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Iran War: Israel Makes Massive Bomb Blast in Southern Lebanon, Threatens Imminent Attack on Iran; Iran Refuses Meeting with US on Strait of Hormuz as Assembly of Experts Statement Assures Already Likely Death of MOU; Strait of Hormuz Transits Increasing as Iran and Oman Not on Same Page

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[Today’s Iran war update launched before complete. Please return at 8:00 AM EDT or refresh this page then for a final version]

As the US (and Gulf states) and Iran are in a staredown over control over the Strait of Hormuz, Israel is, even more than usual, in its “ever be escalating” mode. Israel detonated a very heavy bomb on an underground Hezbollah weapons storage site, creating such a massive blast that settlers in northern Israel felt it. The deranged Israel defense minister Katz is also now saying that an attack on Iran is coming soon. He also makes clear that Israel has capabilities it has not used. That is consistent with our speculation when the US over-retaliated against the drone strike on the Oman-side transiting Ever Lovely, that the reaction indicated either yet more Trump lunacy or a belief that the US and Israel had some new clever means to bring Iran to heel.

We’ll soon turn to the very tough statement by Iran’s Assembly of Experts on the negotiations, which appears to have governing clout in Iran. The short version is they are Not Happy and insist that Iran make no concessions. That is not surprising since, as we surmised yesterday, it appears Iran has not yet gotten the $6 billion of frozen funds from Qatar that Iran president Pezeshkian said Iran “expected” to get. From Aljazeera’s landing page:1

Recall that the Twittersphere and YouTuber take was that meant Iran had gotten those monies, when the use of the word “expected” said the opposite. Oh, and that $6 billion of the $12 billion held by Qatar was supposed to have been returned to Iran in the Biden era.

To underscore that Iran is engaging with the US only narrowly:

On the Strait of Hormuz front, it is disappointing to see anti-globalists on YouTube on a widespread basis take up the line that shipping has more or less stopped after the last set of exchanges between the US and Iran. It has in fact rebounded and includes two-way transits and ones on the Oman side of the Strait of Hormuz. Note these are nearly all fuel vessels of various types when you would normally expect cargo ships to be a significant part of the mix. So the US and Gulf states look to be assigning priority to getting oil to the market as their highest value shipment as well as presumably to try to blunt Iran’s leverage.

But the level is still well below the old normal but may prove sufficiently high if maintained (big if) to push out the arrival of the oil cliff a bit further. Keep in mind that the world ex China, which is now getting a high level of new shipments from Iran, is still operating at deficit levels that are being filled only by drawing on inventories. There is a lot of sloppiness (as well as genuine uncertainties) that we will address.

On the Israel blast in Lebanon, from YNet in Powerful blast heard across northern Israel as IDF destroys Hezbollah’s ‘drone fortress’ in Lebanon

The IDF destroyed a fortified underground Hezbollah tunnel network in the southern Lebanese village of Majdal Zoun on Sunday night, in what the military described as one of the terror group’s major preparedness sites in the western sector.

The underground compound, built more than 25 meters below ground and stretching over 200 meters, was used to store weapons, including drones, warheads and explosives. The powerful blast was heard across northern Israel on Sunday evening.

Please, no ad hom on the account cited:

Brandon Weichert discusses the enormous blast with Mario Nawfal:

From Weichert in a lightly cleaned-up machine transcript:

They [Hezbollah] they were developing octagen which is HMX, a highly explosive fuel for long range precision guided munitions. This was part of what was known as the precision project in 2016. The IRGC was overseeing it. Hezbollah was building these systems. The idea was they were going to mass-produce long range ballistic missiles with the idea that if war came again they would be able to target very reliably the very critical civilian infrastructure of Israel. And now the Israelis spent the last 10 years trying to blow up the depots where the HMX was stored and where the precision guided munitions are. But, you know, they, the Hezbollah, has quite a robust arsenal and I don’t believe the Israelis have gotten anywhere near the full number that they think they’ve gotten.

On Israel’s new threats against Iran:

Erm, does he mean Kurds? They popular view earlier in the war was they were not dumb enough to sign up for this mission, which would put them not only in the cross-hairs of Iran but also Turkiye, who no way, no how wants the Kurds to get any bigger in their britches. I can’t vouch for whether these individuals are rabid or clued-in (not mutually exclusive):

The IRCG is already on the case:

We posted a report from Twitter a couple of days ago of what was reported to be a massive air lift to the Middle East:

Larry Johnson said, based on a call with one contact, that it was in fact troops being moves out. Daniel Davis gave a weaker refutation, saying he had heard of forces in theater getting redeployment orders.

The issue is if Sprinter is right (big if) it looks as if the operation is out of scale to what it would take to return servicemembers and assets from the Iran environs back home. The US deployed nearly 500,000 troops in the Iraq invasion. We have moved only a fraction of that near Iran. Again, this open question will likely be resolved soon.

Again from the Weichert talk with Nawfal:

I am convinced that this war is not coming to an end anytime soon. And I actually think that we are once again ridiculously arming the Kurds of northern Iraq. And we are preparing to send them, I think, into Iran to try to do some insane stupid cockamamie Bay of Pigs style prefailed [snorts] mission into Iran as a prelude to eventually I think trying to insanely stupidly land US Marines somewhere along the coastline of Iran.

Having said all that, the big thing that argues against the nefarious Kurdish plot is that Katz is being so loud about it. So is it actually planned to fail to justify some other Israel escalatory move or to force the timing of US action?

The Fourth of July is a long holiday weekend in the US and would make for a good window for kinetic action from the Trump perspective.

On the statement of Iran’s Assembly of Experts, it’s very bloodyminded, as you can see from its full text (hat tip SafetyFirst).2

1963Macro gives a good overview of its implications in The Assembly of Experts Have Killed the MOU:

The Assembly of Experts is Iran’s highest clerical body, made up of 88 senior clerics. It is constitutionally empowered to select, supervise, and (in theory) remove the Supreme Leader. In practice, it serves as a key institutional check that reinforces the Supreme Leader’s authority, especially during periods of internal or external pressure.

Specifically, these three points from The Experts renders the MOU inoperable (points listed in order from Assembly of Experts statement):

  1. Any breach of the MoU must be responded to immediately. Therefore, considering the continuation of ceasefire breaches by the Zionist regime in Lebanon, and the failure to withdraw from the occupied territories, the opening of the Strait of Hormuz is contrary to the obligations of the officials and is considered a major strategic mistake, and will only embolden the enemy to continue its breach of the agreement.
  2. We remind you again that according to the obligatory guidance of the Supreme Leader, the country’s nuclear rights should not be discussed nor disputed, and should be completely excluded from the negotiations.
  3. Establishing management over the Strait of Hormuz, receiving compensation for war damages, the release of frozen assets, lifting all sanctions, and the withdrawal of U.S. forces from the region are inviolable demands of the Supreme Leader and the people, and they must be pursued. Any negligence in this regard will be met with a fierce reaction of the nation.

The statement specifically reinforces Iranian red lines on Strait control and nuclear enrichment. The practical impact is these points cannot be negotiated away in a manner that meets U.S. terms. These positions are backed by the Supreme Leader, the Experts, and IRGC leadership. These parties remain the functional levers of power in Iran and would control implementation of any deal.

Taken together, the comments suggest the MOU delivering a palatable outcome for the U.S. is effectively zero. The internal Iranian power dynamic has been at the foundation of this analytical series. Until the IRGC and the senior clerical establishment signal willingness to concede on core issues, a strong diplomatic outcome has always been low-probability. That remains true today and is reinforced at the highest levels of Iranian leadership.

As a result, we are faced with some uncomfortable observations:

  • Iran retains coercive control of the Strait, with multiple levers to pull that could materially damage the global economy.
  • The Strait is likely to be contested for the foreseeable future, with normalization far from imminent.
  • There typically is not an easy off-ramp to stop escalating conflict born out of recently failed diplomacy.
  • A path that avoids further escalation likely cedes control of the Strait to Iran, which is a dangerous precedent for international maritime chokepoints.
  • U.S. escalation likely results in a closed Strait, proxy activation, and, on the extreme end, attacks on G.C.C. energy infrastructure. Basically, it has the potential to deliver everything the U.S. doesn’t want.
  • The only means to return the Strait to freedom of navigation is the military option.

Safety First observed in comments that the statement seemed to leave the window for action open for now:

But then by the end the statement it kind of veers into – get this done within the 30- and 60-day time frames of the MoU, because afterwards the war will probably restart again (especially after the US midterms). And this dovetails with the earlier statement by Khamenei II himself, which boils down to “let the diplomats try”.

Sounds like there is a leash in place. I don’t know if it’s a leash tied to specific timelines, or a leash tied to specific actions. But it could very well be that whatever is happening with the talks, or whatever the language of the MoU is, etc., there is a specific future point where the leash is yanked on and the war restarts simply on that basis.

One reason for Iran not pulling the plug on the MOU process now or very soon (which the fierce words of the Assembly of Experts statement would otherwise seem to require) is the timing considerations on the Iran side for oil shipments. It is getting as much pumped and in transit as possible now, but it will soon hit limits as to how much its buyers can take.

From Brett Erickson on Twitter:

The primary concern that I see as it relates to the joint lifting of blockades between the United States and Iran is the disproportionate degree to which it can benefit Iran IF they intend to play this “dishonestly”.

Per the estimations of TankerTrackers four days ago, Iran had already exported ~40M barrels outside of the prior US blockade line since the MOU between the United States and Iran was signed. By now, that figure is almost certainly >50M barrels in 14 days. A rate of ~3.5M barrels per day being exported. Iran’s “normal” rate of export for context is ~1.7M/day.

Therefore Iran is exporting roughly double that amount they normally do since the MOU was signed. But this isn’t a terminal capability. For one, it is unclear how many available buyers there are for Iran outside of China for Iranian oil. There has been indications that Pakistan may have interest, but India is largely stocked up. Perhaps Japan?

But there is only “so much” that can be exported during this 60 day window where it disproportionately favors Iran. Tehran likely still has ~55M barrels in onshore oil storage that can be exported, and assuming they continue to do so at a rate of ~3.5Mbpd, that carries them favorably for ~16 more days.

After that, it not longer is advantageous for Iran to keep the blockades lifted. What happens then? What happens if, by July 15th, the United States still hasn’t released any of Iran’s frozen assets? What is Iran’s incentive to continue with the joint lifting of blockades?

At that point, it would almost certainly be strategically advantageous for Iran to re-close the Strait and return back to the status quo pre-MOU, but now with ~105M-120M barrels outside of the reach of the U.S. blockade.

No matter how I look at this, I just don’t see how the United States will be able to turn the table on Iran here…

As for the state of transits through the Strait of Hormuz, there’s a lot of “glass half full versus half empty” talk. Mind you, there is no question that the level is way below the pre-conflict level. However, a lot of YouTubers are depicting it as having dropped to close to nada after the exchange of strikes and staying there. It has in fact rebounded to what one might call a less bad level:

The chart embedded in this tweet is important:

These are of inbound transits and many are on the Oman side. This shows that the Oman side is still in use and Iran is not intervening. It also shows that some ship operators are confident enough of the odds they will get out to send tankers and crews in.

However, some Gulf states are pulling back from Gulf transits:

On the state of affairs between Iran and Oman regarding the future operation of the Strait of Hormuz, it is enormously frustrating to see YouTubers declare that the fifth paragraph of the MOU gave Iran control of the Strait of Hormuz and was therefore an Iran coup. It did not. Not only is the language regarding what happens in the next 60 days at best arguable, the MOU clearly commits Iran and Oman to operate the Strait (if they can agree, “conduct dialogue” is the operative term) in accordance with international law. That means UNCLOS. “…in line with the applicable international law and the sovereign rights of coastal states of the Strait of Hormuz” underscores that. Again, the full fifth paragraph:

5 — Upon the signing of this MOU, the Islamic Republic of Iran will make arrangements using its best efforts for the safe passage of commercial vessels with no charge, for 60 days only, from the Persian Gulf to the Sea of Oman and vice versa. The traffic of commercial vessels will immediately start, and considering the need for removing the technical and military obstacles, and demining by the Islamic Republic of Iran will be instated within 30 days. The Islamic Republic of Iran will conduct dialog with the Sultanate of Oman to define the future administration and maritime services in the Strait of Hormuz in discussion with other Persian Gulf littoral states in line with the applicable international law and the sovereign rights of coastal states of the Strait of Hormuz.

We have repeatedly said this section is a poison pill for Iran given its intent to control traffic in the Strait of Hormuz…assuming it expects a deal to be consummated consistent with the MOU, which we have always seen as very unlikely. But as Professor Robert Papes and other have said, no way, no how will Iran cede control of the Strait of Hormuz. That would seem to leave them in an ongoing low-level war posture, which would keep traffic in the Strait of Hormuz depressed on a long-term basis, killing any fees they might collect and the global economy. Iran seems to believe the world will blink before that but I would not take that as a given.

Updates on the struggle over the status of the Strait of Hormuz, starting with Bloomberg:

https://www.nakedcapitalism.com/2026/06/iran-war-axios-reports-us-iran-agree-to-ceasefire-within-ceasefire-doha-meeting-on-strait-of-hormuz-as-iran-stands-up-us-on-technical-talks-ship-transits-fall-reports-of-big-us-buildup-israel-at.html#comment-4437189

From the body of story:

  • Iran reiterated its determination to maintain control over maritime traffic moving through the Strait of Hormuz.
  • Deputy Foreign Minister Kazem Gharibabadi said Iran wants to work out an agreement with Oman to oversee ships passing through Hormuz, but will move forward with its own plans if Oman is not interested.
  • The US has said talks with Iran are set to take place in Doha, Qatar, with US Secretary of State Marco Rubio saying any tolls or fees for ships passing through the strait would be unacceptable.

A top Iranian official reiterated the country’s determination to maintain control over maritime traffic moving through the Strait of Hormuz, raising the stakes ahead of fresh negotiations with the US on ending their war for good.

In remarks to Iranian state television, Deputy Foreign Minister Kazem Gharibabadi said Iran wants to work out an agreement with Oman, which controls the other side of the vital waterway, to oversee ships passing through Hormuz. But Iran will move forward with its own plans to control traffic “if for any reason Oman is not interested in doing so,” he said.

Oman supports only “voluntary” fees and does not support control of traffic.3 Note PressTV headline Oman backs Iran’s plan to charge Strait of Hormuz ‘service fees’ misrepresents Oman’s position as stated at the top of the article:

Oman’s Foreign Minister Badr al-Busaidi has expressed support for Iran’s plan to impose “maritime service fees” on vessels crossing the Strait of Hormuz.

In an interview with Monte Carlo Doualiya, published by Oman’s Foreign Ministry on Monday, al-Busaidi reaffirmed Muscat’s commitment to the United Nations Convention on the Law of the Sea (UNCLOS).

He clarified that Oman opposes any tolls on transit passage itself. However, the minister drew a clear distinction between transit tolls and legitimate maritime, environmental, and navigational service fees, which can be discussed voluntarily with benefiting states and companies.

Note as we anticipated, Oman will hew to UNCLOS which requires that it provide for “transit passage” as in requires that it allows commercial ships to go through its waters to obtain access to littoral waters of states that have no other access to open seas, and allows for fees only for actual services rendered and then in limited circumstances.

And:

But again recall in the Bloomberg extract above that Iran will go ahead with its “control” whether Oman plays ball or not. But that means no MOU, no $300 billion fund (which we always saw as an undeliverable promise), no more additional returns of frozen assets, an end to US sanctions relief and perhaps a resumption of the costly and even-more-economy-killing US blockade. As we said before, it did not have to work very well to be sufficient to deter attack-and-capture averse ship operators.

France is also trying to stick its nose in where it does not belong:

And on the economy front, recall that we have sometimes (not enough) pointed out that the business and popular press have focused tightly on the effect of Strait of Hormuz traffic closure and traffic squeezing on oil prices, when supplies of many other critical products are also affected, from lubricants to pharmaceuticals to helium. Those shortfalls are biting even harder:L

Done for today! See you tomorrow!

______

1 We made clear yesterday that we doubted the Trump claim that Iran had agreed to meet in Doha to have a tea and cookies talk over the Strait of Hormuz, as reported only by the highly reliable (not) Axios and Reuters and not confirmed by any Iranian media sources. Iran has further made clear it is not meeting with the loathed Kushner-Witkoff tag team, who were reported to be going to Doha:

We signaled another element of the Trump overreach. Our headline stated that the (to be treated with skepticism) Axios reported the US and Iran had agreed to a ceasefire within a ceasefire due to Trump saying both sides had agreed to stop shooting in the Strait of Hormuz. That also proved to have been incorrect:

2 Point 2 on the need to pursue revenge against Trump and Netanyahu is a nice touch:

3 “Voluntary” is an odd choice of words. I suspect it refers to language in UNCLOS.

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9 comments

    2. johnnyme

      Russia plans to buy gas abroad to stabilize domestic market, Kremlin says, in rare step since 1990s

      Kremlin spokesman Dmitry Peskov said on Tuesday that Russia plans to buy gas from abroad to stabilize the domestic market, a rare step for the country that imported big volumes of energy resources only in the 1990s after the dissolution of the Soviet Union.

      Speaking at a press briefing in Moscow, Peskov said Moscow was holding talks on possible fuel imports with several countries.

      “If agreements are reached on imports at acceptable prices, then it will happen. This will be another step towards stabilizing the market and reducing the surge in demand,” he said.

      The official emphasized that a package of measures to stabilize the fuel market was being discussed by a government commission led by Deputy Prime Minister Alexander Novak following a meeting chaired by President Vladimir Putin on Sunday.

      He declined to comment on media reports that some Russian refineries had been allowed to produce fuel meeting Euro-5 specifications using Euro-3 standards, and that authorities were considering lowering fuel quality requirements further to Euro-2.

      Reply ↓
    1. The Rev Kev

      All those China chickenhawks must be bitterly disappointed. For the past few years they have been talking up the US getting into a brawl with China in the Pacific and they sounded like they were looking forward to it. Just as soon as the war in the Ukraine was won and they were talking about as early s 2027. But now because of this war with Iran the US has been disarmed of the advanced weaponry that they would have needed to take on China. They could build more but first they would have to go to their supplier of exotic materials needed to build those weapons systems. That would be *checks note* China. Yeah, that’s not going to happen. So I guess that the war with China is off now.

      Reply ↓
      1. Juice

        Rich of you to believe the US would use its own troops to buy China, when it can use South Koreans, Philippines, the Japanese and the Indians to do it, using the industrial base of South Korea and Japan.

        US avoided head to head with Russia. Why would it suddenly become stupid enough to try it with China?

        Reply ↓
      2. flora

        Guess what? The US/West used to mine/refine/develop these critical minerals. But, thanks to the neoliberal greed guiding US and the West’s politics since Reagan and Thatcher, these refinery processes were outsourced to China years ago. Refining is an environmentally dirty process that required a lot of expensive remediation in the US to conform to EPA rules. Solution? Outsource critical refining to China! Hey presto! But the minerals back from China at a lower cost than doing clean refining in the US would cost. Profit! Ok, ok, yes we’re letting a so-called enemy control a critical input to all modern military communication, weaponry, etc. But, profit!
        Nothing matters but greater and greater profits!
        National security? Pfft. Those foreign countries like China wouldn’t dare challenge the US economically. Right?
        Winning!

        Reply ↓

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