Iran War

[OttoVonBismarck]

As is typical, I think Trump misunderstands a lot when he says he will just leave it to the countries who "depend on" the Strait to reopen it. Let's look at some of the deficits in that logic:

1. As we've said numerous times in this thread, oil is a fungible commodity. If the Strait is closed or near-closed, this causes global economic impacts. The fact that the U.S. does not directly import significant amounts of oil through the Strait, or use the Strait to get its own oil to market does not alter this reality. If markets detect finality in a Trumpian claim to simply leave the Strait closed, those gas prices that are likely terrifying him right now will not go down--and will likely go up significantly and (in a political timeline) permanently.

2. The reality though, is more likely the Strait would not remain closed. There's many reasons to doubt that it would. One is that China doesn't benefit from the Strait being closed, even though it has a side deal with Iran (China is not paying the so called toll, its ships are just exempted from attack entirely.) China actually buys more oil from Iraq than Iran, and several other Gulf States remain more important to China than Iran does. China is unlikely to sit out permanently on a policy that is going to hurt its gulf partners. And China would still prefer, as an oil importer in general, to not see the global prices sit at 150/barrel even if it may have special deals to buy from some countries (Iran / Russia) at a lower price. China is still impacted by the higher general price (the same way the U.S. is.)

3. Presuming the above scenario of Iran basically agreeing to reopen the Strait to avoid isolating itself from its last remaining allies, this immediately undermines permanently American influence in the Gulf. China will be seen as a broker of stability and America will be viewed as an unreliable chaos agent. I don't see any scenario where any Trumpist can paint this as a "win."

[Syt]

I think he's looking to set up scapegoats if the oil price stays up. "We go our job done, but the lazy Euros refuse to open the trade, because they want to hurt America!"

[crazy canuck]

The US is an unreliable chaos agent.  That fact was established before this war even started.

[The Brain]

Do US oil bros think high oil price is good or bad?

[PJL]

I suspect for China, oil isn't actually the biggest concern re the closing of the Hormuz Strait. Looking at the price of urea (fertilizer) and sulphur right now, which are comparable to 2022 or, for the latter, even worse, I would imagine these are the primary incentives for them to help negotiate a deal on reopening the straits.

[OttoVonBismarck]

I think he's looking to set up scapegoats if the oil price stays up. "We go our job done, but the lazy Euros refuse to open the trade, because they want to hurt America!"

One thing is there's been infrastructural damage to the Gulf, and the shipping lanes are mega backed up. Even if Trump could stop the war today and Iran agreed to stop attacking shipping today, there's going to be months and months before things are back to normal. As that reality settles in the wild swings in the price of oil likely settle down, but drift to being locked in at > 100 probably for months until finally starting to go back down.

Gasoline prices always lag oil prices by sometimes a month or more, so the political impacts Trump is worried about are more akin to a train moving at high speed, he can hit the brakes, but it ain't stopping on a dime, that train is going to keep going for a while and there's nothing Trump can do about it now.

[HVC]

He'll come up with some bullshit excuse and at least 30% of voting Americans will believe him. It's the dems fault for selling American oil to the damn Ukrainians.

[Tonitrus]

I'm thinking now that a ground troops scenario is off, and his announcement will be a convoluted, grand TACO.  Plus NATO pullout (which will face a messy legal/political fight).

[Norgy]

In distant Norway, the cabinet had to eat crow and remove all tax on diesel and gasoline. The companies selling it replied with a new increase in prices.

It is good to know at least some people are earning.

[Tonitrus]

Trump didn't say anything new that he hadn't rambled on about already in the last couple days.  So far, solidifies my hunch that a ground op is off the table and he's going to drop it/TACO inside a couple weeks.

Sleepy Don also sounded tired and weak...Iran will be happy.

[Valmy]

Trump didn't say anything new that he hadn't rambled on about already in the last couple days.  So far, solidifies my hunch that a ground op is off the table and he's going to drop it/TACO inside a couple weeks.

Sleepy Don also sounded tired and weak...Iran will be happy.

I will take the other side. He can't just leave Israel alone and the strait in Iranian hands. He doesn't want to but is being forced into it which is why he keeps saying weird contradictory nonsense.

But we'll see. Both options will be disastrous. But maybe you are correct.

[HVC]

All analysis changes if and when epstein is back on the front page.

[Tonitrus]

I will take the other side. He can't just leave Israel alone and the strait in Iranian hands. He doesn't want to but is being forced into it which is why he keeps saying weird contradictory nonsense.

But we'll see. Both options will be disastrous. But maybe you are correct.

I think he can do those things.

I mean, he's setting it up..."we've changed the regime three times...they're more reasonable now" plus the "if you (Euros) want the oil, go and get it"...with a little bit of "we have your nuclear dust under surveillance...if you make a move..."...all signs he is going to pull the plug and declare it a "win".

But I don't know why he bothered with this address...nothing new said, looks like a weak old man to Iran...nothing gained at all.

[crazy canuck]

The US will leave the area. China will then convince Iran to open the straights and help Iran rebuild from the damage the Americans and Israelis inflicted.

The US will become increasingly irrelevant to the world.

China probably doesn't have to invade Taiwan. In a couple of years, Taiwan will seek entry to China.

[The Minsky Moment]

In his worldview a weak dollar is an advantage somehow.

A weak dollar makes US exports less expensive and imports more expensive.  Which is a good thing because Americans will get less for what they send overseas and pay more for everything else. I mean because a weaker dollar will prompt the Fed to raise rates and get those pesky house prices down   I mean because weakening the dollar internationally will stop the imperialist Yankee pigdogs from bullying other nations.

https://www.ft.com/content/1c4189e9-36af-4779-b862-d868cf2aff76?syn-25a6b1a6=1&utm_source=substack&utm_medium=email

Foreign central banks have slashed their holdings of Treasuries at the New York Federal Reserve to the lowest level since 2012, as countries sell the US government bonds to prop up their economies and currencies in the wake of the Iran war.

The forces that result in the dollar's international reserve role are very powerful and not that easy to dislodge.  But they aren't permanent - just ask Britain and the pound sterling.  Three more years can do a lot of damage.