the US was more stress than oil markets were willing to tolerate. Brent Crude, which the week before had flirted with $120/bbl, surged towards that threshold again.

The timing of events was especially ironic, given that Federal Reserve Chairman Jay Powell had on Wednesday foolishly scoffed at the prospect that we might see a return of “stagflation”.

Even before the events of last weekend, it was clear that the war’s risks to the global economy were not insignificant.

Soft labor markets and some very nasty oil price shocks are what gave us stagflation in the 1970s.

We have soft labor markets. We are about to have a very nasty oil price shock.

Will we have a repeat of 1970s stagflation?

The surge in gas prices which has already occurred alone make for a severe price shock, potentially enough to usher in a stagflationary episode.

Wall Street looked at the potential energy crisis looming as a result of US and Iranian brinksmanship and accelerated its downward trend.

While it continues to be true that, as I have said previously, the US and Israel have for all intents and purposes won the war militarily, and have destroyed nearly every military target of significance in Iran, having an oil price shock of ever increasing magnitude bearing down on the global economy is not an outcome anyone would be able to sell as winning in a geopolitical sense.

Was President Trump on the verge of having won every battle with the Iranians—if the non-stop bombing can indeed be called a “battle”—only to lose the war itself?

Over the weekend, that was far from a radical or fringe interpretation of events.

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“We’re Talking”

Yesterday morning, President Trump managed to flip the script yet again, posting on Truth Social that he had extended his ultimatum by five days, as a result of “productive” talks with Iran over ending the war.

And just like that, the price of oil dropped like a stone.

The optimism was infectious, as equities surged.

Apparently, there is no good news quite so pleasing to hear as an announcement that the Apocalypse is being postponed.

Never one to be satisfied with a linear narrative and an obvious geopolitical plus, Iran has reacted to Trump’s announcement by calling it a fabrication, denying that any talks were taking place.

Foreign Ministry spokesman Esmaeil Baghaei insisted Iran’s positions had not changed regarding the Strait of Hormuz.

In comments shared by the state news agency IRNA, Baghaei said: “Messages have been received from some friendly countries regarding the US’s request for negotiations to end the war.”

Iran responded by giving warnings about “the dire consequences of any attack on Iran’s vital infrastructure”, Baghaei said.

Iranian parliament Speaker Mohammad Bagher Ghalibaf, believed to be the person engaging with US Special Envoy Steve Witkoff, was similarly emphatic:

There is, of course, no way to independently verify the claims on either side, especially regarding which side made the first diplomatic overture. Both sides would clearly benefit from a peaceful resolution of this war—or at least a ceasefire—and yet both sides have powerful political reasons for not being perceived to be the one who backed down before the other.

What we know is that President Trump has issued a five-day delay, presumably in order to give peace a chance.

What we know is that Wall Street was quite relieved to hear that the Trump Administration were talking.

What we know is that Wall Street investors prefer a narrative of President Trump looking to “do a deal” with Iran over one of Donald Trump threatening to eradicate Iran’s vital infrastructures. For the moment, at least, President Trump has given them that narrative.

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Check Your Assumptions

Wall Street is frequently a useful bellwether for gauging how various geopolitical events are being received. Movements in oil prices tell us how investors assess the risks of oil supply dislocations as a result of the war. Movements in equities are a useful proxy for gauging investor sentiment—and, by extension, public sentiment—surrounding the war with Iran (or any other major event).

Wall Street responses are by no means a measure of information accuracy, but they do provide context for the media narratives by which the details surrounding the war are presented.

Ironically, the one asset class which has not performed well during the entire war is one we would expect to be doing extremely well: gold and precious metals.

Gold has long been considered as a hedge against inflation and geopolitical risk. Especially when war breaks out, we typically expect the price of gold to rise, as it did during the opening stretch of Russia’s invasion of Ukraine.

However, after a fleeting “flight-to-safety” moment at the very beginning, as Wall Street sentiment on the war has soured, gold as well as silver prices have dropped.

What has been the preferred “flight-to-safety” investment as the war with Iran has unfolded? Suprisingly, it has been dollars. On forex markets the Dollar Index has been climbing steadily since the start of Operation Epic Fury.

It is worth noting that forex investors responded to Trump announcing “productive” talks with Iran yesterday morning by dumping dollars. Peace prospects apparently do not contribute to the strength of the dollar.

These counterintuitive asset movements in response to evolutions in the war lend a vital perspective to assessing events as they unfold, as they are a constant reminder to check assumptions and question narratives. We do not expect gold to lose value during a geopolitical crisis, and during a war especially. We do not expect the dollar to become an attractive forex play when the United States decides to start a war. Yet these things have happened.

Whatever cherished assumptions and narratives people think are true about the Middle East as well as Donald Trump, people do well to check those underlying assumptions and question those prevailing narratives.

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Nobody Knows

The challenge of chaos and confusion is that they make any sort of rational extrapolation of current events impossible. While we can assess probable outcomes if certain shifts are maintained, we can have no confidence that any shift will be maintained. Events just of the past few days have demonstrated just how fluid things continue to be within this war.

Will there be a peace deal struck between the Trump Administration and the Khamenei regime in Tehran? Nobody knows.

Are there actual talks taking place between members of the Khamenei regime and the Trump Administration? Nobody knows—certainly nobody outside of the Administration or the regime.

Will this war end in a geopolitical victory for Donald Trump, a defeat, or a stalemate? Nobody knows. There are simply too many unknowns (both known and unknown) to allow us to assess with any degree of confidence how they will get resolved. We do know that partisan assessments have already decided that President Trump has already either won or lost this war (depending on the political orientation of the one doing the assessing), but that sort of goal-seeking exercise sheds no real light on how much geopolitical influence Donald Trump and the United States might have gained or lost as a result of this war.

Will Iran’s moves compel the Arab states to move closer to the US and Israel, or to Iran? Nobody knows. Much hinges on whether the Arab states in the Persian Gulf region determine the dangers threatening their countries are more the handiwork of President Trump or of the Iranian regime.

If President Trump emerges from this war with a clear geopolitical win, it is reasonable to assess that perceptions of American strength and dominance worldwide will increase. Yet what if the outcome is not a clear geopolitical win? Will American strength be seen as diminished?

If the mullahs in Tehran survive this war and remain in control of Iran, is that enough for them to claim victory? It certainly seems likely they will at least make the claim, although the credibility of that claim is likely to be at least problematic.

If the mullahs in Tehran remain in control, does that mean the war has ended in a draw? Certainly that is a tempting conclusion to reach.

Will there be a popular uprising in Iran that topples the Khamenei regime? President Trump called for one in his very first address after the start of Operation Epic Fury, and there is little doubt that he would like to see the Iranian people dismantle the regime. However, as of this writing, no insurgency has erupted within Iran.

Could the bombings end, the kinetic operations cease, and there be a space of some months before a popular insurgency displaces the Khamenei regime? We cannot know if that would happen, although is certainly one possible scenario. If during the summer months the Khamenei regime were overthrown, President Trump would arguably deserve at least some credit for crafting an opportunity for the Iranian people to rise up.

Yet we also cannot dismiss the possibility that the mullahs remain in charge, and that there is no insurgency. We cannot dismiss the possibility that such an outcome may diminish Donald Trump’s overall political capital, both domestically and globally.

Virtually every conceivable scenario for what happens next in this war remains very much on the table. Virtually every conceivable scenario could be what happens next in this war.

Which of those scenarios will we see unfold? Nobody knows.

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The fog of war has not stopped elements of the chattering class across both corporate and alternative media from posturing and pontificating about the significance of this or that aspect of Operation Epic Fury. The fog of war has stopped those elements of having anything more substantive than their own opinions—all of which combined are not worth enough to make a down payment on a free hot dog.

Wars are messy, unpredictable things. The only rational basis for analyzing a war as it unfolds is the often-maligned but timeless observation of former Secretary of Defense Donald Rumsfeld:

Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.

Any “analysis” which is not grounded in Rumsfeld’s epistemological humility is, regardless of who is spewing it forth, little more than arrant nonsense, and should be dismissed as such.

When we look at the “known knowns” of this war, we see that the US and Israel are continuing to bomb Iranian targets, Iran is continuing to launch retaliatory strikes in nearly every direction, not discriminating between Arab states and US/Israeli forces, and the Strait of Hormuz is very much a contested waterway. We know that the Iranian people have not risen up against the regime—yet. We know that the Assembly of Experts has selected former Supreme Leader Ayatollah Ali Khamenei’s son Mojtaba to succeed him—but has as of this writing not been seen in public nor even on television. We know that the IRGC in particular remains defiant and bellicose.

As for the “known unknowns”, we do not know with certainty the logistical limits of the United States and Israel. We do not know if Mojtaba Khamenei is severely injured, or if he is even alive. We do not know if Iran is holding back a reserve of missiles and drones for a particular attack on either the US or Israel. We do not know if the Arab states will attack Iran.

As for the unknown unknowns, they remain the impenetrable fog of war which surrounds every conflict. We cannot assess them because we cannot, by definition, even identify them.

Where does that leave any understanding of the war thus far? At present, we can say little more than “it’s not over yet.”

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The Battle For The Strait Of Hormuz

While it might be a stretch militarily to classify the contest taking place for control over the Strait of Hormuz a “battle”, that maritime choke point remains a primary combat zone, and the one which presents the greatest geopolitical ramifications.

What we know is that Iranian drones are continuing to attack oil tankers in an around the Persian Gulf, with a US-owned oil tanker being hit by a sea drone two nights ago.

In the preceding 24-hour period, as many as six vessels were hit by Iranian kamikaze drones.

What may be even more significant than the attacks on civilian shipping, however, are the drone attacks on Arab oil infrastructure around the Persian Gulf. At the same time Iranian drones were attacking six civilian ships, a drone strike was observed against the storage tank farm at MINA Petroleum Facility on the Port of Salalh in Oman.

Attacks such as that are a continuation of a pattern of Iranian aggression against Arab nations that commenced as soon as Iran began retaliating against US and Israeli air strikes, launching major missile barrages against the United Arab Emirates while also targeting Qatari and Saudi natural gas and oil refining facilities.

In the first public statement attributed to newly-installed Supreme Leader Mojtaba Khamenei, Iran intriguingly denies attacking civilian infrastructures, insisting that its attacks are limited to US bases only:

In the recent assault, some of these military bases were utilised; naturally, as we had clearly warned in advance, and without committing any act of aggression against those regional countries themselves, we have only targeted the US bases there. After this, we will have no choice but to continue this course of action. Though, we remain committed to the necessity of friendship with our neighbors.

Arab energy production facilities are not “US bases”, and there has not been any evidence Arab states are persuaded by either the attacks or the regime’s rhetoric to push US forces out of the region.

In that same address, Mojtaba Khamenei explicitly called for Iran to continue exerting control over the Strait of Hormuz and blocking oil traffic from leaving the Persian Gulf.

Iran’s declared position is indisputable: they mean to use the interdiction of maritime traffic through the Strait of Hormuz as a pressure tactic to compel the United States to stand down its forces and cease Operation Epic Fury.

President Trump’s position is equally indisputable: Iran’s efforts to blockade the vial waterway will be met with force. If necessary, the US Navy will soon begin escorting vessels through the passage to ensure oil cargoes are able to be delivered.

The disruption has led President Trump to consider offering naval escorts to ships passing through the Strait of Hormuz, in the hopes that military protection could clear up the gridlock.

“When the time comes, the U.S. Navy and its partners will escort tankers through the Strait if needed,” the president told reporters Monday. “I hope it’s not going to be needed, but if it’s needed, we’ll escort them right through.”

But administration officials have suggested they aren’t prepared to start carrying out naval escorts just yet. Energy Secretary Christopher Wright said this week “it’ll happen relatively soon, but it can’t happen now,” and pointed to the end of the month as a possible timeline.

Thus far, President Trump’s reassurances have helped restrain the rise of benchmark crude oil prices, but were not able to keep Brent Crude from once again breaching the $100/bbl threshold on Friday.

Iran’s efforts to disrupt Persian Gulf oil production have indisputably succeeded in raising global oil prices. As I have observed multiple times, we are going to have a pronounced inflationary surge in March.

Because of that inflationary surge, Iran’s regional pressure tactics in this war—and indeed the war itself—are catalyzing global consequences.

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The Chinese Connection

The global scope of Operation Epic Fury’s ultimate impact is made unmistakable by last week’s emergence of lengthy gas lines in China, where the people are facing significant gasoline price increases.

The price rises are not illusory, as the gas lines are being occasioned by official announcements from Beijing raising retail price caps on gasoline and diesel fuel. China has bluntly told its citizens that energy prices are going to rise dramatically, producing an oil shock akin to the ones infamously experienced by the United States during the 1970s, even though Iran has gone to some lengths to keep oil flowing to the Middle Kingdom.

Remarkably, Beijing’s efforts to stockpile oil over the years are proving an incomplete buffer to Persian Gulf oil disruptions. China has the largest onshore crude stockpiles in the world, but that amount provides only approximately 2-3 months of refinery demand. Japan and South Korea, two other nations greatly exposed to Persian Gulf oil production, have crude stockpiles for over six months of refinery demand.

Much of China’s vulnerability comes from scale. China is the largest oil importer in the world by far, and has made a point of buying as much sanctioned oil from Iran, Venezuela, and Russia as it can. Consequently, China has been Iran’s principal customer over the years, accounting for as much as 90% of Iran’s total oil exports.

China’s interest in Iranian crude has been a driving force behind China’s efforts to build power and influence in the Persian Gulf, including agreeing to help Iran rebuild its air defenses after last year’s Twelve Day War with Israel.

China’s interests in Iranian crude may also have been one of the motivating factors behind President Trump’s decision yesterday to attack presumptively “military” targets on Iran’s Kharg Island, where 90% of its oil export operations take place.

The decision to strike at Kharg Island illustrates the risk many pundits invite with interpretations of unfolding events, as a number of pro-Trump commentators pointed to a lack of strikes there as demonstrative of President Trump’s strategic finesse and tactical granularity in prosecuting Operation Epic Fury.

Many folks are deeply confused about the significance of yesterday’s refinery strike. It didn’t damage Iran’s ability to export oil, since the refinery strike on Tondgouyan didn’t affect the country’s export facilities like Kharg Island (more on that in a moment). It was a refinery for domestic fuel. Hitting Tondgouyan hit the IRGC’s ability to keep its trucks and war machinery running, and undermined the regime’s social compact— selling fuel to its own population

President Trump was not threatening Iran’s global oil exports—until he did.

The reality is that Kharg Island has always been a potential target, simply because of its pivotal role in Iran’s oil economy. The terminal’s vulnerability was something I specifically highlighted early on, when the media rumor mill was rife with speculation that Saudi Arabia was on the verge of joining the US and Israel in launching attacks on Iran.

More ominously, Saudi Arabia is reported to be weighing attack options against Iran’s oil infrastructure.

Saudi Arabia would target “Iranian oil facilities if Iran mounts a concerted attack on Aramco,” the source tells AFP, referring to the state oil giant.

We should note that Saudi Arabia does have attack options. Global Firepower ranks their air force as the 7th most powerful in the world—well ahead of Iran’s.

Moreover, Iran has several vulnerable facilities within easy reach of Saudi Arabia—not the least of which is the oil terminal at Kharg Island, which processes roughly 95% of Iran’s oil export volumes.

While Saudi Arabia has not (yet) launched any air strikes of its own against Iran, the vulnerability of Kharg Island to air strikes has always been part of the combat environment for this war. Until yesterday, prevailing wisdom was that disrupting Iran’s oil production to that degree carried too great a geopolitical risk to make strikes against the island worthwhile.

Analysts have said that the prospect of a U.S. move to seize Kharg Island, a strategically vital hub often referred to as Iran’s “oil lifeline,” is considered extremely high risk, both from a geopolitical and economic standpoint.

The five-mile-long coral island, which is located about 15 miles off the coast of mainland Iran in the waters of the northern Persian Gulf, has been left untouched through nearly two weeks of U.S. and Israeli-led strikes against Iran.

The Trump administration has discussed seizing the island, according to an Axios report on March 7, citing four unnamed sources with knowledge of the discussions.

Was Iran’s determination to keep supplying oil to China a factor in President Trump’s decision to launch air strikes against Kharg Island? There has been no public reporting saying that quiet part out loud, but the inference is obvious and even unavoidable.

However, we should also look at events outside of the Persian Gulf region which may have tipped the risk scales in favor of attacks on Kharg Island.

In yet another demonstration of its growing facility in drone warfare, as the US was launching Operation Epic Fury, Ukraine launched yet another drone strike on the Russian oil terminal at Novorossiysk, on the Black Sea. While Russia has been predictably tight-lipped about the extent of damage, Reuters has reported that the Sheskharis oil terminal suspended loading operations for at least a few days as a result of the attacks, and other media reports suggest that the damage inflicted on the terminal was significant.

Ukrainian outlet Exilenova Plus reported on Telegram that port infrastructure in Novorossiysk is on fire.

An analysis by Astra from videos posted by Exilenova and eyewitnesses on social media suggests that it is the Transneft Sheskharis loading terminal on the east side of the bay that is on fire.

This is not the first attack on the Sheskharis terminal—it was hit in November last year, along with Russian energy export infrastructure at the nearby Tuapse and Temryuk ports.

Remember, China is a principal buyer of sanctioned oil, which is to say it is a primary customer not just for Iran but also for Russia—and Russia’s own export operations are experiencing their own duress, courtesy of the war in Ukraine.

At the same time, yesterday Sweden has seized yet another “shadow fleet” tanker, ships upon which Iran and Russia depend to carry sanctioned oil to their customers—which is to say, to China. This was Sweden’s second such seizure this month, having earlier detained the cargo ship Caffa.

On March 1, Belgium seized the Ethera, a shadow fleet tanker presumably falsely flying the Guinean flag.

These are seizure operations which have occurred just since the start of Operation Epic Fury.

While we should not overstate the immediate impact of either the temporary disruption of loadings at the Sheshkaris terminal or the loss of a couple of shadow fleet tankers on China’s overall oil imports, these events are indicative of a measure of stress being imposed on sanctioned oil flows worldwide, oil flows which primarily go to China.

Have global efforts to curtail sanctioned oil flows put enough pressure on China’s oil consumption to where disrupting Kharg Island operations has a maximized impact on China? That is speculation, but what is not speculation is that China buys up most of the world’s sanctioned oil, that China buys virtually all of Iran’s oil production, and that having to buy that same volume of unsanctioned oil would be a substantial cost increase to China—at a time when China is already grappling with persistent deflation and an increasingly sclerotic export sector, and can ill afford the disruptive impacts of a major oil price shock.

Regardless of the reasons why, President Trump’s air strikes on Kharg Island appear to have come a time when they will have the greatest geopolitical reverberations worldwide.

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Is Mojtaba Khamenei Even Alive?

The fog of surrounding this war with Iran is without a doubt the thickest where questions about Iran’s new Supreme Leader, Mojtaba Khamenei, are concerned.

Bizarrely, media sources cannot at this time even confirm if Mojtaba Khamenei is alive or dead. While orchestrated demonstrations of support for his accession have occurred in several cities, Mojtaba, the son of slain former Supreme Leader Ayatollah Ali Khamenei, has yet to be seen in public, or even to make a televised address.

Even those presumably within the government and close to the inner circles of power are not claiming to have seen or spoken with the younger Khamenei. The one consistent theme in what has been reported about his status is that he was injured in the initial attacks on February 28.

Iran’s new Supreme Leader Mojtaba Khamenei has been injured but is “safe and sound,” the son of President Masoud Pezeshkian said on Wednesday, offering one of the few official explanations for his absence from public view since being appointed last week.

Yousef Pezeshkian, who is also a government adviser, wrote on Telegram that he had asked contacts about reports of Khamenei’s injury and was told he was safe.

“I heard news that Mr. Mojtaba Khamenei had been injured. I have asked some friends who had connections. They told me that, thank God, he is safe and sound,” he said.

Even Mojtaba Khamenei’s recent remarks were a written statement actually read by presenters on state news media and not delivered by Khamenei himself.

That he is apparently severely injured or even dead begs the question of why he was chosen to be Supreme Leader.

There have also been persistent rumours that he was killed or left in a coma from the attack, which the written address has done little to alleviate.

Hossein Alizadeh, a former Iranian diplomat, put the question directly: “If his injuries are so severe that he cannot even record his voice, why was he chosen?”

That is not an idle question. Even as the Assembly of Experts was struggling to gather to elect a new Supreme Leader, criticisms of the younger Khamenei were in abundance, not the least of which has been his conspicuous lack of significant religious credentials.

These gaps in his resume have fueled speculation that Khamenei was the desired choice of the Islamic Revolutionary Guard Corps, who some believe effectively ordered the Assembly of Experts to elect the younger Khamenei.

Even if Khamenei is still alive and not in a coma, the manner in which he was tapped to be the Supreme Leader invites the speculation that he is little more than an IRGC puppet, and that his ability to rule hinges on his continued good relations with the IRGC leadership.

What those pledges have also made clear is that the IRGC is now the dominant power in Iran, regardless of whom formally holds the supreme leadership title – and that this would probably be true whether Mojtaba was healthy and present or wounded and absent.

“The supreme leader is no longer really supreme,” said Ali Vaez, an Iran expert at the Crisis Group think tank. “It is really the Revolutionary Guards who are running the show – and without whom Mojtaba would not be able to preserve his power.”

He added: “Both because he needs them to push back against his foreign enemies, and because he needs them to keep the population at bay.”

If that is indeed the case, the Iranian regime’s theocratic nature has been significantly diluted, with a more base (and more kleptocratic) authoritarianism dressed up as Islamofascism supplanting Shi’a conservatism.

However, if Mojtaba Khamenei is not alive, or is in a coma as some have speculated, the IRGC foisting him on the Assembly of Experts presents a conundrum for the IRGC leadership should that ruse be revealed to the Iranian people.

The existing power brokers in the regime besides Khamenei, men like Secretary to the Supreme National Security Council Ali Larijani, cannot become Supreme Leader because, both within Iran’s constitution and within the doctrines of Velâyat-e Faqih (ولایت فقیه in Persian) developed by the Islamic Republic’s founder Ayatollah Ruhollah Khomeini, the Supreme Leader must be a senior and substantive cleric. Mojtaba Khamenei was reportedly believed to have exceedingly thin religious credentials, but Larijani has no religious credentials.

The Supreme Leader might be dependent upon the IRGC infrastructure to prop up his rule, but the IRGC leadership needs a compliant Supreme Leader because they themselves cannot take on that role.

What becomes of IRGC political credibility even among Iran’s more conservative elements if they are found out to have so corruptly tainted the succession process by imposing either a coma patient or a corpse as Supreme Leader of the Islamic Republic?

In the Khomeini doctrine, the Supreme Leader is to be a sort of religious guardian, able to keep the government and the people moving along lines compliant with Islamic law and Shi’a religious doctrine. A Supreme Leader who is quite literally just a poster on a stage seems quite the blasphemous mockery of the role and the Islamic theology behind it.

The IRGC leadership may have imposed Mojtaba Khamenei on the Assembly of Experts in a bid for time, hopefully time enough for the US and Israel to exhaust their logistics and will to wage war, but if that time runs out, what becomes of the regime then?

Could that be the moment when the Iranian people decide the IRGC has got to go, no matter what? Could exposure of IRGC mendacity be the needed catalyst to fuel secular regime change in Iran?

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We Still Do Not Know

As Operation Epic Fury proceeds into its third week, what is clear is that the “known unknowns” far exceed the “known knowns” regarding both the war and its proximate outcomes for the Middle East and for the world. After two weeks of war, rumors of war, and reporting on war, we still do not know how this war ends.

We still do not know if the regime will fall.

We still do not know who would take over if the regime does fall.

We still do not know how long the war will last.

We still do not know how long before the price of oil comes back down to prewar levels.

We still do not know if Saudi Arabia, the United Arab Emirates, and other Arab states will join the war against Iran.

We still do not know what will become of Iran once Operation Epic Fury finally ends.

As is eternally true of every event, we still do not know what are the “unknown unknowns.” Every question for which we do not have a clear answer is almost surely matched by multiple questions we have not yet thought to even ask.

Will the military victory President Trump has almost certainly already secured be overmatched by geopolitical defeat? We cannot know, and we cannot even plausibly gauge how likely that scenario might be. The counterfactual is also plausible, that President Trump secures not just military but geopolitical victory, and the outcome of this ginormous US and Israeli flex is an exponential expansion of US power and influence in the world.

It is plausible to believe that expanding US power and influence is at the core of why President Trump launched Operation Epic Fury, but having that as a goal is not of itself a guarantee that goal will be achieved.

Would geopolitical victory make Operation Epic Fury a right decision by President Trump? That will ultimately be a matter of individual opinion.

Those who desire America have a more isolationist foreign policy will not see the US achieving greater engagement with the world as a good thing.

Those who believe that any conflict in the Middle East is yet another illegal and endless foreign war will not see Operation Epic Fury as a good thing or even a necessary thing.

Those who desire to see the United States fit more comfortably into a globalist “rules based order” anchored by supranational institutions such as the EU and the United Nations will not see an accretion of power to the US as a good thing.

Russia's Vladimir Putin and China’s Xi Jinping, both of whom have hegomonic ambitions of their own, are almost certainly rooting for US failure in Iran.

Those who want to see America First in the world, either as an outright hegemon or as primus inter pares within a globalist rules based order, very likely view Operation Epic Fury favorably.

Yet these various perspectives do not change the realities of Operation Epic Fury itself, the immediate impacts it is having on Middle Eastern nations, or the ultimate impacts it will have on the world.

Whether the decision to launch this war was good or bad, righteous or wicked, it is a decision that has been made. Decisions having been made, and actions having been taken, reactions must now unfold, and consequences must emerge.

All that we really know about what those consequences will be is just this: This war is not over yet.

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Perhaps unsurprisingly, the fog of war has only increased in that week. Many of the lingering questions from the outset of the war are no closer to being answered.

Can Iran keep the Strait of Hormuz closed?

Will the Iranian regime survive?

Will the Arab states join the war against Iran?

At present, even after a week of emerging information, the answer to each of these questions remains “we do not know.” There are signs and hints, but what is known is in every instance less than conclusive—and information is still emerging, putting the constant caveat of “as of this writing” on everything covered here.

Still, with more speculation than fact swirling around in the media, we do well to keep a close eye on the facts that we do know.

The information reported here is current as of Monday evening, March 9. Circumstances may easily overtake what has been reported thus far.

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Can Iran Keep The Straight Of Hormuz Closed?

The most pressing global question is without a doubt the status of the Strait of Hormuz, easily the most vulnerable and most crucial maritime choke point affecting global oil flows.

Last week, IRGC commanders threatened to burn any tanker which attempted to transit the vital waterway between the Persian Gulf and the Gulf of Oman.

“Any ship that seeks to pass through the Strait of Hormuz we will set on fire,” Brigadier General Ebrahim Jabbari said in remarks carried by Iranian media on Monday.

Understandably, a number of tanker captains and their crews were reluctant to chance an Iranian attack, with the result that the seas on either side of the Strait quickly filled with blockaded tankers.

Even as those threats were being made, reports of oil tankers coming under attack were emerging.

So far three commercial ships have suffered direct hits. This morning come reports that the tanker Stena Imperative was temporarily on fire after being hit at port in Bahrain. Over the weekend a sailor in the engine room of the tanker MKD VYOM died when an Iranian rocket hit it off Oman. A much smaller tanker, the Skylight, was also hit and evacuated while on fire. Friendly fire? According to TankerTrackers, Skylight had been anchored 5 miles north of Khasab, Oman for the past week and has a history of being used by Iranian ships for bunkering, or refueling.

On March 5, Middle East Monitor reported that Iran’s Islamic Revolutionary Guard Corps claimed a successful attack on a US ship in the Persian Gulf.

The Guards’ Public Relations Department said in a statement carried by the state news agency IRNA that Iranian naval forces “successfully targeted an American oil tanker in the northern Persian Gulf.”

Over this past weekend, additional reports emerged of an Iranian attack on the Marshall Islands-flagged Louis P near the Saudi port city of Jubail.

The IRGC quickly claimed credit for the attack.

“An oil tanker operating under the commercial name ‘Louise P’, flying the flag of the Marshall Islands and considered one of the assets of terrorist America, was struck by a drone in the central Persian Gulf,” the IRGC statement said.

While it was unclear this time last week how successful Iran would be in interdicting traffic through the Strait of Hormuz, it is clear that Iran has been determined to disrupt vital oil traffic in that passage.

Benchmark oil prices have predictably soared as a result of both the real and threatened disruptions to Middle Eastern oil flows, with Brent Crude flirting with $120/bbl over the weekend, while West Texas Intermediate moved past $110/bbl before retreating below $100/bbl by Monday morning.

By the end of the day Monday Brent Crude had retreated to $93/bbl, and West Texas Intermediate had descended to $86/bbl.

Equally predictably, before Monday’s price freefall there had been considerable speculation that oil prices will move even higher, as Iran proved to have been quite effective in stopping tankers passing through the narrow strait.

Goldman Sachs had anticipated that flows of crude through the strait would fall to 15% of normal levels but Iran’s effective blockade on tankers passing through the narrow waterway mean that only 10% of oil cargoes that usually transit the trade route have been able to pass.

In a bid to alleviate global price pressures, the United States responded by granting India a 30-day waiver to purchased otherwise sanctioned Russian crude.

Whether the waiver was a significant factor in Monday’s oil futures retreat is of course not knowable at this time.

Equally uncertain is whether or not Iran is still able and intent on closing the Strait of Hormuz to maritime traffic. Ali Larijani, Secretary of the Supreme National Security Council and Iran’s top security official, threw considerable shade on the prospect of the Strait being open so long as hostilities were ongoing.

“It is unlikely that any security will be achieved in the Strait of Hormuz amid the fires of war ignited by the United States and Israel in the region, especially if it is designed by parties that were not far from supporting this war and contributing to fueling it,” Larijani said in a post on X.

Despite such remarks, oil prices still retreated yesterday afternoon.

In the short term, one clear beneficiary of the war with Iran is Russia, as its benchmark Urals Crude has moved to its highest prices in five years, reaching $90.97/bbl on Friday, March 6..

Will oil prices once again go higher? If Persian Gulf oil is found to be still cut off, absolutely. While oil prices did not hold yesterday, it would be facetious to mistake volatility for a reversion to the mean. So long as the Strait of Hormuz remains contested we should anticipate further benchmark crude price volatility, as well as price increases.

Could the world see a return to $100/bbl oil, or even a spike to $150/bbl? We cannot rule out either one, although as of this writing (Monday evening, March 9), both possibilities are a good deal less likely than they were just twelve hours ago.

However, the key word here is “if”. We do not know if or how long Iran can or will keep Persian Gulf oil bottled up. If the world believes the Strait of Hormuz is open to maritime traffic, then oil prices are less likely to surge again as they did over the weekend.

Speaking with CBS News correspondent Margaret Brennan on Sunday’s “Face the Nation”, US Energy Secretary Chris Wright expressed confidence that the oil price surge was strictly temporary, and that a quick end to the war would mean a quick restoration of previous price levels.

They shouldn’t go much higher than they are here because the world is very well supplied with oil. There’s no energy shortage at all in the Western Hemisphere. The United States is a net exporter of oil, a large net exporter of natural gas. But refineries in Asia and Europe are seeing an interruption from the normal crude flows. But there is massive energy stores around the world.

What you’re seeing is emotional reactions and fear that this is a long-term war. This is not a long-term war. It’s a temporary movement.

Sorry, go ahead. Temporary movement?

No, I’m saying, look, we’ve seen previous administration have done everything they could. They’ve begged, bartered and bribed the Iranian government to stop its nefarious activity, stop its murderous behavior. And it simply hasn’t worked. And now they’re expanding missile and drone program that are rapidly growing to protect their desire to build a nuclear weapon. We’re going to cross a threshold where we can’t put them back in the box. Now is the time to end their risk to America and the world.

Is Secretary Wright correct in his assessment?

Certainly with respect to the weekend surge into triple digits, he was spot on. Whether Secretary Wright is correct over the long term we do not know, and we cannot know. As with all war, we will not know when this war will end until it ends. Until it ends, the world can look forward to elevated oil prices, constituting an oil shock for many parts of the world.

For his part, President Trump on Monday sent a similar signal to Secretary Wright’s, stating in a telephone interview with CBS News that he felt Operation Epic Fury was very nearly complete.

“I think the war is very complete, pretty much,” the president said, speaking from his Doral, Florida, golf club. “[Iran has] no navy, no communications, they’ve got no air force. Their missiles are down to a scatter. Their drones are being blown up all over the place, including their manufacturing of drones.”

Much of the world no doubt breathed a sigh of relief upon hearing that assessment from Donald Trump. $90/bbl oil is a major energy price increase for most of the world's economies. $100/bbl is an oil price shock for most countries.

Deeloping economies dependent on energy imports are especially vulnerable to an oil price shock. Many sub-Saharan African nations in particular would face potentially severe price dislocations should there ever be an extended closure of the Strait of Hormuz. The global ramifications of Iran’s retaliatory actions have been not only significant, but potentially extreme.

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Will the Iranian regime survive?

One needs no particular expertise in geopolitics or economics to recognize that the future of global oil prices is closely connected to the future of the Iranian theocratic regime.

That we are speaking of the future of the regime at all at this point is itself rather remarkable. As I wrote at the very beginning of Operation Epic Fury, what was unfolding looked for all the world like the destruction of the Islamic Republic.

President Trump, in announcing the operation on video put out on Truth Social, very specifically called for the Iranian people to overthrow the regime.

Finally, to the great, proud people of Iran, I say tonight that the hour of your freedom is at hand. Stay sheltered. Don’t leave your home. It’s very dangerous outside. Bombs will be dropping everywhere. When we are finished, take over your government. It will be yours to take. This will be probably your only chance for generations.

However, the National Intelligence Council had assessed a fairly low probability of regime change being an outcome of military operations even before Operation Epic Fury commenced.

The report, completed about a week before the United States and Israel initiated the war on Feb. 28, outlined succession scenarios stemming from either a narrowly tailored campaign against Iran’s leaders or a broader assault against its leadership and government institutions, the people familiar with its findings said. In both cases, the intelligence concluded that Iran’s clerical and military establishment would respond to the killing of Supreme Leader Ayatollah Ali Khamenei by following protocols designed to preserve continuity of power, these people said.

The prospect of Iran’s fragmented opposition taking control of the country was described as “unlikely,” said the people, who spoke on the condition of anonymity t o discuss a classified report.

President Trump last Wednesday rather darkly hinted that any future Iranian Supreme Leader would quickly be killed by either US or Israeli attacks.

“Their leadership is just rapidly going. Everybody that seems to want to be a leader, they end up dead,” Trump said on Wednesday.

Despite the ominous and bellicose commentary, by the week’s end the Wall Street Journal was reporting that President Trump was shifting his war aims from regime change in Iran to a “surrender” by the regime.

“Even as the conflict has escalated into a regional crisis involving more than a dozen countries, President Donald Trump appears to be refining the rationale and endgame of the war on the fly, according to current and former US officials and allied diplomats,” the report said.

“It will be impossible to replicate the model in Iran, analysts say. Unlike in Venezuela, where the US was dealing with a hollowed-out petrostate, Washington is confronting an entrenched theocracy backed by a vast security apparatus that is built to preserve the system even after the loss of senior leaders,” the report added.

President Trump himself appeared to acknowledge an improbability of regime change in a CNN interview, where he stated openly he was prepared to accept a religious leader for Iran.

Trump also said he was open to having a religious leader in Iran. “Well I may be yeah, I mean, it depends on who the person is. I don’t mind religious leaders. I deal with a lot of religious leaders and they are fantastic,” he said.

And pressed on if he is insisting there needs to be a democratic state, Trump told CNN, “No, I’m saying there has to be a leader that’s going be fair and just. Do a great job. Treat the United States and Israel well, and treat the other countries in the Middle East — they’re all our partners.”

At the same time, on Friday Trump called for “unconditional surrender” by Iran.

Inside Iran, Iran’s Assembly of Experts, the clerical body tasked with selecting the next Supreme Leader, has selected Ayatollah Khamenei’s son Mojtaba to succeed him.

A statement from the Assembly of Experts — the panel of Shia clerics responsible under Iranian law for choosing the country’s top leader — said Mojtaba Khamenei had been selected as the third leader of the Islamic Republic, according to reports from IRIB state TV and the Fars, Tasnim and ISNA news agencies.

While Mojtaba has been officially chosen, it remains unclear if his accession to the position of Supreme Leader is sufficient to ensure the future of the regime.

President Trump himself has dismissed Mojtaba Khamenei as a “lightweight” who would not bring peace to Iran. Trump has repeatedly insisted he be involved in the selection of Iran’s next leader, a condition which would obviously exclude the junior Khamenei.

Intriguingly, at the outset of Operation Epic Fury there was a substantial body of speculation that Mojtaba Khamenei would not be tapped as his father’s successor, as he is widely viewed inside the regime as lacking key credentials.

The first challenge is likely to be constitutional requirements. As per the Islamic Republic’s constitution, Assembly of Experts appoints Khamenei’s successor. Candidates must have ‘political experience’ as per the law. Mojtaba reportedly fails on this account, the institute noted. This is because despite running the Office of the Supreme Leader, de facto, he’s had no formal political roles in the regime.

If Mojtaba were to be the next Supreme Leader it would go against the Shi’a Islamic convention, which notes that blood lineage for the mantle is exclusively reserved for 12 divinely ordained Shi’a Imams. Khamenei himself was elected supreme leader in 1989 over Khomeini’s influential son, Ahmad, due to this. In 2023, Khamenei had said in a speech “dictatorship and hereditary government are not Islamic,” as per US-based think tank, Stimson Center.

They also reported that Ayatollah Mahmoud Mohammadi Araghi, a member of the Assembly of Experts revealed in 2024, “The news reached the leader that the experts are investigating the case of Mojtaba’s leadership. The leader said, ‘What you are doing raises suspicions about the leadership’s hereditary issue.’ So the investigation was not allowed. … On another occasion, when they sought permission from the leader to investigate a person related to him, he responded, ‘No, draw a line under this issue’.”

As it became clear that Mojtaba would become the next Supreme Leader, speculation shifted to the possibility that the IRGC effectively forced his selection on the Assembly of Experts.

This is not a routine succession. It is a wartime decision shaped by the security state, and it raises serious questions about constitutional procedure. The priority appears to be speed and control, as the Islamic Republic faces attacks from outside and a leadership vacuum at the top.

If this view is correct, then the IRGC is now functioning as a sort of latter-day Persian Praetorian Guard, arbitrarily selecting the next ruler of the empire based on what fits their agenda, not what the rest of the government mandates and expects.

If this view is correct, then Mojtaba is arguably an IRGC puppet, with the theocratic elements of the regime being correspondingly diluted in favor of base authoritarianism.

At a minimum, Mojtaba Khamenei is broadly understood to have deep ties to the IRGC, and his background in security affairs may outweigh his problematic clerical credentials. His elevation would seem to give the IRGC added prominence within Iranian leadership circles, at least for now.

At the same time, it is an open question as to how much “regime” is left for Mojtaba Khamenei to govern. Not only has much of the senior leadership been killed, but Israel and the US are moving on in their strike packages to Iran’s eeconomically and politically vital oil infrastructure, with several oil storage facilities around Tehran being targeted over the weekend.

Israel is also reportedly striking oil refineries as well.

An extended analysis on X suggests this is a strategic effort to both weaken the regime and undermine Iran’s nominal ally (and principal oil customer) China.

Energy infrastructure is the bloodstream of a regime’s war machine.

Strike the fuel… you slow the missiles.
Strike the depots… you choke the logistics.
Strike the energy grid… you weaken the entire system.

Aqdasiyeh was not widely known for oil storage in older public records… but the pattern is unmistakable. Earlier strikes hit facilities tied to fuel distribution across Tehran, including the Shahran depot.

Now the fires have reached deep into the capital.

For Beijing this is a nightmare scenario.

China relies heavily on Iranian oil flowing east through a fragile web of sanctions evasion, shadow fleets, and backchannel supply chains. When depots burn in Tehran… supply chains tremble in Beijing.

Every explosion in Iranian energy infrastructure sends shockwaves through the strategic calculus of the Chinese Communist Party.

If this is the strategic calculus for the US and Israel, that strategy could reverberate back into global oil markets even after the war ends. Given that Iran’s oil infrastructure is clearly being targeted, with multiple oil storage facilities around Tehran being hit over the weekend, we cannot dismiss the possibility this is the strategic calculus behind Operation Epic Fury, or a calculus very close to this.

If China is not able to purchase Iranian crude or refined products because Iran’s own energy infrastructure is obliterated, China will have to purchase crude from other countries, which will permanently bid up the price of oil. Even if market speculation is correct that China has bulked up its oil reserves over the past year, those reserves can only last so long before China is forced back into global oil markets to purchase crude.

If Israel and the US effectively end the Iranian regime by ending its capacity to extract, export, and refine oil, they will also effectively remove a considerable quantity of oil from global supply.

Even if the US and Israel do not destabilize the regime by destroying Iran’s oil infrastructure, whether or not an uprising by the Iranian people culminating in regime change leaves the status of Iran’s oil wells and oil refineries very much up in the air. There exists the possibility that regime change could result in a disruption of Iranian oil production, which would again remove a considerable quantity of oil from global supply.

Chris Wright may think there’s not an oil shortage now. Would he still think that if Iran’s oil spigot were permanently turned off?

Ending the Iranian regime and thereby ending China’s access to Iranian oil—or ending China’s access to Iranian oil and thereby ending the Iranian regime—is fraught with inflationary perils for the rest of the world.

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Will the Arab states join the war against Iran?

After soaring energy prices, perhaps the world’s greatest concern in the war with Iran is the potential for that war to expand and encompass other Persian Gulf states.

Already last week saw Qatar shooting down a pair of Iranian Su-24 bombers, marking the first time an Arab state has fired on Iranian targets since the Iran-Iraq war of the 1980s.

In the immediate aftermath of the initial strikes by the US and Israel, Iran had responded by quite literally spraying missiles and drones all around the Middle East, apparently indiscriminately, with over 200 drones and 137 ballistic missiles being launched at UAE alone.

There were additional reports of attacks on both Qatari and Saudi natural gas and refining facilities.

As Bernard Haykel, Professor of Near Eastern Studies at Princeton University, frames the situation, these attacks on civilian infrastructure are pushing the Saudis—and, by extension, the rest of the Arab states—into open confrontation with Iran.

Haykel explained that Riyadh had previously communicated a specific warning to Tehran: if Saudi Arabia remained neutral during a US-Israel conflict with Iran, its infrastructure must remain off-limits.

“The Iranians did tell the Saudis that if they faced an existential attack by Israel and or America, that they would attack Saudi Arabia,” Haykel said. “And so the Saudis said, if you do that and we’re neutral, we will join forces with the Americans and attack you.”

Even Iran’s northern neighbor Azerbaijan found itself on the receiving end of a drone attack, for which Azerbaijan’s President Ilham Aliyev promised retaliation.

“Today a terrorist act was carried out from the Iranian side against the territory of Azerbaijan,” Aliyev told a security council meeting.

Azerbaijan’s military “has been instructed to prepare and carry out retaliatory measures” and “placed on mobilisation level number one, and must be ready to conduct any operation”, he added.

In a bizarre illustration of the “fog of war” at work, Iran’s President Masoud Pezeshkian apologized for the attacks on Iran’s neighbors—even as more attacks ensued.

Over the weekend, a desalination plant in Bahrain was reported struck by Iranian drones. Iran’s public reply to the accusation was to blame the United States.

“The Iranian aggression randomly bombs civilian targets and causes material damage to a water desalination plant following an attack by a drone,” the ministry statement said.

Iran said it was the United States that set a precedent for such attacks when it targeted a water desalination plant on Iranian soil.

“The US committed a blatant and desperate crime by attacking a freshwater desalination plant on Qeshm Island,” Iran’s Foreign Minister Abbas Araghchi said in a post on X on Saturday.

“Water supply in 30 villages has been impacted. Attacking Iran’s infrastructure is a dangerous move with grave consequences. The US set this precedent, not Iran.”

The attacks on water desalination plants is a particularly dicey escalation, as they are a vital infrastructure for many of the Persian Gulf countries.

In Kuwait, about 90% of drinking water comes from desalination, along with roughly 86% in Oman and about 70% in Saudi Arabia. The technology removes salt from seawater — most commonly by pushing it through ultrafine membranes in a process known as reverse osmosis — to produce the freshwater that sustains cities, hotels, industry and some agriculture across one of the world’s driest regions.

It is not at all surprising, given this context, that the UAE President Mohammed bin Zayed Al Nahyan openly refers to Iran as an “enemy”. Thus far, that rhetoric has not translated into direct military action.

While the Arab states have not launched offensive military operations against Iran as of this writing, the rhetoric from Arab leaders has indisputably shifted against Iran. In what could prove to be an epic miscalculation, Iran may very well end up expanding the roster of nations seeking to attack it from the US and Israel to include some or all of the Persian Gulf states.

Will that happen? We will not know until it does, but the probability of Arab attacks on Iran is at present increasing and not decreasing.

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We Do Not Know

Despite what the chattering class across corporate and alternative media might present, we do not know how this war ends.

We do not know if the regime will fall.

We do not know who would take over if the regime does fall.

We do not know how long the war will last.

We do not know how long before the price of oil comes back down to prewar levels.

We do not know if Saudi Arabia, the UAE, and other Arab states will join the war against Iran.

Will the United States “win” this war? In most military respects, it already has. No matter what else transpires, Iran’s military has been shattered. Their capacity to launch missiles and drones at neighboring countries has been significantly degraded. Their leadership has been thrown into chaos.

Iran was already suffering from a collapsing economy before this war began, and the devastation of this war is only going to amplify the economic distress.

Would Iran count the regime surviving despite weeks of relentless air assault as a “victory”? Certainly we should expect Iran’s propaganda machine to promote such a narrative. Regimes do not generally stay in power by admitting defeat.

If an unbowed and unrepentant theocratic regime, especially one dominated by the IRGC, is the long-term outcome of Operation Epic Fury, its military successes may be overshadowed by far less favorable geopolitical outcomes. Military victory and geopolitical defeat are not mutually exclusive, and war in Iran may yet prove a potent reminder of that.

Can Iranians opposed to the Islamic Republic regime unite and overthrow that government? Potentially, but until their opposition elements do united into a common cause they likely do not pose a significant threat to the regime. The Islamic Republic regime is unquestionably vulnerable at the moment, the most vulnerable it has been in decades, but it has not become clear the Iranian people are ready, willing, and able to exploit that vulnerability to effect regime change.

With or without a unified opposition, Iran’s problems from before the war are still around, only more so because of the war. Everything that pushed the Iranian people to protests back in January is still very much an issue now. In terms of crises and issues facing the regime, not much has actually changed even with the war, except that every crisis and issue has gotten worse by an order of magnitude at least.

We do not know how this war will end. Even so, already it is clear that when Operation Epic Fury does end, for Iran it will not be the end of the crisis. It will not even be the beginning of the end. At most, it will be the end of the beginning.

2026 will not be a kind year to the Islamic Republic.

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Ayatollah Ali Khamenei is dead, as are many of Iran’s senior leaders, including many of those who were thought to be potential successors to Khamenei.

While the US and Israel have already succeeded in carrying out a decapitation strike for the ages, the joint operations are continuing. Ending the lives of Khamenei and other top Iranian leaders was a principle objective of Operation Epic Fury/Roaring Lion, but it has hardly been the only one. As Donald Trump made clear speaking from the White House during a Medal of Honor ceremony, the goal is to end Iran’s capacity to make mischief, period.

Our objectives are clear.

First, we’re destroying Iran’s missile capabilities, and you see that happening on an hourly basis, and their capacity to produce brand new ones, and pretty good ones they make.

Second, we’re annihilating their navy. We’ve knocked out already 10 ships. They’re at the bottom of the sea.

Third, we’re ensuring that the world’s number one sponsor of terror, can never obtain a nuclear weapon. Never going to have a nuclear weapon. I said that from the beginning. They’re never going to have a nuclear weapon. They were on the road to getting one legitimately through a deal that was signed foolishly by our country.

And finally, we’re ensuring that the Iranian regime cannot continue to arm, fund, and direct terrorist armies outside of their borders.

It is no exaggeration to say that President Trump has set a lofty bar for what he hopes to achieve.

For their part, the Iranian leadership is determined not to go gently into that good night. They are fighting back, although with uncertain levels of efficacy—the damage that has been done seems more likely to push the Arab states in the region to join forces with the US and Israel against Iran, and may have already done so.

While they have scant hope of victory, it is clear the Iranian regime has no thought of surrender.

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While the US and Israel are the countries attacking Iran, Iran has chosen to retaliate against the Arab nations of the Persian Gulf.

By yesterday afternoon, Iran had launched over 200 drones and 137 ballistic missiles at the United Arab Emirates alone.

“It is really a tough and serious moment,” said Cinzia Bianco, a visiting fellow at the European Council on Foreign Relations who focuses on the Gulf. “There was nothing that they valued more than that perception of safety — and they prided themselves on maneuvering politically and hedging to be basically on the good books of everyone.”

Dubai had cultivated close ties with Iran, partly in an effort to maintain its safe haven status; the Emirates is one of Iran’s largest trading partners. But not a single Gulf country was spared.

By this morning, Qatar reported shooting down a pair of Iranian Sukhoi Su-24 bombers. While these vintage aircraft date back to the days of the Soviet Union, they nevertheless remain aircraft capable of delivering bombs to targets. Qatar was quite naturally defending its airspace.

However, Iran has now accomplished the hitherto unimaginable feat of having an Arab state firing shots on the same side of a conflict as Israel. How the geopolitical ramifications of that play out we can only begin to imagine.

Separately, Iranian drone strikes are credited with disrupting Qatari natural gas production and Saudi oil refining.

On Monday, Iranian drones targeted a power plant and an energy facility in Qatar, the Qatari defense ministry said. Soon after, QatarEnergy, one of the world’s largest exporters of liquefied natural gas, said that it would halt production, a major shock that sent the price of natural gas soaring.

Earlier on Monday, Saudi Arabia’s energy ministry said that a fire had broken out at the Ras Tanura oil refinery in the kingdom’s eastern province after two Iranian drones were intercepted, causing fragments to fall. Some units of the refinery were shut down as a precautionary measure, it said. Five drones near the Prince Sultan Air Base, a military complex south of the capital of Riyadh, were also intercepted, the defense ministry said.

These attacks have not sat well with the Saudi Crown Prince Mohammed bin Salman, who has openly threatened joining with the US and Israel in attacking Iran in reprisal.

More ominously, Saudi Arabia is reported to be weighing attack options against Iran’s oil infrastructure.

Saudi Arabia would target “Iranian oil facilities if Iran mounts a concerted attack on Aramco,” the source tells AFP, referring to the state oil giant.

We should note that Saudi Arabia does have attack options. Global Firepower ranks their air force as the 7th most powerful in the world—well ahead of Iran’s.

Moreover, Iran has several vulnerable facilities within easy reach of Saudi Arabia—not the least of which is the oil terminal at Kharg Island, which processes roughly 95% of Iran’s oil export volumes.

Saudi Arabia does not project military power, as a rule, but with Iran’s air defenses all but obliterated by the US and Israel, if Saudi Arabia decides to end Iran’s oil economy, it has the means to do so.

Which again brings us back to the remarkable state of Middle Eastern affairs at the moment, where the Arab states are lining up on the same side as Israel against Iran. Apparently, the strongest geopolitical truism of all remains “the enemy of my enemy is my friend.”

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At the same time, Iran remains defiant.

Although the Wall Street Journal published a report yesterday indicating that the Iranian regime wanted to resume negotiations with Donald Trump, late last night Ali Larijani, part of the governing triumvirate running Iran while the clerical Assembly of Experts selects a new Supreme Leader, threw a bucket of cold water on that idea.

What Iran has done is threaten to blockade the Strait of Hormuz, the choke point between the Persian Gulf and the Gulf of Oman, beyond which lies the Arabian Sea, the Indian Ocean, and the world. A senior Islamic Revolutionary Guard Corps commander has said no oil will transit the Strait.

“Any ship that seeks to pass through the Strait of Hormuz we will set on fire,” Brigadier General Ebrahim Jabbari said in remarks carried by Iranian media on Monday.

This is no small threat. The Persian Gulf states account 20% of the oil consumed globally. Depriving the world of fully one-fifth of global oil demand would wreak havoc on oil markets.

China in particular has an interest in keeping Persian Gulf oil flowing, as it is the largest purchaser of Persian Gulf crude. Iran alone accounts for some 15% of China’s oil imports.

Yet Iran’s declared intent of shutting off oil traffic through the Strait of Hormuz is a problematic strategy, as it is not clear how Iran would put the interdiction into effect.

With the destruction of most of the Iranian navy it is debatable how well they can carry out this threat. They can go the Houthi route of firing on civilian tankers with anti-ship missiles, or they can try mining the Strait as they did in 1988—which resulted in Operation Praying Mantis, in which the US Navy destroyed one of Iran’s newest frigates (new at the time) and crippled the other, while also demolishing two of the three abandoned oil platforms they used as staging areas for naval activity.

Operation Praying Mantis stands out in particular as a demonstration of one of the more colorful aspects of American military mythology: “don’t f*** with America’s boats.” With Donald Trump unabashedly the most testosterone-fueled President since Theodore Roosevelt, it is most unlikely that any Iranian strategy which imperils America’s maritime resources would not receive an overwhelming response.

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Indeed, the US is already taking steps to prevent Iran from blockading the Strait, having targeted the Iranian naval base at Bandar Abbas and inflicting considerable damage.

Satellite imagery shows extensive damage to Iran’s naval base at Bandar Abbas, including depicting the IRINS Makran sea base-type ship on fire, following strikes as part of the ongoing U.S.-Israeli campaign. In addition to being the main headquarters for the Iranian Navy, Bandar Abbas is a key installation when it comes to Iran’s aims at controlling the Strait of Hormuz. U.S. President Donald Trump has said “annihilating” Iran’s naval forces is a core objective of what American authorities have dubbed Operation Epic Fury, and that 10 Iranian ships have been “knocked out” so far.

Yet even the threat has had an impact on Persian Gulf traffic, as an increasing number of tankers are reluctant to make the perilous passage out of the Gulf.

The latest Automatic Identification System (AIS) vessel-tracking data, via Bloomberg, shows that tanker traffic in the Strait of Hormuz has been paralyzed, with only a few tankers still transiting the critical maritime energy chokepoint.

Despite the tanker traffic jam, most oil market analysts do not expect Iran’s efforts to close down the Strait to last very long.

FGE NexantECA Chairman Emeritus Fereidun Fesharaki told Bloomberg TV on Monday morning that any attempt by the Islamic Revolutionary Guard Corps to choke off the critical Strait of Hormuz using warships, drones, and missiles would likely be short-lived, as the regime’s naval capability is too weak to sustain a blockade against U.S., British, and French naval forces.

“It’s just a fear factor,” Fesharaki said earlier on Bloomberg TV, following his prediction one week earlier on Bloomberg TV: “I don’t think the U.S. has a choice but to go to war. It is very hard for me to see a scenario in which they would simply avoid this, turn the ships around, and go home.” Fesharaki has tracked the market for decades.

Oil markets themselves tend to support this assessment. Although oil prices spiked sharply when trading opened Monday morning, prices quickly found new equilibrium levels at $75/bbl for Brent Crude and $71/bbl for West Texas Intermediate.

Barring a major shift in tactics, global oil markets are not panicking over Iran’s threats regarding the Strait of Hormuz.

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We should also note that it is unclear to what extent the threat to shut down the Strait of Hormuz originates from the top of the Iranian leadership. There is a distinct possibility this would be the effort of individual IRGC elements acting on their own, without any guidance from the ruling triumvirate.

Sunday Iranian Foreign Minister Abbas Araghchi, appearing on Al Jazeera television, made the startling claim that many IRGC and Iranian military units have been effectively cut off from central command centers as result of US and Israeli strikes.

Well, there might be a risk. I have been in touch with all of them, as I said, especially with Qatar and Oman foreign ministers. I explained for them what happened in Oman was not our choice. We have already told our, you know, armed forces to be careful about the targets that they choose. As a matter of fact, you know, our, you know, military units are now in fact independent and somehow isolated, and they are acting based on instructions, you know, general instructions given to them in advance.

If the Iranian Foreign Minister is at all accurate on the state of command and control within both the IRGC and the regular Iranian military, it is quite possible various units of both are acting entirely on their own, without any coordination or support from Tehran. If that is the case, then any effort by an independent IRGC or military unit to blockade the Strait will not last long, as it is extremely unlikely a single unit has the logistical depth for a sustained blockade, even before one considers the virtually certain US reprisals against a blockade.

If there is one word which can sum up the state of Iran’s response thus far to the joint US and Israeli air strikes, it is “chaos”.

Iran has not made focused, concentrated missile and drone attacks, but has literally sprayed both all over the region. Few significant military targets have even been attacked, much less damaged, but the Arab states are not pleased with the damage being done to civilian infrastructure in Bahrain, Doha, and other cities. While many Arab states host US military bases, they also have made it a policy to stay largely out of the geopolitical tensions between US and Iran, and Israel and Iran.

As of this evening, Iran remains defiant. Iran remains hostile. Iran is making a great show of being determined to fight the US and Israel no matter what.

As of this evening, it is becoming increasingly clear that Iran does not have much left with which to fight. Whether it takes another day, another week, or another month, there is only one way this fight seems fated to end, and that is not with the Islamic Republic coming out on top.

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As was finally confirmed by Iranian state media late yesterday, the attacks succeeded in killing the Supreme Leader of the Islamic Republic Ayatollah Ali Khamenei.

While most of the media attention is naturally focused on the deaths of Khamenei and the other members of Iran’s top leadership killed in the attacks, we should also step back to note the intelligence victory these deaths represent.

The Roman poet Seneca is said to have pithily observed that “luck is what happens when preparation meets opportunity.” Both Operation Epic Fury and Operation Roaring Lion are legitimately proud proofs of this dictum.

A combination of military and intelligence preparation resulted in a momentous opportunity, and Donald Trump made the most of it.

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The twin operations are an unqualified success not just because Ayatollah Khamenei was killed. This graphic from the New York Times illustrates how much of Iran’s top leadership has been eliminated.

To that list we can also add Defense Council Secretary Ali Shamkhani and former Iranian President Mahmoud Ahmadinejad.

These deaths were not mere casualties of war. These deaths were operational objectives. That was readily apparent just from the targets selected by US and Israeli forces, targets where Iran’s leaders worked and frequently met.

This had been noted by independent reporting on social media yesterday even as the attacks were ongoing.

Reuters confirms strikes targeted Khamenei and Pezeshkian. CNN confirms months of joint US-Israeli planning. Israeli officials confirmed the strike hit the location where Iran’s top officials were gathered. Whether Khamenei was moved before the strike or extracted after is the most consequential unknown on the planet right now. If before, someone inside Tehran’s inner circle told Jerusalem when and where the meeting would happen. If after, the strikes hit the room and he survived. Both scenarios are catastrophic for the regime.

While speculative social media reporting must often be taken with a grain of salt, as more information has emerged, this report proved to be fairly accurate. Iran’s leadership was not merely targeted. Iran’s leadership was tracked until an optimal moment to strike presented itself.

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As reported by the New York Times, the CIA has been monitoring and tracking the whereabouts of Khamenei and other top officials literally for months.

The C.I.A. had been tracking Ayatollah Khamenei for months, gaining more confidence about his locations and his patterns, according to people familiar with the operation. Then the agency learned that a meeting of top Iranian officials would take place on Saturday morning at a leadership compound in the heart of Tehran. Most critically, the C.I.A. learned that the supreme leader would be at the site.

The United States and Israel decided to adjust the timing of their attack, in part to take advantage of the new intelligence, according to officials with knowledge of the decisions.

That the CIA (as well as Israel’s Mossad intelligence agency) had achieved pinpoint level of detail on where Khamenei and others would be is illustrated by the apparent last-minute decision to execute the strikes in the morning rather than at night as is the historical norm.

That the militaries of both countries were able to respond quickly to an up-to-the minute flow of intelligence information speaks volumes about the planning and preparation which had already been put into the operations.

The success of Operations Epic Fury and Roaring Lion also compel us to reevaluate a boast Donald Trump made in the runup to last summer’s Operation Midnight Hammer: that he knew exactly where Khamenei was and could kill him at any time.

While even most members of the MAGA Coalition tend to take Donald Trump seriously but generally not literally, Operation Epic Fury tells us this was no mere boast by the President. As the St. Louis Cardinals pitching great Dizzy Dean once observed, “It ain’t bragging if you can do it.”

Clearly, Donald Trump was not bragging last June.

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We also need to recall once again what I highlighted yesterday: that the US government, via the National Endowment for Democracy, has for months been smuggling Starlink terminals into Iran.

As has been demonstrated in Ukraine, access to Elon Musk’s Starlink Internet service provides comprehensive communications facilities. Were these terminals part of how the CIA was able to monitor Khamenei’s movements so precisely?

That possibility remains very much on the table, principally because the Ranking Member on the House Oversight Committee did not want the head of the NED talking about Starlink on the record.

One interesting development actually occurred a few days ago, during a House Oversight Committee hearing, when the head of the National Endowment for Democracy casually let slip that his agency had smuggled thousands of Starlink internet terminals into Iran in recent months.

Damon Wilson, the head of the National Endowment for Democracy (NED), was interrupted by a member of Congress during a House oversight hearing on February 24 after revealing that his agency “began supporting the deployment [and] operation of about 200 Starlinks early on” amid the violence which swept through Iran last month.

Before he could finish the sentence, he was cut off by the ranking member of the House Subcommittee on State, Foreign Operations, and Related Programs, Rep. Lois Frankel, who told Wilson: “You know what, I’m going to interrupt you – we’d better not talk about it.”

Roughly two weeks prior, it was reported by the Wall Street Journal and picked up by other outlets that some 6,000 terminals had been smuggled into Iran by the US State Department.

The US sent around 6,000 terminals to Iran in an unprecedented, direct attempt to deliver internet freedom to regime-stifled protestors, according to officials cited by the outlet.

The majority of the US State Department’s purchase of almost 7,000 terminals was made in January, utilizing funds diverted from similar “internet-freedom initiatives,” to “help anti-regime activists circumvent internet shut-offs in Iran,” officials told WSJ.

Has the United States been laying groundwork for an Iranian insurgent effort to topple the regime in the aftermath of a major attack? We are presented with apparently corroborated evidence arguing that it has, which means the preparations for this attack have been ongoing for quite some time, longer than most of the US military assets deployed to the Middle East recently have been on station.

While the National Endowment for Democracy is a nominally independent non-profit institution, the reality of the organization is that it is funded primarily by Congress, which arguably makes it a vehicle for expressing and implementing US foreign policy—or for gathering intelligence on foreign countries.

This is not to say that the NED efforts in Iran were conclusively part of any intelligence effort by the CIA. This is merely to highlight that the US government has been actively making significant efforts to smuggle highly mobile and effectively untraceable communications technology into Iran for quite some time.

This is also to say that, whatever methods were used by the CIA and Mossad to track the movements of the Iranian leadership, they were extraordinarily successful.

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That the CIA has the ability to track foreign leaders in near realtime this way, to the point where mission plans can be changed on the fly with no loss of mission readiness, is quite a testimony to the agency’s intelligence gathering capacities.

More importantly, there is nothing in the CIA’s efforts in Iran which are unique to Iran. The same technologies which worked so well in Iran will work in nearly any other moderately developed country. What worked in Iran would also work in Russia or China, for example.

That aspect of Operations Epic Fury and Roaring Lion should give the leaders of American adversaries such as China pause. Can the CIA track Xi Jinping the way it tracked Ayatolla Khamenei? Can the CIA track Vladimir Putin the way it tracked Ayatolla Khamenei?

Quite possibly, the answer is “Yes.”

Quite possibly, the CIA may already be tracking Vladimir Putin’s movements the way it tracked Khamenei’s.

Given Ukraine’s demonstrated capacities to conduct drone strikes deep inside Russia at will, coupling CIA intelligence gathering on Putin with Ukraine drone forces could put a target on Putin’s back as has not been done before.

Note that I am not speculating on what either Ukraine or the CIA is doing presently. So far there is no reason to even speculate that the Trump Administration wants Vladimir Putin targeted and assassinated.

Rather, I am pointing out how the intelligence gathering capabilities the CIA demonstrated in Iran could be used against the leaders of other foreign countries. I am pointing out how the preparations made in Iran are not, based on what has been described, country-specific.

Operation Epic Fury has been a clear win for the United States. It is a victory not just for what was done, but for what the United States has shown it can do—track the movements of political leaders in near real time, regardless of the security precautions those leaders may have taken.

Operation Epic Fury is a remarkable demonstration of US intelligence gathering capabilities, making this attack on Iran a subtle warning to the rest of the world: The United States still knows how to prepare for conflict.

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Based on the latest reporting, the attacks—named “Operation Epic Fury” by the United States and “Operation Roaring Lion” by Israel—succeeded in killing Iran’s Supreme Leader Ayatollah Ali Khamenei.

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While Reuters has not yet reported confirmation of Khamenei’s demise by Iran, Israel has been making increasingly confident “confirmations” of his death over the past few hours.

Roughly a half hour ago, Iran International claimed it also had confirmed Khamenei’s death. No details have been provided as of this writing.

At about the same time, Axios also picked up the story line, reiterating Israel’s confirmation that Khamenei is no more.

Why it matters: The 86-year-old Khamenei led Iran for 35 years, making him one of the world’s longest-serving authoritarian rulers. His death is a massive blow to the regime and could accelerate its collapse, which U.S. and Israeli officials have stated as their explicit goal.

The big picture: Khamenei’s killing sets off an immediate succession crisis with no clear answer.

• Under Iran’s constitution, a council of clerics is meant to select a new supreme leader — but Israel’s strikes also targeted senior Islamic Revolutionary Guard Corps (IRGC) commanders and political leaders, leaving the regime’s chain of command in disarray.

• Israeli officials say they assess the Iranian minister of defense and the commander of the IRGC were also among those killed in targeted strikes on Saturday.

As the corporate media grows more confident that Khamenei has been killed, alternative media outlets such as ZeroHedge are also carrying the report, although as of this writing ZeroHedge is being somewhat more circumspect.

Summary: Currently, the biggest question is where's the Ayatollah? Iran state TV teased an imminent speech to address the nation after the major US-Israeli attack, and in the wake of Iran's retaliation on US regional bases - and the Gulf countries hosting them. There were earlier rumors that Supreme Leader Ali Khamenei was killed, but nothing is verifiable. He could be deep in a hidden underground bunker, at a command post, known only by his closest IRGC associates. There are also unverified reports that members of his own family may have been killed. Meanwhile in the US some Democratic Congressional leaders are demanding an immediate War Powers vote, and condemn the Trump-ordered attack as an unconstitutional war on a foreign nation which has not directly attacked the US.

Iran’s Al-Alam TV had reported this morning that Khamenei would give a televised address “shortly”. There has been no reporting of such an address.

As I commented a few hours ago, Khamenei has not been seen at all since the attack began.

While Iran officially denies that Khamenei was killed in the overnight attack, no actual “proof of life” has been put forward.

If Khamenei is dead and the regime clings to a public denial of this, one tempting speculation is that Ali Larijani, whom Khamenei presumably tapped to take over should he be killed in a US/Israeli attack, is having difficulty consolidating power.

The key word in that sentence is, of course, “if”.

Yet so far we do not have reliable confirmation that Khamenei is still alive.

The most probable view of the extant reporting is that Khamenei is, in fact, deceased.

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The lack of confirmation or proof of life for Khamenei from Iran invites speculation that there is a succession crisis unfolding within the Iranian leadership.

As reported by Axios, in theory the Assembly of Experts would convene to appoint a new Supreme Leader.

However, it was reported in January that, at the height of the protests, Khamenei tapped Secretary of the National Security Council Ali Larijani to take up many of the reins of power, and charged him with ensuring the continuity of the Islamic Republic.

Ayatollah Khamenei has instructed Mr. Larijani and a handful of other close political and military associates to ensure that the Islamic Republic survives not only American and Israeli bombs, but also any assassination attempts on its top leadership, including on Ayatollah Khamenei himself, according to the six senior officials and the Guards members.

Nasser Imani, a conservative analyst close to the government, said in a telephone interview from Tehran that Ayatollah Khamenei has a long and close relationship with Mr. Larijani, and the supreme leader turned to him in this time of acute military and security crisis.

“The supreme leader fully trusts Larijani. He believes Larijani is the man for this sensitive juncture because of his political track record, sharp mind and knowledge,” Mr. Imani said. “He relies on him for reports on the situation and pragmatic advice. Larijani’s role will be very pronounced during war.”

Reputed to have close ties to the Islamic Revolutionary Guard Corps, in which he served until 1993, leaving at the rank of brigadier general, Larijani is technically barred from becoming Supreme Leader as he is not a Shi’ite cleric.

However, there is rampant speculation that he has influence over just about every other aspect of political power in the Islamic Republic.

If Larijani is having difficulty consolidating his position, or there is a wider struggle for control within the Assembly of Experts, or even if there is an ongoing attempt by the IRGC to seize power directly, keeping Khamenei’s death under wraps might be a way for the factions within the Tehran government to maintain some semblance of control over the country while fighting behind the scenes over who takes control next.

Khamenei’s increasingly likely death thus leaves Iran’s government in a very parlous state. While it is too soon to proclaim the end of the Islamic Republic, it is apparent that Operation Epic Fury/Operation Roaring Lion has succeeded in delivering a major body blow to the regime, and quite possibly a fatal one.

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Tonight has been a night when literal decades are happening. What the geopolitical landscape of the Middle East will be even just a few hours from now will be radically altered from what it was just yesterday. More than that cannot be said, not even if this will prove to be a blessing or a curse for the Iranian people, for the Middle East, or for the United States and Israel.

These attacks were only a tactical surprise, as the world has known for quite some time that the US was likely to launch a fresh round of aerial bombardments of Iran. This included Iran, which lost no time in retaliating against Israel.

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Information is still developing, which means that much of what has been reported already may not actually be what is occurring within Iran. Still, over the past few hours some significant data points have emerged.

The US and Israeli air strikes cover nearly the whole western half of the country, and have done so with apparent ease and impunity.

While the usual cadre of security “experts” engage in ritual pearl clutching over Iranian military strengths, it remains unclear how much actual military strength Iran actually possesses.

Within hours of the joint U.S. and Israeli strike on Iran, Ali Vaez, who directs the Iran Project at the International Crisis Group, warned that the war could likely escalate.

Vaez on social media stressed that Iran had been preparing for the conflict and that wider war could break out across the Middle East.

As I remarked in the overnight period:

Iran has launched multiple missile attacks across the Middle East, the succes of which remains mostly unclear.

Iran has not been able to defend Iranian airspace or Iranian cities.

In war preparations, defense of the realm is usually a primary concern.

Iran can launch missiles, but it seems to have few military options beyond that, based on their response thus far.

Iran appears to have been relatively indiscriminate with their missile strikes, with a number of Persian Gulf states such as Qatar on the receiving end. For its part, Saudi Arabia has confirmed it was among the Arab states attacked by Iran, and that it successfully defended itself against the Iranian missiles.

Europe appears to be its usual feckless dysfunctional self. Even though European leaders such as Germany’s Friederich Merz were read in to some degree on at least the Israeli portion of the strike plan, European Commission Ursula von der Leyen called for all sides to exercise “maximum restraint” and “fully respect international law.”

This morning, Europe’s political leaders, including Merz, called on Iran to return to the negotiating table and seek a negotiated peace. Given Iran’s strong rhetoric up until now, it is difficult to see how the Khamenei regime can return to the negotiating table under these circumstances without it looking like abject surrender.

I do not see Iran bending the knee to the US, to Israel, nor to anyone else, certainly not right away.

As I remarked to one my regular subscribers, we are very much in the early stages of this operation.

How this plays out will be interesting to watch. Ever since the protests began in Iran at the end of 2025 there have been calls for the United States to act.

The United States has acted.

As a geopolitical flex this surpasses by far the Maduro operation in Venezuela.

That countries such as Germany were apparently read in is a curious twist. Even the “Gang of Eight” in Congress received some briefings a few days ago, which is a different approach than for Venezuela.

The full consequences and ramifications are a long way from being either known or knowable.

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One interesting development actually occurred a few days ago, during a House Oversight Committee hearing, when the head of the National Endowment for Democracy casually let slip that his agency had smuggled thousands of Starlink internet terminals into Iran in recent months.

Damon Wilson, the head of the National Endowment for Democracy (NED), was interrupted by a member of Congress during a House oversight hearing on February 24 after revealing that his agency “began supporting the deployment [and] operation of about 200 Starlinks early on” amid the violence which swept through Iran last month.

Before he could finish the sentence, he was cut off by the ranking member of the House Subcommittee on State, Foreign Operations, and Related Programs, Rep. Lois Frankel, who told Wilson: “You know what, I’m going to interrupt you – we’d better not talk about it.”

Roughly two weeks prior, it was reported by the Wall Street Journal and picked up by other outlets that some 6,000 terminals had been smuggled into Iran by the US State Department.

The US sent around 6,000 terminals to Iran in an unprecedented, direct attempt to deliver internet freedom to regime-stifled protestors, according to officials cited by the outlet.

The majority of the US State Department’s purchase of almost 7,000 terminals was made in January, utilizing funds diverted from similar “internet-freedom initiatives,” to “help anti-regime activists circumvent internet shut-offs in Iran,” officials told WSJ.

Has the United States been laying groundwork for an Iranian insurgent effort to topple the regime in the aftermath of a major attack? We are presented with apparently corroborated evidence arguing that it has, which means the preparations for this attack have been ongoing for quite some time, longer than most of the US military assets deployed to the Middle East recently have been on station.

As with Operation Midnight Hammer during Israel’s Twelve Day War last summer, we are left to ponder if the talks with Iran over its nuclear ambitions were merely window dressing, a way for Trump to “run out the clock” while all elements of a regime change operation were put in place.

With reports of Iranian missile strikes still coming in, and social media is picking up multiple video clips and photos showing the extent of damage in both Iran and Israel, this story is still very much a developing story. Conclusions of any specificity are obviously premature.

Will the Khamenei regime survive this obvious attempt at regime change by the United States and Israel? It may, although with the December protests still a fairly recent memory, the Iranian people have ample reasons to rise up and effect regime change on their own.

The US and Israeli air strikes may yet give the Iranians space to act on those reasons and end the Khamenei regime.

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Approximately three hours ago as of this writing, Israel launched what it called “pre-emptive strikes” against Iran, an attack dubbed “Operation Roaring Lion”. Anticipating retaliatory strikes by Iran, Defense Minister Israel Katz declared a state of emergency across Israel.

Multiple cities in Iran have been targeted, with Iranian state news media reporting strikes in Isfahan, Qom, Lorestan, Karaj, Kermanshah, Tabriz and Tehran.

The strikes are part of a coordinate US-Israeli effort against the regime of Iranian Supreme Leader Ayatollah Ali Khamenei, with the US launching its own attacks against Iran in what the War Department has named “Operation Epic Fury”.

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Two hours ago (as of this writing), President Trump released a video statement on Truth Social.

A short time ago, the United States military began major combat operations in Iran. Our objective is to defend the American people by eliminating imminent threats from the Iranian regime, a vicious group of very hard, terrible people. Its menacing activities directly endanger the United States, our troops, our bases overseas, and our allies throughout the world.

For 47 years, the Iranian regime has chanted death to America and waged an unending campaign of bloodshed and mass murder, targeting the United States, our troops, and the innocent people in many, many countries.

Among the regime’s very first acts was to back a violent takeover of the U.S. Embassy in Tehran, holding dozens of American hostages for 444 days.

In 1983, Iran’s proxies carried out the marine barracks bombing in Beirut that killed 241 American military personnel.

In 2000, they knew and were probably involved with the attack on the USS Cole. Many died.

Iranian forces killed and maimed hundreds of American service members in Iraq.

The regime’s proxies have continued to launch countless attacks against American forces stationed in the Middle East in recent years, as well as U.S. naval and commercial vessels in international shipping lanes. It’s been mass terror, and we’re not going to put up with it any longer.

From Lebanon to Yemen and Syria to Iraq, the regime has armed, trained, and funded terrorist militias that have soaked the earth with blood and guts. And it was Iran’s proxy, Hamas, that launched the monstrous October 7th attacks on Israel, slaughtering more than 1,000 innocent people, including 46 Americans, while taking 12 of our citizens hostage. It was brutal, something like the world has never seen before.

Iran is the world’s number one state sponsor of terror, and just recently killed tens of thousands of its own citizens on the street as they protested. It has always been the policy of the United States, in particular my administration, that this terrorist regime can never have a nuclear weapon. I’ll say it again. They can never have a nuclear weapon.

That is why, in Operation Midnight Hammer last June, we obliterated the regime’s nuclear program at Fordow, Natanz, and Isfahan. After that attack, we warned them never to resume their malicious pursuit of nuclear weapons.

And we sought repeatedly to make a deal. We tried. They wanted to do it. They didn’t want to do it. Again, they wanted to do it. They didn’t want to do it. They didn’t know what was happening. They just wanted to practice evil.

But Iran refused, just as it has for decades and decades. They’ve rejected every opportunity to renounce their nuclear ambitions, and we can’t take it anymore. Instead, they attempted to rebuild their nuclear program and to continue developing long-range missiles that can now threaten our very good friends and allies in Europe, our troops stationed overseas, and could soon reach the American homeland. Just imagine how emboldened this regime would be if they ever had and actually were armed with nuclear weapons as a means to deliver their message.

For these reasons, the United States military has undertaken a massive and ongoing operation to prevent this very wicked, radical dictatorship from threatening America and our core national security interests. We are going to destroy their missiles and raize their missile industry to the ground. It will be totally, again, obliterated. We’re going to annihilate their navy. We’re going to ensure that the region’s terrorist proxies can no longer destabilize the region or the world and attack our forces and no longer use their IEDs or roadside bombs, as they are sometimes called, to so gravely wound and kill thousands and thousands of people including many Americans, and we will ensure that Iran does not obtain a nuclear weapon.

It’s a very simple message. They will never have a nuclear weapon. This regime will soon learn that no one should challenge the strength and might of the United States Armed Forces. I built and rebuilt our military in my first administration. And there is no military on Earth even close to its power, strength, or sophistication.

My administration has taken every possible step to minimize the risk to U.S. personnel in the region.

Even so, and I do not make this statement lightly, the Iranian regime seeks to kill. The lives of courageous American heroes may be lost, and we may have casualties. That often happens in war.

But we’re doing this not for now. We’re doing this for the future, and it is a noble mission. We pray for every service member as they selflessly risk their lives to ensure that Americans and our children will never be threatened by a nuclear-armed Iran. We ask God to protect all of our heroes in harm’s way, and we trust that, with his help, the men and women of the armed forces will prevail. We have the greatest in the world, and they will prevail.

To the members of the Islamic Revolutionary Guard, the armed forces, and all of the police, I say tonight that you must lay down your weapons and have complete immunity, or, in the alternative, face certain death. So, lay down your arms. You will be treated fairly with total immunity, or you will face certain death.

Finally, to the great, proud people of Iran, I say tonight that the hour of your freedom is at hand. Stay sheltered. Don’t leave your home. It’s very dangerous outside. Bombs will be dropping everywhere. When we are finished, take over your government. It will be yours to take. This will be probably your only chance for generations.

For many years, you have asked for America’s help, but you never got it. No president was willing to do what I am willing to do tonight. Now you have a president who is giving you what you want. So let’s see how you respond.

America is backing you with overwhelming strength and devastating force. Now is the time to seize control of your destiny and to unleash the prosperous and glorious future that is close within your reach. This is the moment for action. Do not let it pass.

May God bless the brave men and women of America’s armed forces. May God bless the United States of America. May God bless you all. Thank you.

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Separately, Prime Minister Netanyahu released the following statement:

My brothers and sisters, citizens of Israel, a short time ago, Israel and the United States embarked on an operation to remove the existential threat posed by the terrorist regime in Iran.

I thank our great friend, President Donald Trump, for his historic leadership. For 47 years, the Ayatollah regime has been shouting ‘Death to Israel,’ ‘Death to America.’

It has spilled our blood, murdered many Americans, and massacred its own people. This murderous terrorist regime must not be armed with nuclear weapons that would allow it to threaten all of humanity. Our joint action will create the conditions for the courageous Iranian people to take their destiny into their own hands.

The time has come for all segments of the Iranian people - the Persians, the Kurds, the Azeris, the Baluchis, and the Ahwazis - to throw off the yoke of tyranny and bring about a free and peaceful Iran.

I appeal to you, the citizens of Israel, to listen to the instructions of the Home Front Command. In the coming days, in Operation ‘The Roar of the Lion,’ we will all be required to have endurance and fortitude.

Together we will stand, together we will fight, and together we will ensure the eternity of Israel.

US officials are reported as stating that the US strikes are focused on military targets but declined to give details, as the operation is ongoing.

At the same time, there are reports of a “wave” of cyberattacks against Iranian state news agencies and media outlets, indicating this is a multi-domain attack on the regime’s societal infrastructures as well.

The decision to launch the strikes was apparently made within the past day, as President Trump was on Friday indicating he had not made any final decisions, but asserted the same basic position that he did a short while ago: Iran will not be allowed to have nuclear weapons.

Although Israel and the US had inflicted substantial damage to Iran’s nuclear weapons program last summer, Iran is reported to have been working to rebuild key facilities and restart uranium enrichment and nuclear weapons development.

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Unsurprisingly, Iran has already launched retaliatory strikes against Israel. For now, Israel is reporting success in defending against the missile strikes.

For his part, exiled former Crown Prince Reza Pahlevi released a statement urging Iranian citizens to be prepared to take to the streets and topple the Khamenei regime.

My dear compatriots,

Decisive moments lie before us.

The assistance that the President of the United States had promised to the brave people of Iran has now arrived. This is a humanitarian intervention, and its target is the Islamic Republic, its apparatus of repression, and its machinery of killing—not the country and great nation of Iran.

However, despite the arrival of this assistance, the final victory will still be achieved by us. It is we, the people of Iran, who will finish this task in this final battle. The time to return to the streets is approaching.

Now that the Islamic Republic is collapsing, my message to the country’s military, law enforcement, and security forces is clear:

You have sworn an oath to protect Iran and the Iranian nation, not the Islamic Republic and its leaders. Your duty is to defend the people, not to defend a regime that has taken our homeland hostage through repression and crime. Join the nation and help ensure a stable and secure transition. Otherwise, you will sink with Khamenei’s ship and his crumbling regime.

And my message to the President of the United States, President Trump, is this:

The honorable people of Iran, despite the brutal repression and killings carried out by this regime, stood bravely for nearly two months. I now ask you to exercise the utmost possible caution to preserve the lives of civilians and my compatriots. The people of Iran are your natural allies and the allies of the free world, and they will not forget your assistance during the most difficult period of Iran’s contemporary history.

And to you, my dear compatriots in Iran:

In these sensitive hours and days, more than ever we must remain focused on our ultimate goal: reclaiming Iran.

I ask you, for now, to remain in your homes and remain calm and safe. Stay alert and ready to return to the streets for the final action at the appropriate time, which I will communicate to you.

Follow my messages through social media and satellite media. If disruptions occur in the internet and satellite broadcasts, I will remain in contact with you via radio.

We are very close to final victory. I hope to be with you as soon as possible so that together we may reclaim Iran and rebuild it.

Long live Iran.

Reza Pahlavi

Will this topple the Khamenei regime? There is no denying that is the explicit goal for both Israel and the United States. While Iranian leaders are not (yet) reported as having been killed, it will not be at all surprising if they should be, as there have been reports that Israel is targeting the homes of the Iranian leadership.

Will the Iranian people rise up against the regime, either independently or in response to Reza Pahlevi’s call to arms? Only time will give answer to that.

Tonight has been a night when literal decades are happening. What the geopolitical landscape of the Middle East will be even just a few hours from now will be radically altered from what it was just yesterday. More than that cannot be said, not even if this will prove to be a blessing or a curse for the Iranian people, for the Middle East, or for the United States and Israel.

There will be debate and controversy. There will be accusations and recriminations.

What there will not be yet is certainty. For that we must wait and watch.

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Iranian President Masoud Pezeshkian announces the “end of the 12-day war” imposed by Israel, in a message to the nation carried by the official IRNA news agency.

“Today, after the heroic resistance of our great nation, whose determination makes history, we are witnessing the establishment of a truce and the ending of this 12-day war imposed by the adventurism and provocation” of Israel, Pezeshkian says.

For the Iranian President to make a statement like that in public, one thing is certain: this war is over.

Now what?

How does what President Trump has named the “Twelve Day War” change the trajectory of events in the Middle East? What global impacts might the ending of the war have?

The answers to these questions will be not just days or weeks but months and even years unfolding. A lot depends on what Iran and Israel do over those months and years.

Even so, we can step back and see how the ripples from this event are beginning to spread out.

Contents

• Oil Prices Down, Stock Market Up

• How Much Damage Was Done?

• Regime Change?

• Power Vacuum

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Oil Prices Down, Stock Market Up

The most obvious good news emerging from war’s end has been immediate drop in oil prices. In any other circumstance we would call the price shift a “collapse”, as oil prices have eliminated all the increase since the start of Operation Rising Lion and then some.

While we are still looking at the potential for some significant energy price inflation in June, that the price decline has continued into the ceasefire creates the possibility of energy price deflation in July and beyond.

That’s good political news for President Trump and excellent economic news for the American consumer.

The drop in oil prices is very bad news for Russia and Vladimir Putin. Russia’s benchmark Urals Crude typically trades at a discount of between $5/bbl and $10/bbl to Brent Crude.

While it make take a day for the markets to reflect the new price, Russian oil is headed for a drop of as much as $10/bbl. That loss of revenue will put renewed strain on the Russian economy as it struggles to fund Putin’s war in Ukraine.

Two unexpected beneficiaries of oil market movements apparently are going to be China and, ironically, Iran. Powering oil’s extended drop has been Trump’s announcement on Truth Social that China could continue to buy oil from Iran, an indication the US may be easing sanctions on the Islamic Republic.

China is Iran’s primary customer, but while China will benefit from lower oil prices, Iran stands to gain from having unimpeded access once more to global oil markets.

While oil prices have trended down in the past 24 hours, stocks have trended up.

All three major stock indices on Wall Street are not only higher on the month, but they have completely recovered their price positions from right before Israel commenced Operation Rising Lion.

Nor is it just Wall Street that is feeling bullish. Chinese markets are up significantly since the ceasefire announcement as well.

Peace is always good for business!

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How Much Damage Was Done?

The one question that everyone is asking in some form or fashion is how successful were Israel and the US in damaging Iran’s nuclear weapons program?

Depending on which damage assessment you want to believe, the damage was somewhere between “a little” and “a lot”.

A classified US Defense Intelligence Agency assessment leaked to CNN and the Washington Post suggests that the damage particularly to the Fordow enrichment site was not as dramatic as President Trump has claimed.

An initial U.S. intelligence report assesses that airstrikes ordered by President Donald Trump against Iran’s nuclear facilities set Tehran’s program back by months but did not eliminate it, contradicting claims by Trump and his top aides about the mission’s success, according to two people familiar with the report.

However, without even contemplating the specifics of the assessment, we must remember that it is a very preliminary one. The Defense Department is not likely to be prepared to present Trump with a final battle damage assessment for days or even weeks. DoD assessment protocols are not going to allow that final assessment to be ready any sooner than that.

The leaked DIA assessment is almost completely contradicted by Israel’s own assessment. Israeli intelligence estimates indicate the damage done was dramatic and set Iran’s nuclear weapons program back “years”.

Israeli intelligence assesses that US and Israeli strikes set back Iran’s nuclear program by “several years,” but did not completely destroy it, as US President Donald Trump has repeatedly claimed, a senior Israeli official tells The Times of Israel.

The extent of the setback is relevant as it sets the context for deciding whether the Twelve Day War was worth fighting.

An independent assessment by the Institute for Science and International Security, an independent and presumably non-partisan organization, provides a detailed breakdown of the apparent damage done at each of Iran’s nuclear sites. This assessment concludes that Israel and the US have done significant damage to Iran’s nuclear weapons programs.

Overall, Israel's and U.S. attacks have effectively destroyed Iran’s centrifuge enrichment program. It will be a long time before Iran comes anywhere near the capability it had before the attack. That being said, there are residuals such as stocks of 60 percent, 20 percent, and 3-5 percent enriched uranium and the centrifuges manufactured but not yet installed at Natanz or Fordow. These non-destroyed parts pose a threat as they can be used in the future to produce weapon-grade uranium.

If this assessment is even just partially accurate, Iran’s enrichment centrifuges have suffered significant damage, although Iran might still possess some centrifuges from equipment not yet installed at Fordow or Natanz.

The Institute in particular assessed that Fordow was heavily damaged if not destroyed, just as President Trump has boasted multiple times.

Which assessment is the most accurate? At the present time, there is no good way to tell.

Yet if the centrifuge cascades at Fordow and Natanz are even just partially damaged, Iran’s ability to enrich uranium may very well be at a standstill until the cascades are rebuilt and repaired. Without functioning centrifuge cascades, Iran cannot enrich its 60% enriched uranium to weapons-grade 90%+.

Arguably, even partial damage to the centrifuges is far closer to “severe” rather than “superficial” level of damage to Iran’s overall nuclear weapons program.

What is the correct assessment of damage done? At present, we simply do not know.

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Regime Change?

Much has been made of President Trump’s post to Truth Social apparently calling for regime change in Iran.

White House Press Secretary Karoline Leavitt downplayed the significance of the post.

Asked about the president's remarks on Monday, White House Press Secretary Karoline Leavitt said Mr. Trump "was just simply raising a question that I think many people around the world are asking: If the Iranian regime refuses to give up their nuclear program or engage in talks — we just took out their nuclear program on Saturday night, as you all know — but if they refuse to engage in diplomacy moving forward, why shouldn't the Iranian people rise up against this brutal terrorist regime? That's a question the president raised last night. But as far as far as our military posture, it has not been changed."

However, while President Trump may not have called for explicitly ending Iran’s theocratic government, Trump Administration officials have conceded that among the potential outcomes of the Twelve Day War is the collapse of the Islamic Republic.

Rubio was the first to flag the possibility on Sunday. While he reiterated that toppling Iran’s theocratic republic was not the goal of the strikes, he said that if the country remained committed to becoming a nuclear power, it could imperil the survival of the regime. “I think it would be the end of the regime if they tried to do that,” Rubio said, speaking on Fox News’ Sunday Morning Futures.

While en route to the NATO Summit in the Netherlands, Trump himself indicated he did not actually favor regime change in Iran.

However, a piece in the Atlantic on Sunday openly speculated on the possibility that Iranian Supreme Leader Ayatollah Ali Khamenei might not remain in control of the country for much longer.

In the days leading up to the American intervention, a group of Iranian businessmen, political and military figures, and relatives of high-ranking clerics, two sources involved in the discussions told me, had begun hatching a plan for running Iran without Khamenei—whether in the event of the 86-year-old leader’s death or of his being pushed aside. Constitutionally, the Assembly of Experts, a body of 88 clerics, would need to vote to dismiss Khamenei from his position, but organizing such a vote under current circumstances is unlikely. The leader could also be more informally sidelined, say, by insiders who pressure or persuade him to pass real power to a temporary replacement. The plotters have agreed that a leadership committee consisting of a few high-ranking officials would take over running the country and negotiate a deal with the United States to stop the Israeli attacks.

Whether or not the United States formally backs regime change in Iran, the devastation inflicted on Iran in just under two weeks could give Khamenei’s political rivals within Iran the opportunity to force Khamenei to step aside, even if unofficially.

Can Iran move forward from this defeat while Khamenei remains in control? At the moment, that question is unanswerable—which means that the answer may prove to be “No”.

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Power Vacuum

With or without regime change in Iran, however, there are already indications that Iran’s defeat has created something of a power vacuum in the Middle East, with various actors good and bad rushing to fill it.

In particular, there is the perhaps unavoidable speculation that the remnants of the once-powerful Islamic State, as well as its progenitor al-Qaeda, will exploit Iran’s defeat to regain power and influence in the Middle East.

"We should pay attention to this in our policy discussions," Joseph Votel, a retired four-star Army general who served as chief of U.S. Central Command (CENTCOM) from March 2016 to March 2019, told Newsweek.

Votel described militant groups such as ISIS and Al-Qaeda as being "opportunistic by nature," noting how "they will often take advantage of voids created by a lack of governance, disenfranchisement, unemployment, lack of opportunity, and social and economic disparity to develop inroads with vulnerable populations."

"How successfully they can do this in Iran is a matter to be watched," he added. "The state still controls the population, but the degradation of control will provide them with operating space in the long term, either to co-opt the population or to further utilize the area as a sanctuary for their planning and operations."

The same command and control infrastructures Israel targeted to degrade Iran’s military capabilities are also the ones which allow Iran to combat militants not part of the terror proxy network Iran has built up over the years. The loss of those infrastructures could give ISIS and other groups hostile to the Tehran regime an opportunity to flourish.

Yet not all the opportunities are for bad actors. Iran’s setbacks in recent months, most notably the toppling of Bashar al-Assad in Syria last December, has opened up a number of diplomatic opportunities for Israel.

Israeli National Security Adviser Tzachi Hanegbi confirmed that Israel and Syria are currently pursuing a “daily” dialogue.

Hanegbi today confirms comments he made during a classified session of the Knesset Foreign Affairs and Defense Committee on Sunday, saying “There is direct daily dialogue at all levels between Israel and the regime in Syria. I am leading it with political officials there,” the Hebrew outlet reports.

Hanegbi told the committee that Syria and Lebanon are candidates for the Abraham Accords normalization agreements, the paper reports.

We should note that just last month President Trump urged Syrian President Ahmad al-Sharaa to take exactly that step.

As I noted at the time, joining the Abraham Accords would be impactful not just for Syria and Israel but for the whole of the Middle East.

Acceding to the Abraham Accords would not merely mean Syria was normalizing diplomatic relations with Israel. The Abraham Accords involve establishing peaceful relations and the pursuit of greater economic cooperation.

While not formally establishing alliance between Israel and the signatory Arab states, they do establish a framework for improving the overall prosperity of the Middle East, with Israel and the signatory Arab states pursuing joint economic goals.

That step is apparently becoming more and more plausible, as al-Sharaa has been looking increasingly westward in charting Syria’s geopolitical future.

Turkey and the Gulf monarchies – particularly Riyadh and Doha – played a decisive role in supporting Hayat Tahrir al-Sham, the Islamist faction that now forms the backbone of Syria’s post-Assad government. The new leadership has rapidly diversified its international partnerships, ranging from Middle Eastern capitals to Brussels and Washington. Most recently al-Sharaa has backed Israel in its conflict with Iran by giving the Israeli air force permission to use Syrian airspace to refuel its fighter jets. Smagin noted that “Riyadh and Doha have already paid off Damascus’s $15mn debt to the World Bank, and offered to pay government salaries.”

Al-Sharaa’s successful ouster of the Assad regime in Damascus gave his Turkish backers a geopolitical boost over Iran. Al-Sharaa achieving diplomatic normalization with Israel, in particular accession to the Abraham Accords, is likely to do the same for Israel. Al-Sharaa has apparently taken at least one substantive step towards normalization by siding with Israel over Iran in a way that is substantive and not merely performative.

Iran’s declaration tonight that the war is over, and that there is now a truce between Israel and Iran, is almost certain to give a boost to Israel’s diplomatic engagements with Syria and even Lebanon. Syria acceding to the Abraham Accord would be a particularly noteworthy accomplishment for Israel, given the history of war the two countries have shared in the past.

The geopolitical chessboard that is the Middle East has been almost completely rearranged over the past twelve days, an outcome no one anticipated twelve days ago.

There is no way to predict exactly what moves will be made on that chessboard going forward. There are certain ripples that suggest a number of possibilities are emerging. Only time will tell how far those ripples spread and in what directions.

Welcome to interesting times!

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The immediate answer is once again “we do not know.” With reports already of ceasefire violations, whether the ceasefire can hold is simply not knowable.

This report comes close on the heels of Iran launching a last-but-lethal attack on the southern Israeli city of Beersheba just before the ceasefire was scheduled to start.

Unsurprisingly, members of the Israeli Knesset are calling for retaliation.

“Tehran will tremble,” tweets far-right Finance Minister Bezalel Smotrich, a member of Prime Minister Benjamin Netanyahu’s security cabinet.

“Quiet will be answered with quiet, missiles will be answered with…?” tweets Otzma Yehudit lawmaker Limor Son Har-Melech.

The IDF is promising that there will be retaliation.

IDF Chief of Staff Lt. Gen. Eyal Zamir, in an ongoing assessment, says that “in light of the grave violation of the ceasefire by the Iranian regime, we will strike with force,” according to remarks provided by the military.

For its part, Iran denies launching any missiles at Israel after the start of the ceasefire.

President Trump is encouraging both Israel and Iran to honor the ceasefire.

For its part, Wall Street is anticipating the ceasefire will hold, with stock futures trading up in advance of the opening bell.

Wall Street’s most sensitive barometer of how it views events in the Middle East—oil prices—is also reflecting guarded optimism this morning.

To say that tensions between Iran and Israel are still “high” would be an understatement. We do well to remember that a ceasefire is not the same as a peace deal or a peace treaty. A ceasefire is merely a temporary agreement by the belligerents to cease firing—no more and no less.

That the ceasefire deal even exists is no small achievement. Still, Israel’s agreement to the ceasefire came with a warning that it would respond forcefully to any violations—while an understandable position such a caveat is also a measure of how little trust exists between the two countries.

Iran opting to launch missiles right up to the last possible moment is certainly no testament to Iran’s own commitment to making peace with Israel.

Is the ceasefire agreement merely a tactical move on the part of either Iran or Israel, a means of pausing hostilities while the two sides reconstitute and reorganize their respective forces after a week of war? We should not rule out that possibility.

Has the ceasefire already been broken by Iran? Israel says it has, Iran says it hasn’t.

Getting a ceasefire agreement in place was a tremendous accomplishment by President Trump. Keeping that ceasefire in place will be an even bigger accomplishment by all sides.

Cross your fingers, folks!

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Update 3 (9:00PM CDT)

Whether there is or is not an actual ceasefire has been quite the challenge for all media to get right. That is how fluid and shifting this story has been.

According to the The Mirror, an hour before President Trump announced the ceasefire, Iran had received no ceasefire proposal.

Just an hour before President Donald Trump announced a ceasefire agreement between Israel and Iran, a senior Iranian official that the country had not seen any ceasefire proposal, and reportedly saw no reason for one, a source has revealed.

The official went on to say that Iran would continue to fight until it achieves a "lasting peace," adding that it would view remarks from Israel and the US as “a deception” intended to justify attacks on Iran’s interests.

Breitbart picked up on this bit of news after CNN echoed the Mirror’s reporting.

CNN later reported Iranian Foreign Minister Abbas Araghchi confirming that “there was currently no ceasefire agreement” with Israel. Interestingly enough, in that same update Araghchi said that if Israel stopped fighting so would Iran.

Araghchi added that if Israel stops its “illegal aggression” against Iran “no later than 4 a.m. Tehran time, we have no intention to continue our response afterwards.”

Later, Araghchi would post on X praising Iran’s armed forces for fighting until the very last minute before the ceasefire took effect.

Iran’s semi-official Mehr News Agency repeated Araghchi’s social media post.

Meanwhile X was filled with posts such as this claiming there was no ceasefire.

Al Jazeera is noting the difference between Araghchi’s tone and Trump’s tone, and questioning the validity of Trump’s ceasefire announcement principally on that basis.

Certainly, this is not the “full agreement” that Trump posted about three hours ago, and perhaps those congratulations were premature.

Is there a ceasefire in effect? Araghchi certainly makes it sound as if there is. Official or not, I, for one, certainly hope there is. There’s too much war in the world as it is. We need an outbreak of peace.

Update 2 (7:40PM CDT)

If Donald Trump’s Truth Social posts are accurate, Iran has agreed to a ceasefire with Israel, to be phased in by Wednesday.

This came on the heels of a typically Trumpian post roasting Iran for its missile attack on Al-Udeid Air Base in Qatar, in which a total of 14 missiles were fired and 13 shot down.

Oil markets were ecstatic on the news, with the price of both Brent Crude and West Texas Intermediate plunging.

Oil prices had already retreated to their Friday price levels after surging in the wake of Operation Midnight Hammer. Now they are below where they were at the start of Operation Rising Lion.

With a missile strike that seemed almost performative, it is difficult not to conclude that Iran is ready for this war to end. It certainly has not gone well for them.

However, if one prefers the typically conspiratorial take from ZeroHedge, this could all be Iranian Kabuki theater.

To some degree, more 'known unknowns' (cue Rumsfeld) have been created in the wake of Trump's alleged destruction of Iran's enrichment facilities. Perhaps the Iranians will now hasten to begin the actual secretive nuclear bomb program?

To be sure, the status of Iran's store of highly enriched uranium is very much a mystery, and very much a concern. It would require no great technology or infrastructure to convert that into a series of radiological weapons.

If the facilities at Fordow and Natanz are out of commission, Iran is out of the uranium enrichment business for the time being. That's no small setback for the Islamic Republic. Add to that the reduction of their ballistic missile capacities and the apparent destruction of Iran's air defenses. The sum is not one that amounts to any sort of victory for Iran.

Is the Iran-Israeli War, what Trump calls the “Twelve Day War”, over? For now it seems that it might be. Politically, that is a win for both President Trump and Israeli Prime Minister Benjamin Netanyahu.

Will Iran give up its nuclear weapons program after being mauled by Israel? That is difficult to believe. Yet it is not impossible. If Iran does abandon its nuclear ambitions, the Middle East has just undergone a dramatic geopolitical “reset”, and Israel is officially the big dog on the block.

What will be the ultimate outcome? I am hopeful, but I still don’t know…and neither does anybody else. Folks should remember that.

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Update 1 (12:00 CDT)

Has Iran's retaliation begun? There are early reports of explosions near Al-Udeid Air Base in Qatar. Nearby residents are being advised to “shelter in place.” There are reports at this time of any casualties or damage.

Separately, Israel is expanding its range of targets, as it proceeds to further dismantle the regime's infrastructure. Israel may not be pushing regime change per se, but they are making it progressively more difficult for the regime to govern.

Wall Street is mostly taking the news in stride, with the Dow down only slightly in recent trading.

Iran is going to need a more intense strike to make the statement of strength they need to make.

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Starting Point

At least some damage was done to the Fordow fuel enrichment facility, as well as the facilities at Natanz and Isfahan. Whether the damage is as “superficial” as Iran claim has of this writing not been determined.

Predictably, oil prices surged as soon as oil trading resumed Sunday evening.

Remarkably, oil prices retreated again almost immediately, and as of this morning are at about the same level they were before President Trump ordered the attacks on Iran.

It has now been well past 24 hours since the US bombed Iran’s nuclear enrichment facilities, and thus far there has still been no retaliatory measures taken by Iran.

US forces in the Middle East have not been attacked. We should not forget that, with about 40,000 troops at various bases in and around the Persian Gulf region, and with 2,500 troops in Iraq specifically, Iran does not lack potential US targets at which to strike.

The Iranian parliament has called for the closure of the Strait of Hormuz as a response to the US attack. This would disrupt approximately 20% of the world’s oil and liquid natural gas shipments, and would undoubtedly cause a tremendous spike in energy prices globally. However, as of this writing, Iran has not taken any actions to interdict oil tankers passing through the Strait.

Iran, of course, is quite forcefully saying that it will respond.

Abdolrahim Mousavi, the new chief of staff of Iranian armed forces, said in a short statement on Monday morning that the US violated Iran’s sovereignty when it attacked the Fordow, Natanz and Isfahan nuclear sites on Sunday and had “entered the war clearly and directly”.

“The criminal US must know that in addition to punishing its illegitimate and aggressive offspring, the hands of Islam’s fighters within the armed forces have been freed to take any action against its interests and military, and we will never back down in this regard,” he said, in reference to Israel.

Words, however, are not the same as actions. Iran has not taken any action as of yet.

That Iran has yet to respond is not to suggest that Iran will not respond. Some level of retaliation is almost compulsory for Iran, given the efforts it has expended in the region to be a hegemonic geopolitical actor. After the demolition of the Assad regime in Syria and the near-total destruction of Hamas and Hezbollah, Iran’s levers of influence have been greatly diminished over the past twenty or so months; a failure to respond to the US attacks on its own facilities would almost certainly be seen in the region as a sign of perhaps fatal weakness for Iran’s theocratic regime.

Iran has yet to respond—and that is itself a potential indicator of weakness. The longer it takes Tehran to respond, the weaker that response will be. Alternatively, the longer it takes Tehran to respond, the more dramatic that response will need to be to have geopolitical effect.

The length of time it takes Iran to formulate a response also invites a certain speculation: what capacity does Iran still have to respond? What are its ballistic missile capacities after Israel’s near constant aerial assaults? What resources remain with which to menace shipping in the Strait of Hormuz?

Between Operation Rising Lion and Operation Midnight Hammer, the possibility is growing that Iran has been dealt an even more devastating defeat than the reporting thus far suggests is the case.

Will that prove to be the case? We will know in short order.

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Yet even as the damage assessment information starts to flow, the US and the world must grapple with the potential ramifications of Trump’s decision to have the US directly attack Iran.

Did President Trump end a potential threat? Is peace now more or less likely?

Was the attack itself, dubbed Operation Midnight Hammer, even legal, given the Constitutional divisions of authority between Congress and the President over the use of US military force?

With events still unfolding as of this writing, there is much that may change about what is known of the attack, its effects, and its consequences. However, with what is known at this time, we may still construct a broad framework for assessing what transpired and why.

Contents:

• Did President Trump Have The Authority?

• Is Iran A Threat To The US?

• Iran Will Retaliate…But How?

• “Another War”?

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Did President Trump Have The Authority?

Many commentators both in and out of government have decried Operation Midnight Hammer as a case of President Trump exceeding his Constitutional authority.

As I noted last night, contrarian Republican Thomas Massie posted on X that he did not deem the attack to be Constitutional.

Progressive Democrat Congresswoman Alexandria Ocasio-Cortez called for President Trump’s impeachment.

A number of my own readers have expressed similar opposition.

The actual legal situation, however, is not quite so clear.

The legal foundation for Presidential actions to use military force stems from the War Powers Resolution of 19731. Specifically, Section 2(c) of the act2 establishes presumptively clear statutory limitations on Presidents committing the Armed Forces to hostilities.

The constitutional powers of the President as Commander-in-Chief to introduce United States Armed Forces into hostilities, or into situations where imminent involvement in hostilities is clearly indicated by the circumstances, are exercised only pursuant to (1) a declaration of war, (2) specific statutory authorization, or (3) a national emergency created by attack upon the United States, its territories or possessions, or its armed forces.

We should note that the Executive Branch has never viewed Section 2(c) as a significant impediment to Presidential action involving the Armed Forces, as a Reagan-era Office of Legal Counsel Memorandum3 makes clear:

The Executive Branch has taken the position from the very beginning that §2(c) of the WPR does not constitute a legally binding definition of Presidential authority to deploy our armed forces. The Department of State’s position set forth in a letter of November 30, 1973 was that § 2(c) was a “declaratory statement of policy.”

As Reagan’s 1986 bombing of Libya4 and Bill Clinton’s missile strike on Sudan in 1998 illustrate, when Presidents believe they have reason to strike a particular target, they do so, without much concern over the technicalities of Section 2(c) of the War Powers Resolution.

However, there may very well be sufficient statutory authorization already granted by Congress legitimizing Trump’s attack on Iran’s nuclear facilities. Specifically, the Authorization To Use Military Force5 passed by Congress in the wake of 9/11 has fairly broad language on the types of military actions the President may initiate.

That the President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.

While this AUMF was initially passed to allow President Bush to pursue al-Qaeda and the Taliban in Afghanistan, President Obama used it to justify military operations in Iraq and Syria against ISIS—which continues today as Operation Inherent Resolve—and as the legal pretext for the 2016 bombings of Islamic State targets in Libya.

These justifications are not without their challenges, however. Legal scholars such as Jens David Ohlin, writing in OpinioJuris, flatly rejected the premise that the 2001 AUMF extended to cover offshoots of al-Qaeda.

Yes, ISIS once had a relationship with al-Qaeda and Osama Bin Laden, but that prior relationship no longer governs. What matters is the current relationship. Furthermore, the fact that ISIS is the “true inheritor” of Bin Laden’s legacy is neither here nor there. In what sense is ISIS the “inheritor” of Bin Laden’s legacy? The only one I can think of is that ISIS represents the gravest Jihadist threat to the peaceful world — a position once held by Osama Bin Laden. Also, the fact that they threaten U.S. personnel and interests is an argument that proves way too much — plenty of other groups do that as well, which isn’t terribly relevant. None of this makes ISIS fit into one of the AUMF categories (planning, aiding, haboring, etc). Simply put, ISIS is not al-Qaeda.

By similar logic, Iran is not Afghanistan.

Yet Obama’s use of the AUMF to justify further military actions in the Middle East largely went unchallenged. In 2016, in an article initially appearing in the American Journal of International Law6, University of Chicago professors Curtis Bradley and Jack Goldsmith concluded that part of Obama’s presidential legacy was to have expanded the scope of the 2001 AUMF to an almost infinite degree.

In a real sense, then, the 2001 AUMF is President Obama's AUMF. Despite his frequent rhetoric about ending the AUMF-authorized conflict, part of Obama's legacy will be cementing the legal foundation for an indefinite conflict against various Islamist terrorist organizations.

However, this expansion does not rest entirely on Barack Obama’s shoulders. Congress repeatedly declined either to pass new authorizations or to curtail the 2001 AUMF in response to Obama’s reliance on the Bush-era authorization to justify military endeavors throughout the Middle East.

It is challenging to argue that President Trump does not have the same scope of authority Congress was willing to allow President Obama under the rubric of a statutory authorization initially granted to President Bush, when Congress has not updated that authorization.

I will note that I have in the past argued against the continued reliance on the Bush-era AUMFs for justifying virtually any military operation in the Middle East or elsewhere.

On that authority has rested all US troop deployments to the Middle East since. Barack Obama used the Bush-era authorizations during his Administration, and President Trump has continued that unconstitutional policy. The Congress has actually encouraged this, despite its obvious Constitutional defects.

In truth, Congress has always been tolerant of Presidents waging undeclared war. In the whole of American history Congress has issued only 11 formal declarations of war, and 6 of those involved the hostile powers in World War Two. The bloodiest of all US wars, the Civil War, is not among the 11 declarations. The assault on the Barbary Pirates immortalized in the Marine Corps Hymn ("to the shores of Tripoli") was undeclared, as were the interventions in Korea and Vietnam. Our longest and costliest expenditures of blood and treasure have never been sanctioned by formal declarations of war issuing from the Congress.

Put another way, our longest and costliest expenditures of blood and treasure arguably have been illegal and unconstitutional.

While the legal and Constitutional arguments against President Trump having the authority to order Operation Midnight Hammer are substantial, the legal reality is that, historically, those arguments have failed to persuade.

Certainly, Congress has failed completely to defend its Constitutional prerogatives in this area. As the late Justice Antonin Scalia noted in his concurrence in United States v Irvine7, there is legal substance to the doctrine “qui tacet, consentire videtur” ("he who is silent is taken to agree”). By refusing to take action even to limit the scope of the 2001 AUMF, or to reject earlier reliances by President Obama on that AUMF, Congress has potentially legitimized its expanded usage, arguably ceding to the President its Constitutional authority even to declare war.

Where that leaves President Trump’s actual authority is left for the reader to decide.

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Is Iran A Threat To The US?

Legal questions of authority aside, the operative factual question is whether or not Iran’s nuclear weapons program constituted any sort of threat to the United States.

Readers will note that I am referring to Iran’s nuclear enrichment activities as a nuclear weapons program. That is not accidental.

Iran is not merely enriching uranium to increase the concentration of the radioactive U-235 isotope. Iran is producing quite a bit of highly enriched uranium, and while it claims that its aims are entirely “peaceful”, it has been decidedly less than cooperative with the International Atomic Energy Agency on establishing either what those peaceful purposes are, or implementing safeguards with the IAEA to ensure the enrichment remains “peaceful.”

In a May 31 report to the IAEA Board of Governors8, IAEA Director General Rafael Grossi reported that Iran was producing 34kg of 60% enriched uranium each month, and had accumulated 408.6kg of 60% enriched uranium.

Civilian nuclear reactors typically use uranium enriched to only 3%-5%9, and only a few research reactors utilize highly enriched uranium for producing medical-related istopes.

Iran is producing highly enriched uranium at levels that exceed all plausible needs for a civilian nuclear power program or a nuclear medicine program.

In a separate report also dated May 3110, the IAEA concluded that Iran has been conducting an “undeclared structured nuclear programme”, and has been doing so for decades.

The thrust of the two reports is a very substantial and fact-based challenge to Iran’s assertions that its nuclear program is “peaceful.”

While many of the findings relate to activities dating back decades and have been made before, the IAEA report's conclusions were more definitive. It summarised developments in recent years and pointed more clearly towards coordinated, secret activities, some of which were relevant to producing nuclear weapons.

With this as the assessed backdrop by the IAEA, how should a President of the United States view televised statements by Iran’s Supreme Leader Ayatollah Ali Khamenei that “Death to America” is, in fact, Iranian policy?

The situation between America and Iran is this: When you chant 'Death to America!' it is not just a slogan – it is a policy. I have stated the reasons previously. For many years, from the 1940s to the 1970s – that is 30 years – the Americans did everything they could do against the Iranian nation. They hit Iran in any way they could – financially, economically, politically, scientifically, and morally.

Moreover, we need to not overlook the reality of the dangers highly enriched uranium itself presents. Iran does not need to consolidate its stockpile of enriched uranium into a series of nuclear weapons to present a strategic threat to the United States or to any other nation. Just the enriched material itself can be utilized to produce “radiological weapons”—so-called “dirty bombs”.

The IAEA identified such weapons as a potential threat of nuclear terrorism as far back as 2005.

The IAEA has categorized four potential nuclear security risks: the theft of a nuclear weapon; the acquisition of nuclear materials for the construction of nuclear explosive devices; the malicious use of radioactive sources — including in so-called "dirty bombs"; and the radiological hazards caused by an attack on, or sabotage of, a facility or a transport vehicle.

Historically, the general perception of the threat of radiological weapons has been relatively low11, with the belief that the explosive spread of radioactive material would be limited in scope by the very nature of such devices. However, “low threat” is not the same as "no threat”.

Would Iran gift a portion of its store of highly enriched uranium to Hamas, Hezbollah, or one of its other terror proxies, to create a nuclear terror event either in the Middle East or elsewhere? There is, of course, no way to answer that question definitively—but can a President of the United States afford to take that chance?

Nor is this simply a question of the US or the IAEA meddling in Iranian internal affairs. Iran ratified the Nuclear Non-Proliferation Treaty in 1970, Article III of which obligates non-nuclear weapons states such as Iran to cooperate with the IAEA to ensure proper safeguards are in place to prevent the conversion of nuclear energy programs from civilian to military purposes.

The IAEA reports over the years have been a consistent documentation of Iran’s refusal to measure up to its NPT Article III commitments.

If it had become known prior to Israel’s initial attacks last week that Iran was in possession of a functioning nuclear weapon, or even several such weapons, would people in the United States feel more or less safe?

The answer to that question is the extent to which Iran’s non-compliance with its NPT Article III commitments poses a strategic threat to the United States, and is the extent to which Iran’s uranium enrichment activities may be accurately described as a nuclear weapons program.

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Iran Will Retaliate…But How?

As of this writing, Iran has yet to retaliate against the United States for Operation Midnight Hammer.

President Trump last night, and Secretary of Defense Pete Hegseth again this morning, warned Iran against any such retaliation.

Despite such warnings, retaliation should be expected.

Already, the Iranian Parliament is calling for Iran to close the Strait of Hormuz, the channel between the Persian Gulf and the Gulf of Oman. With 20% of the world’s oil traversing the Strait, even a brief disruption of oil shipments would send oil prices skyrocketing, potentially sparking a renewed hyperinflation cycle in the United States and elsewhere.

Can Iran maintain such a closure in the face of a US Naval presence in the Persian Gulf? That seems unlikely, although if it was maintained for even a few days the impact on oil prices could reverberate for far longer than that.

Iran could attempt missile and/or drone attacks on US bases and personnel in the region. With some 2,500 troops stationed in Iraq, and a total of around 40,000 stationed throughout the Middle East, Iran has no shortage of tempting US military assets to attack.

Such retaliations would almost assuredly spark further reprisal attacks by the United States, as President Trump has stated repeatedly.

There is also a concern that Iran may attempt a retaliation via one of its proxy terrorist groups, such as Hamas or Hezbollah. That may be a more problematic approach for Tehran, as Hezbollah particularly has shown little appetite for getting involved in this latest conflict, with Hezbollah sources reportedly claiming that “Iran can defend itself”.

With Iraq’s Kataib Hezbollah (no relation to Hezbollah in Lebanon) calling Israel’s attacks on Iran “deeply regrettable”, but announcing no intent to retaliate against either Israel or the United States, there is more than a little doubt that Iran’s proxies are up for any sort of conflict with either the US or Israel at this time.

The natural expectation is that “something” will happen, and soon, but in light of Israel’s success thus far in its air war against Iran, what Iran’s remaining capacities for retaliation might be makes assessing what retaliatory measures are more or less likely somewhere between difficult and impossible.

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“Another War”?

The concern on the minds of many is that this attack by the US is the prelude to yet another extended US engagement in the Middle East.

It would be folly to rule out such an outcome, but we should also note that President Trump’s position has been focused and explicit: Iran cannot obtain nuclear weapons. Beyond that, Trump has explicitly declaimed any desire for a protracted war with Iran.

As many on X have noted, President Trump has been explicitly opposed to Iran obtaining nuclear weapons, and his position that Iran’s enrichment activities are a nuclear weapons program in violation of the NPT predates his first term as President.

None of this can be taken as assurance that Operation Midnight Hammer will not become yet another “forever war” in the Middle East, but it can be taken as President’s Trump sincere desire that such a war not emerge from this.

A great deal will depend on whether or not the attacks particularly on the Fordow facility were as devastating as Trump has claimed.

Various Iranian sources are claiming the damage was in fact largely superficial. Others are claiming the site had been evacuated in anticipation of a US attack, thus the potential for significant damage was largely eliminated.

Satellite imagery does show a significant amount of activity around the Fordow site last week, suggesting supplies, records, equipment, or perhaps even the store of highly enriched uranium was removed from the site prior to the US attack.

Yet if the site’s centrifuge cascades—which likely could not be quickly removed—have been damaged, then even with the materials that were removed Iran may find it difficult to resume its enrichment operations.

If Iran’s enrichment efforts have been brought to a standstill then President Trump’s attack objectives have largely been met.

That will not end Iran’s interest in nuclear weapons.

Even before Israel attacked, Iran responded to the IAEA’s latest censure by threatening to withdraw from the NPT. In the days following Israel’s opening strikes, the Iranian parliament prepared a bill to formally do just that.

Assuming the current regime remains stable and intact, it is reasonable to presume that Iran will do exactly that.

Where will that leave the Middle East? Where will that leave the wider world?

At this juncture, there is no way to predict such outcomes. Only one other nation has withdrawn from the NPT—North Korea, which was a largely isolated nation prior to its withdrawal and has been regarded as a pariah state since.

Would Iran be similarly isolated? Probably not, as its reserves of oil are a commodity the world wants regardless of the political climate in Tehran. But Iran’s ability to influence events in the Middle East could be greatly circumscribed should it step outside the parameters of the NPT.

Will any of this require extended US military engagement against Iran?

As of this writing, nobody really knows.

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President Trump made his decision, and that decision was to attack Iran’s uranium enrichment facilities.

Update 5 (02:00AM CDT)

Iranian parliament member Mohamad Manan Raisi, who represents the city of Qom near the Fordow enrichment site, is reported to be saying Fordow sustained only “superficial damage”, although no evidence has been provided either way. Raisi noted that “all sensitive materials” had been removed from the site, which could mean that any uranium which had been present at the site had already been removed.

The major question is whether or not the gas centrifuges essential for the enrichment process are still operational.

The International Atomic Energy Agency (IAEA) has reported no increase in radiation level near the Fordow site. Whether that confirms the claims of only superficial damage to the site or not is unclear.

Iran has launched at least two missile salvos using a total of 27 missiles (Iran’s very first missile attack last week used over 100). Al Jazeera is reporting “extensive damage” in Tel Aviv and Haifa, with the Israeli army reporting 16 injuries.

An apparently pro-Iranian think-tank, the Quincy Institute for Responsible Statecraft, is claiming there was “no evidence” that Iran posed a threat to the United States, and that all this attack has accomplished is guaranteeing that Iran would be a nuclear weapon state within the decade.

Apparently Iran’s Supreme Leader saying “Death to America” plus enriching uranium to weapons grade levels is not a threat to the United States in the eyes of the Quincy Institute.

Update 4 (10:00PM CDT)

Iran is claiming that it anticipated the attack and that Fordow has not suffered “irreversible damage”.

Mahdi Mohammadi, an adviser to Iran’s Parliament Speaker Mohammad Bagher Ghalibaf, says Iran had been anticipating the US attack on Fordow.

“The site has long been evacuated and has not suffered any irreversible damage in the attack,” Mohammadi wrote in a social media post.

In his usual Trumpian fashion, President Trump warned Iran against retaliation.

I would expect Iran to at least attempt a retaliation of some kind. Whether Iran has missile capacity left to seriously threaten the US is a question we are likely to see answered within the next 24 hours.

For his part, House Minority Leader Hakeem Jeffries shows once again that he has no real clue what is happening.

“Donald Trump promised to bring peace to the Middle East. He has failed to deliver on that promise. The risk of war has now dramatically increased, and I pray for the safety of our troops in the region who have been put in harm’s way,” Jeffries said in a statement, adding that Trump “misled the country about his intentions”.

“Risk of war”? It’s safe to say there’s been a war with Iran for the past 8 days. President Trump can’t increase the “risk of war” because there’s already a war.

Intriguingly, the UN Secretary-General, António Guterres, expresses “concern” over the attacks and is somewhat critical of the United States, but stops short of any condemnation of the US for its attack.

I am gravely alarmed by the use of force by the United States against Iran today. This is a dangerous escalation in a region already on the edge – and a direct threat to international peace and security.

There is a growing risk that this conflict could rapidly get out of control – with catastrophic consequences for civilians, the region, and the world.

Iran is proving to have very few friends in the world.

Update 3 (9:35PM CDT)

Israeli Prime Minister Benjamin Netanyahu has released a video message congratulating President Trump on the apparently successful US attack on Fordow.

NASA’s fire information system is detecting a “significant heat-generating event” near Fordow. It would seem at least some damage was done to the facility.

This being the weekend it is too soon to tell how much oil prices will spike because of these attacks. A price surge is anticipated, however, for obvious reasons.

Update 2 (9:11PM CDT)

President Trump’s address was brief, celebratory, and contained little that was not in his earlier Truth Social post.

One point warrants emphasis: President Trump called on Iran to make peace or further attacks will follow.

In for a penny, in for a pound.

Military officials speaking on condition of anonymity reported 6 GBU-57 bombs were used on Fordow and 30 submarine-launched TLAM missiles were fired against Natanz and Isfahan.

Update 1 (8:36PM CDT)

Iranian officials have confirmed the strikes. Still no confirmation of the damage done particularly to Fordow.

Obviously, the bombings create heightened risks to the 40,000 US troops stationed in the Middle East.

Starting Point

A short while ago, President Trump posted this message to his Truth Social account:

Presumably, this means B2 bombers delivered GBU-57 “bunker buster” bombs to the three sites. Aside from Trump’s declaration that Fordow is “gone”, precise damage assessments are not known as of this writing.

The responses from various quarters appear to be along predictable lines.

The Houthis in Yemen said this was the “beginning of war”.

Mohamed al-Farah, a member of the Yemeni group’s political bureau, says it is clear that Trump wants the hostilities to be quick and for the war to end.

However, “destroying a nuclear facility here and there is not the end of the war, but it’s the beginning,” al-Farah said in a statement.

Congressman Thomas “Cranky” Massie was his usual petulant self.

The ever unctuous Senator Lindsey Graham was predictably thrilled.

For myself, I stand by what I said earlier on this matter:

I do not want the US to attack Iran. I will continue to support President Trump if he does order the US to attack Iran.

Because the world cannot allow Iran to develop nuclear weapons.

I pray this will not be the start of a wider escalation, but President Trump has my support and my prayers in this challenging moment.

President Trump has said he will be addressing the nation from the White House at 10PM Eastern.

Welcome to interesting times!

This story is still developing.

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Corporate media is convinced that he already has decided he will.

President Trump told senior aides late Tuesday that he approved of attack plans for Iran, but was holding off on giving the final order to see if Tehran will abandon its nuclear program, three people familiar with the deliberations said.

Since his private instructions in the White House Situation Room to the military, Trump has disclosed publicly that an attack is an option.

Was Tucker Carlson right after all? Will there now be “all out war”?

The only rational and even sane answer to that question is always “I do not know.”

I do not know if Donald Trump actually will attack Iran.

Tucker Carlson does not know if Donald Trump actually will attack Iran.

Corporate media does not know if Donald Trump actually will attack Iran.

What any of us know is that Donald Trump may attack Iran.

A number of my readers have expressed support for the US joining Israel’s attacks to varying degrees.

Others are opposed.

Perhaps the better question to ask is “should Donald Trump attack Iran?”

How a person answers that question hinges mightily on how they view the war, the countries involved, and the United States overall.

We should note that Donald Trump has already stated his casus belli for attacking Iran, and reiterated it from the Oval Office earlier today.

Reporter: Have you seen the Tucker Carlson, Senator Ted Cruz interview? It seems like this issue on whether or not the United States should strike is kind of dividing a lot of your supporters.

Donald Trump: No, my supporters are for me. My supporters are America first. They make America great again. My supporters don't want to see Iran have a nuclear weapon.

Tucker's a nice guy. He called and apologized the other day because he thought he said things that were a little bit too strong, and I appreciated that. And Ted Cruz is a nice guy. I mean, he's been with me for a long time. I'd say once the race was over, he's been with me ever since, right?

But very simple. If they think that it's okay for Iran to have a nuclear weapon, then they should oppose me, but nobody thinks it's okay. People that don't want... I don't want to fight either. I'm not looking to fight. But if it's a choice between fighting and them having a nuclear weapon, you have to do what you have to do.

Maybe we won't have to fight. Don't forget, we haven't been fighting. We add a certain amount of genius to everything, but we haven't been fighting at all. Israel's done a very good job of that.

But we'll see what happens. The bottom line is they can't have nuclear. And if Ted, I can't imagine that Ted Cruz said it's okay for Iran to have nuclear, including Tucker. I don't think Tucker says it's okay. The problem is then they get themselves into a thing. They don't want them to have nuclear, but then they say, well, we don't want to fight. Well, you're going to have to make a choice because it's possible that you're going to have to fight for them not to have nuclear.

And it's interesting because I did ask Tucker. I said, well, are you okay with… nuclear weapons being in the hands of Iran. And he sort of didn't like that. He didn't want to really, but he sort of didn't like that. And I said, well, if it's okay with you, then you and I do have a difference. But it's really not okay with him.

Therefore, you may have to fight. And maybe it'll end, and maybe it'll end very quickly. But there's no way that you can allow, whether you have to fight or not, you can allow Iran to have a nuclear weapon because the entire world will blow up. I'm not going to let that happen.

This is a position with which one may agree or disagree, and which many no doubt will disagree.

Yet the internal logic of President Trump’s position is quite sound. His policy position is that Iran cannot have nuclear weapons and cannot have a nuclear weapons program. He has been consistent on this point for years.

Secretary of State Marco Rubio reiterated that position when the US and Iran first began negotiations over Iran’s nuclear weapons program:

So I think if in fact – Iran likes to say they’re not interested in nuclear weapons. They like to say all they want is peaceful nuclear energy. Then they should not be afraid of inspections by inspectors of any kind, including Americans.

And look, there’s a win here for Iran, okay? They can actually have real economic development, can have real investment in their country, but they have to walk away from sponsoring terrorists, they have to walk away from helping the Houthis, they have to walk away from building long-range missiles that have no purpose to exist other than having nuclear weapons, and they have to walk away from enrichment.

There is little doubt that Iran has been pursuing nuclear weapons. The IAEA finding traces of highly enriched (83.7%) uranium at Iran’s Fordow enrichment site admits of no other conclusion.

When the IAEA censured Iran over their non-compliance with the Nuclear Non-Proliferation Treaty, Iran threatened to withdraw from the NPT. That is hardly the action of a country with no interest in possessing nuclear weapons.

Iran’s parliament in recent days has prepared a bill which, if passed, would begin the withdrawal process.

That Iran is determined to enrich to whatever level they desire has been, regardless of the strictures of the NPT, is a position they made clear after the IAEA censure, and which has been a sticking point throughout their talks with the Trump Administration.

Iran’s position is not reconcilable with President Trump’s position. One or the other must give way, or conflict will ensue.

Clearly, conflict has ensued.

Is Donald Trump wrong about the consequences of a nuclearized Iran? If he is, he is not alone. Saudi Arabia’s Crown Prince Mohammed bin Salman has publicly stated that if Iran acquires nuclear weapons, the Kingdom will also seek to acquire nuclear weapons.

Israel has for years declared a nuclearized Iran to be an existential threat. Israeli Prime Minister Benjamin Netanyahu, in an interview last week with Fox News’ Bret Baier, asserted that not only was Iran “weeks” away from weaponizing enriched uranium, but that it was committed to building up an arsenal of ballistic missiles capable of delivering nuclear payloads.

We should note that Iranian officials have publicly promised to “wipe out” Israel in the past. A primary reason Israel views Iran as an existential threat is because Iran has made existential threats toward Israel.

Consequently, if there is one policy on which Saudi Arabia and Israel find clear agreement, it is that a nuclearized Iran is a threat.

With the IAEA willing to censure Iran over its non-compliance with the NPT, one certainly cannot say that Donald Trump stands alone in the world with his declaration that Iran cannot be allowed to possess nuclear weapons.

However, once one draws that policy line in the sand, the question of “what are you prepared to do?” takes on immediate relevance.

If diplomatic efforts do not dissuade Iran from enriching uranium and pursuing nuclear weapons, how far should the United States—or any nation—go in order to prevent Iran from obtaining nuclear weapons?

If the choice is between a nuclearized Iran and fighting Iran, should Donald Trump refrain from fighting Iran?

If the choice is between a nuclearized Iran and Tucker Carlson’s “all out war” scenario, should Donald Trump choose a nuclearized Iran over waging “all out war”?

President Trump has made his policy stance clear: Iran must surrender its nuclear weapons program, including all enrichment efforts, or Israel’s attacks will continue, and the US may very well join in those attacks.

Is that the right policy? People will reach their own conclusions on that point.

I will not attempt to predict what Donald Trump will do, whether he will or will not attack Iran.

What I will say is that Donald Trump’s stated casus belli is sound:

• Iran is pursuing nuclear weapons, not “peaceful” enrichment for civilian purposes.

• Iran would rather withdraw from the NPT than give up its weapons program.

• Iranian nuclear weapons would be serious threat to the Middle East and to the globe.

• Iran has threatened to wipe the nation of Israel from the face of the Earth.

• Trump is seeking only to dismantle Iran’s nuclear weapons program. That is a precise and limited objective.

With that as his policy framework, should Donald Trump order an attack on Iran’s nuclear weapons facilities, such an order cannot be construed as reckless or ill-considered. Given his policy stance, such an order may very well be inevitable, unless Iran elects to surrender its nuclear weapons program first.

I am a man of peace. I do not want to see any nation at war with any other nation.

I do not want to see Israel at war with Iran.

I do not want to see the United States at war with Iran.

At the same time, I do not want to see Iran with nuclear weapons. I do not want to see the Middle Eastern nuclear arms race that Saudi Arabia has already said would result from Iran having nuclear weapons. I do not want to see Israel attacked with nuclear weapons.

If the choice is between Israel’s continued existence and Iran having nuclear weapons I choose Israel’s continued existence.

If the choice is between the US attacking Iran’s nuclear weapons facilities and Iran having nuclear weapons, I choose for the US to attack Iran’s nuclear weapons facilities.

I do not want the US to attack Iran. I will continue to support President Trump if he does order the US to attack Iran.

Because the world cannot allow Iran to develop nuclear weapons.

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Between repeated aerial assaults and some behind the scenes cajoling by various Gulf state leaders, Tehran appears to have decided that it has had enough war for now.

Gulf leaders and their top diplomats worked the phones all weekend, speaking to each other, to Tehran, Washington and beyond in an effort to avoid a widening of the conflict as longstanding enemies Israel and Iran intensified their attacks in their biggest ever confrontation.

Iran is willing to be flexible in the nuclear talks if a ceasefire is reached, one of the Iranian sources said.

The war has quite clearly not gone well for Iran, with increasing amounts of civilian infrastructure getting hit during Israeli attack waves. Video from this morning shows the headquarters building for the Iranian state news agency on fire after the most recent Israeli assault.

This reiterated my assessment from last night, that Iran is, at this juncture, completely defenseless.

Operation Rising Lion has driven home for Iran one very grim reality: the country cannot protect itself from aerial assault.

Israel has been able to launch daylight bombing raids on Iran with impunity, a reality that is sure to sow at least as much chaos as the the bombing raids themselves.

If President Trump is able to secure a ceasefire agreement, his peacemaking credentials will be greatly enhanced. That could pay dividends in other conflicts such as Ukraine.

If Iran is serious about being willing to actually negotiate on ending its nuclear weapons program, a major source of Middle East instability could be permanently removed.

For its part, Israel stands to reap the geopolitical benefits of having gone toe to toe with Iran and largely prevailed. Iran show of weakness becomes a most daunting show of Israeli strength.

Will there be a ceasefire? I, for one, certainly hope so!

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