Yves here. We’ve gone from the fog of war to fog-of-war-colored post mortems in the (so far) short US-Israel v. Iran conflict. One striking element is the extreme Trump-led US cheerleading on how the Western aggression has eliminated the Iranian nuclear enrichment program. That in theory eliminates a main casus belli, as in greatly weakens the case for a reboot. But as Satyajit Das discusses below, Iran has suspended cooperation with the IAEA, and is highly unlikely to agree again to its former level of oversight. So this pretext looks to be adequate to keep raising the weapons of mass destruction in Iraq nuclear weapons bogeyman.
Regardless, Israel remains committed to regime change, as do American Iran hawks. The most likely course for continued Israel action is terrorism and assassinations. And Iran has treated senior-level assassinations as demanding a kinetic response (even if arranged so as not to do much damage).
But the biggest brake is likely to continue to be Trump’s fear of Mr. Market, here of energy prices. I thought the oil price move during the exchange of blows was muted, yet it was enough to lead to alarmed and unhappy Truth Social posts, and even the embarrassment of Secretary of State Marco Rubio begging China to keep Iran from closing the Strait of Hormuz.
Das argues that the oil market complacency is very much overdone, and explains why in detail, including the heretofore ignored possibility of another oil embargo. Another risk is that Israel will attack Iran’s oil production. Alexander Mercouris has argued that these complexes, including refineries, are extremely large and well-constructed, so that bombing and missile strikes pretty much always (despite the showiness of the explosions) do limited and repairable damage. Of course, this equation also applies to the threat of Iran bombing facilities in other Gulf states, but Iran does possess hypersonic and other potent missiles. It is over my pay grade to assess whether a sustained attack, targeting particularly vulnerable parts of these operations, could change this general picture.
To address a view among some analysts and commentators, that it was a mistake for Iran to cease hostilities, let me turn the mike over to Mark Sleboda, as summarized at Moon of Alabama:
Mark Sleboda is summarizing his view of the current episode in the war on Iran (slightly edited for clarity):
What the Hell Just Happened in the Middle East You May Ask?
My take –
The US/Israel realized:
- that their regime change plans were not coming to fruition,
- that the Iranian govt had more support and stronger foundations than they had believed,
- that Israeli air defense was collapsing/exhausted and
- that an attrition war of long range strike was going to go badly for Israel.
- And Trump began to get freaked out over the rising price of oil with the Iranian threat of closing the strait of Hormuz.
So they wrapped it up, declared victory, and demanded a ceasefire.
Iran agreed because they too have been badly shaken through Israeli covert warfare and their own air defense all but collapsed.
The can will only be kicked down the road, and both sides will start rebuilding, and making preparations and plans for the next round, the next war. This was only a skirmish at the end of the day …
Iran, for surviving, maintaining a civilian nuclear enrichment program, and for the fact that it was the US/Israel that pushed for the “ceasefire”, comes out slightly ahead on points.
The biggest loser – the collapse of the NNPT and international law.
Douglas Macgregor, in a new Deep Dive interview, adds that the US was badly taxed as well, that its naval assets had come close to exhausting their missile stocks and were going to have to depart to restock.
By Satyajit Das, a former banker and author of numerous technical works on derivatives and several general titles: Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives (2006 and 2010), Extreme Money: The Masters of the Universe and the Cult of Risk (2011) and A Banquet of Consequence – Reloaded< (2021). ). His latest book is on ecotourism – Wild Quests: Journeys into Ecotourism and the Future for Animals (2024). This is an expanded and extensively updated version of a piece first published on 23 June 2025 in the New Indian print edition
Western-supported Israeli expansionism and domination are reshaping the Middle East and energy markets in an unpredictable manner.
Peace In Our Times?
Complacent financial markets and policymakers are playing out a theatre of the absurd based on little detail and propaganda– as the old trope states truth is the first casualty of war.
After the conflict commenced but before the US strikes on Iran, the market price for oil for future delivery was trading around the mid-sixties per barrel well below the spot price which had risen to the mid seventies. This is below the average inflation adjusted price for two decades. It moved marginally higher after news of the American attacks on Iranian nuclear sites. Prices then fell sharply following an almost apologetic, symbolic response from Tehran, similar to the incident in 2020. This was seen as signalling de-escalation to avoid a full-blown conflict. This was despite the continuation of the air war between Israel and Iran.
On 24 June, markets did a victory lap after US President Donald Trump announced Iran and Israel had agreed a ceasefire that would end their conflict within 24 hours. Brent crude immediately fell 4.1 percent to $67.61 a barrel, around the price before Israel’s initial attack on Iran on 13 June. Oil market reactions were surprising given that there was no substantive agreement or details. As of Wednesday 25 June, the ceasefire appeared to be partially holding despite violations but remained fragile.
Caution is warranted. There is no certainty that Iran’s nuclear capabilities have been destroyed or significantly degraded. The fate of Iran’s highly enriched Uranium is unknown. Iran, which has extensive nuclear expertise despite the targeted killings of its scientists, has not indicated abandonment of its programs. Given the continuing threats it faces and the knowledge that the US and Israel would not have dared attack if it possessed nuclear armaments, it might now be tempted to weaponize. This is precisely what Saddam Hussein did after Israel bombed his nascent nuclear programme in 1981 eventually leading to the Gulf Wars. In effect, Iran is being forced to choose between becoming Libya (where Colonel Gaddafi gave up his nuclear ambition and was removed then murdered) or North Korea.
Iran has the option of moving its program underground by withdrawing from the Non-Proliferation Treaty and preventing inspections. The Iranian parliament has voted to stop cooperation with the UN nuclear oversight body. Many countries, including Israel itself, have developed nuclear weapons covertly.
Given that Tel-Aviv has shown little regard for ceasefires in Gaza, it is fanciful to think that there will be even a sustained halt in hostilities. Israel has used the Iranian nuclear threat arguing that the Islamic nation is within weeks or days of building a bomb as an excuse for its aggression since 1992! Suggestions by the ever changeable US President that there may be no need for a nuclear agreement with Iran as it was unnecessary with the “obliteration” of the nuclear sites may prove problematic for Prime Minister Netanyahu especially if damage assessments show less damage than currently assumed.
Its campaign against the abandoned Palestinians and attacks on Lebanon and Syria have not ceased. The Iranian action was in part to distract the world’s attention from its continuing genocidal atrocities. These will come back into focus. Qatar has indicated that it wants the US to actively press for a comprehensive cease fire in Gaza. The UN and West, if it has any moral courage remaining, may impose meaningful sanctions. Prime Minister Netanyahu needs a state of permanent war, through the support of his Zionist coalition partners, to stay in power to forestall legal actions against him and his family.
Without meaningful sanctions relief and security guarantees, it is difficult to see a permanent cessation in hostilities. There is too much bitterness, mistrust and history between the combatants. Iranians, especially the Republic Guards whose leaders were assassinated, are unlikely to forget and forgive. For Iran, recent events have confirmed, it that was needed, that Israel, the US and its allies are its enemies.
Despite its undoubted military capabilities, the Islamic Republic will have noted that the Jewish state is not invulnerable to its missiles and needed extensive US support and intervention in the “12-day war”. Tehran has tested its weaponry under battlefield condition and can now refine its arsenal. Israeli sleeper cells and intelligence penetration will be less effective in future conflicts. Tel-Aviv cannot, as Prime Minister Benjamin Netanyahu admitted, sustain a war of attrition. Iran will need to be patient rebuilding its capabilities and proxies. 911 occurred years after the US-led intervention in Iraq.
The ‘truce’ may earn President Trump ‘points’ towards the Nobel Peace Prize that he covets. It is unlikely to bring lasting peace to the Middle East.
Oil Matters
Western focus on the Middle East is because of Israel, to expiate its own Holocaust guilt, and energy.
While renewables especially solar and wind power have grown as part of the mix, oil and gas, alongside coal, remain major sources of energy fuelling economies. Currently the world consumes around 100 million barrels of oil daily (around 50 percent for transport and 20 percent for petrochemicals). While energy intensity (usually measured as the tonnes of oil needed to create $1,000 of GDP) has declined from 0.12 in 1975 to 0.05 in 2022, no significant decline in demand is forecast due to limited alternatives for heavy transportation and as a chemical feedstock. Natural gas is around 23 percent of the world’s total energy consumption and provides a quarter of global electricity.
The Gulf region is the world’s most important energy-producer, containing around 50 percent of proven reserves. It produces around 33 percent of the world’s oil and around 17 percent of natural gas. Any serious disruption would affect availability and price flowing through to economies.
The current lethargy comes from a perception of ample supplies. In the lead up to the current crisis, OPEC, driven by Saudi pressure, increased output which combined with slowing demand from decelerating economic activity particularly in China caused sharp declines in price. In a repeat of 2015, Saudi Arabia sought to punish producers who were producing above quotas agreed between member states. The actions may have been to placate President Trump who has consistently sought lower oil prices. Saudi Arabia’s objectives remain unchanged: generate revenue at necessary levels, maintain its market share as low prices make US shale oil and gas uncompetitive and accelerate use of a potentially stranded resource.
Even before recent events, rising tensions and spreading conflict had altered the equation. There is increased stockpiling and consumption; military aircraft are not designed for fuel efficiency! But the serious long-term threat comes from collateral damage to energy facilities or the weaponization of oil and gas supplies.
There is no guarantee that Israel, whose declared objectives is eliminating the Iran’s nuclear capabilities and unseating its leaders, will not at some time target oil and gas facilities to increase pressure on the regime. Iran exports up to 2 million barrels of oil and refined petroleum products daily (around 2 percent of total oil supply). This loss may not be able to be covered by other producers whose capacities are already strained due to lack of infrastructure, in part because of under-investment in the shift away from fossil fuels. Only Saudi Arabia, the UAE and Russia, whose capacity is hobbled by sanctions, may have actual additional available capacity.
The US direct military involvement has shifted the dynamics making long-term resolution or containment more difficult. The key is how Iran and the Arab world reacts.
Narrow Waters
One familiar option is for Iran to seek a total or selective blockade of the Strait of Hormuz, the chokepoint of global energy supplies where a fifth of world oil supply passes. An old rule in the Persian Gulf states if Iran is under threat, then they will seek to prevent regional competitors selling their oil. Reports suggest that in the wake of the US bombing Iran’s parliament approved moves to close the strait. This would require approval from the Supreme National Security Council, a body led by an appointee of Iran’s Supreme Leader Ayatollah Ali Khamenei. The resources needed are not demanding. The Strait was briefly closed in the early 1980s using a few mines. Alternatives include GPS spoofing to misdirect ships onto collision courses.
Even the threat of closure or resumption of hostilities will make shipping companies reluctant to transit the narrow waterway due to insurance concerns. After the Israeli attack on Iran, the charter costs of large crude carriers (capable of carrying 2 million barrels of oil) from the Gulf to China more than doubled (from around $20,000 to just under $48,000 per day). Cost of some refined products like diesel and jet fuel also rose sharply, especially in Europe.
Another perennial option is attacks on other Gulf nation’s oil facilities, which has occurred previously. Already in-place Iranian-backed domestic militias are well-placed to undertake these providing Iran with ‘plausible deniability’. Iraq, which supplies over 4 million barrels of oil a day, is vulnerable due to the location of infrastructure in Basra close to Iran and the history between the two nations. A variant would be action against American military bases in these countries, which were unavailable for the US attack on Iran, at the request of the host states, necessitating a long, expensive and risky flight.
Iran would have been reluctant to attack Gulf neighbours with whom they have carefully re-established relations and a modus vivendi over recent years. However, on 23 June, Iran launched a well-telegraphed strike of on Al Udeid base in Qatar. Suggestions are that there was limited damage and no casualties because the bases had evacuated. In one more bizarre tweet of his surreal rule. President Trump thanked the Iranians for advance notice of the very weak response and signalled that peace was imminent … [as the Iranians had] “gotten it all out of their ‘system’ …. there will, hopefully, be no further HATE”.
The real option, rarely mentioned now, is a co-ordinated oil embargo on the US, Europe and supporters of Israel. While Arab unity is elusive and never guaranteed, there is a historical precedent – the 1973 oil embargo by Arab members of OPEC in response to the Yom Kippur War and the US support for Israel.
What Do MBS And The Emir Think?
The crucial actors are West-leaning Saudi Arabia, the UAE and Qatar. Despite competition with Iran for regional influence and the Sunni and Shia schism, there are reasons that an embargo remains a powerful action. While Qatar, Saudi Arabia and the UAE predictably criticised Iranian actions against the US base, there are deep underlying concerns.
First, they fear regional instability if the present Iranian regime is toppled. Iraq, Afghanistan and Syria highlights the West’s lack of staying power and appetite for casualties and the cost of prolonged military engagement. In addition, the West is struggling to manage its commitments to support Ukraine. The prospect of refugees from Iran seeking safety in other Middle East countries, as in previous conflicts, is unwelcome.
Second, the US and Israeli actions despite the lack of evidence of any weapons development program let alone bombs (confirmed by the IAEA and US defence establishment) should be alarming. There is the precedent of Iraq’s non-existence WMD and the possible complicity of the IAEA – the Board’s ‘Non-Compliance’ Resolution on 12 June 2025 preceded Israel’s strike on Iran the very next day. Western denial of Iran’s right to even peaceful nuclear capabilities will concern Saudi Arabia and the UAE which have ambitions in this area.
This leaves the region subservient to Israel as its only nuclear capable actor. The Saudis are already angry about US refusal to sell its F-35 fighters based on Washington’s policy of maintaining Israel’s qualitative military advantage in the region. Given expansive Israeli visions of Judea and statements by extreme Jewish elements that Turkey, Qatar and UAE are “next”, the Gulf regimes must recognise their rising vulnerability to a now emboldened US supported Israel intoxicated with its successes. Announcing agreement to the ceasefire, Prime Minister Netanyahu trumpeted that its military actions now placed Israel in the ranks of great global powers.
For many, MAGA has morphed into MIGA – Make Israel Great Again. The US appears to have been coerced into intervening on behalf of the Jewish state. One X denizen tweeted that “America so deindustrialized we don’t even manufacture our own consent”.
Third, Israel and its supporter’s will continue to seek regime change in Iran and potential replacement by the scions of the Shah. In a post to the Truth Social platform, President Trump promoted the idea of regime change in Iran to ‘MAKE IRAN GREAT AGAIN’. This will frighten Gulf monarchies. They must realise that their kingdoms now only exist at the behest of foreign powers. The ruling dynasties can be displaced at the whim of the West. Given the volatile foreign policies of the US and its allies including their short-lived and disastrous backing of the ill-fated Arab Spring, this possibility is non-trivial. As Hosni Mubarak discovered, US support for its ‘allies’ exists until it doesn’t. Subsequently, the Muslim Brotherhood found that Western belief in democracy was highly selective.
Fourth, America’s confiscation of Russian assets, tariffs and recent economic policies have created unease in the Petrostates about the security of their Western investments. The Gulf states have already begun to favour domestic projects over foreign investments.
Fifth, the Gulf population, excepting the rulers and their acolytes, is predominantly pro-Palestinian and anti-American. Siding with Israel and the West is existentially dangerous for the internally fractious ruling families notwithstanding their highly repressive domestic security infrastructure. Internal instability is complicated by increasing financial constraints which reduce the scope for maintaining rule through generous handouts to citizens. Oman has become the first Gulf state to introduce income taxes as subsidies for locals and tax-free salaries have left the region fiscally exposed.
Sixth, there are economic consequences. Flight of foreign workers and firms from Gulf states will disrupt activity. Even temporary suspension or re-routing of flights, given the expansive business plans of Middle East airlines, are unhelpful.
Higher oil prices, under an embargo, would financially benefit producers struggling to balance budgets. Saudi Arabia needs prices around $80 to $100 per barrel depending on production levels and spending.
An embargo that maintained their energy supplies would be supported by non-aligned nations, who oppose the wars in Gaza and Iran and Western meddling. China which is a major importer of Iranian and Gulf oil (around 1.5-1.7 million barrels a day), in particular, would benefit from diversion of supplies to meet its requirements. The Middle Kingdom also wants to protect its investments in the New Silk Road connectivity corridor as well as its influence in the region. In a curious twist which would have been unwelcome in Israel, following the announcement of the ceasefire, President Trump announced that China would be allowed to buy oil from Iran, reversing a policy of sanctioning Chinese refineries for these purchases.
The effect of an embargo should not be underestimated. In cases of extreme uncertainty or turmoil in the region, oil prices have historically risen by approximately 70 percent and average a 30 percent rise over time. Given the weaknesses in major economies and financial markets, any large rise in energy costs would trigger higher inflation, a major slowdown and financial instability which Western states are ill-positioned to deal with. If combined with financial measures, such as withdrawing capital and shifting away from US dollars as a payment mechanism for oil, the pressures may force an agreement which curbs Israeli expansion, ensures a just settlement for the Palestinians and removes Western interference in the region. The 1973 oil embargo forced the United States and its allies to reconsider their support for Israel engineering a shift in the global balance of power and empowering oil-producing nations.
But persistent Arab division, skilfully exploited by the US and Israel, will probably lead to no decisive co-ordinated strategy. While they may not acknowledge the reality, failure to act strategically now undermines the ruling dynasties of the Gulf states and Jordan. They become little more than rich puppets who serve their American, Israeli and allied masters and whose policies are chosen for them. Their standing and wealth is dependent on a dwindling finite resource with an uncertain future.
Certainty of Uncertainty
The precise trajectory is unclear. But it is not the end. The central issues – Israeli territorial ambitions, Palestine, the tribal and religious differences between Arabs, the battle for Gulf pre-eminence, energy security, great power involvement – remain unresolved. In the Middle East victories or defeats are rarely clear-cut. Irrespective of the paths chosen, continued regional instability and volatile energy markets are probable. Conflict, most worthwhile military strategists agree, is like opening a door into a dark room where no one knows what is hidden in the darkness. The only certainty is that a new most likely tragic and violent chapter in the history of the region is under way.
The US, Israel and its allies would do well to remember Thucydides’ Melian Dialogue which records Athens’ conquest of Melos. The Melians unsuccessfully resisted suffering horrific losses. Athens believed that “the strong do what they can and the weak suffer what they must”. They believed that they could act with impunity because their power was complete. Less than three years later Athens suffered a military disaster in Sicily from which they never recovered.
