[Today’s Iran war post launched largely complete but your humble blogger had to run out briefly. Please return at 8:00 AM EDT or refresh this page then so as to see the final tweaks]
Escalation expert Robert Pape is sounding alarms that the effect of the massive funeral ceremonies for the martyred Iranian Supreme Leader, other officials assassinated at the start of the war, and the many civilian victims like the children in the Minab school will be to validate and intensify the entirely justified anger that many, likely most, Iranians feel. The Financial Times has estimated that the turnout will be 12 to 15 million. If it exceeds 15 million, that would top the largest funeral gathering to date, that for Indian leader C. N. Annadurai in 1969.
Pape’s new warnings come on his latest Substack post and on the channel At the Water’s Edge:
In the talk above, Pape describes how to ascertain if Iran is indeed toughening its stance in response to the overwhelming evidence that the public wants retribution and is willing to take more costs, including being on the receiving end of more US/Israel bombing or suffering more economic harm if the Strait of Hormuz row intensifies. His key indicator is whether Iran increases its demands, such as requiring the US abandon its bases in the Middle East. He also describes August 15 as a triple witching hour, when the MOU expires, the prospect of oil shortages will be imminent, increasing Iran’s leverage, and when Iran may also either be making new demands or making recently added ones hard red lines.
As Pape wrote in his Substack:
Leaders who might previously have worried about the domestic costs of prolonged confrontation have now witnessed an extraordinary public demonstration of nationalist solidarity. That makes it easier—not harder—to demand more.
Everyone is watching shipping in Hormuz.
What actually matters is Iran’s demands.
The consequences extend far beyond Tehran.
It means harder Iranian negotiating demands are now more likely just as the global economy approaches its most vulnerable period. The next two to three weeks may determine whether August brings elevated energy prices—or a genuine global economic shock.
The strategic question is no longer whether US-Iran talks eventually resume. It is whether the political conditions now exist for Iran to press for substantially greater concessions precisely when time is beginning to work in its favor.
As Pape suggests the struggle over Strait of Hormuz control continues to escalate, it does not merely mean ship passages will stay at their current “not high enough to prevent going over the oil cliff” levels but drop further, intensifying the supply crisis for oil and other important cargoes. That hurts many innocent bystanders far more than the US. Commentators have regularly pointed out that wealthy nations, and in particular the US, will be less harmed by choking the Strait of Hormuz than poor nations. Look at Sri Lanka, India, Indonesia and the Philippines as poster children.
This may seem like a secondary matter, but Putin has been explicit that when it comes to an existential threat, Russia is willing to take down the rest of the world.1 Iran does not seem to have confronted the conundrum, that to get its (entirely deserved) revenge on the US, if it uses the very blunt instrument of extended closure of the Strait of Hormuz, many forecast a worse-than-Great Depression-level economic meltdown. A world of extended supply chains, complex manufacturing processes, and need for critical materials means that when businesses fail, they have “for the want of a nail, the shoe was lost” knock-on effects. And when commercial enterprises dissolve and their staff moves on, they typically cannot be reconstituted. They need to be rebuilt. That is difficult to begin with and even more so in a setting of widespread want.
To put it more graphically: There remains no overlap between the US and Iran bargaining positions. If anything, per Pape, the gap is set to widen. But to punish the US and Israel, Iran will wind up machine gunning down a crowd to get to them.2 Some commentators have suggested that the reason Iran entered into the Memorandum of Understanding (MOU) as opposed to continuing to prosecute the war were the entreaties from nations suffering serious harm from the closure of the Strait of Hormuz.
Now to the escalating fight for control over the Strait of Hormuz. Keep in mind that the last trapped tanker reportedly exited, so the mini-surge from that supply trapped inventory getting to market is working its way through the system. As we have discussed in comments, and will review soon, the rush of shipments from Iran has largely not been sold but is sitting at sea. So once Mr. Market has digested the effect of the release of the supply captured in the Gulf, perhaps more commentators will focus on the actual new loading getting out of the Gulf to buyers. That looks to remain at best at its current ~25% of the old normal and may fall further if things hot up.
The reporting an the latest action on the Oman side of the Strait of Hormuz seems a bit more scattered than usual, so forgive me if some of these tidbits are disproven later. But two tankers on the Oman side most assuredly were hit, and in what no doubt is meant to be seen as an escalation, by virtue of Iran using ballistic missiles as opposed to the drones it had employed earlier. From Anadolu Agency in Iran resumes attacks on commercial ships in Strait of Hormuz: Report:
Iran’s Islamic Revolutionary Guard Corps (IRGC) fired at least two missiles at commercial ships transiting the Strait of Hormuz late Monday, according to a media report.
The US is likely to retaliate with strikes against Iranian targets following the attacks, said the Axios news site, citing two US officials.
Iran’s state broadcaster wrote on the US social media platform X, citing sources, that a Qatari oil tanker “intended to pass through the Omani route in the Strait of Hormuz with US Navy support but was targeted after ignoring repeated warnings.”
The report came after the UK Maritime Trade Operations (UKMTO) center said a tanker was hit off the coast of Oman, triggering a fire aboard the vessel.
UKMTO said it received a report of an incident 8 nautical miles east of Limah.
“A tanker has reported being hit by an unknown projectile on the port side causing a fire, whilst travelling southbound,” the agency said in a warning notice.
Bloomberg oddly mentions only one tanker being hit in Qatari LNG Ship Struck in Strait of Hormuz, Testing US Talks and has happy patter about other vessel transits:
A laden liquefied natural gas carrier was hit by a projectile near the Omani coast as it exited the Strait of Hormuz, heightening unease among shipowners and testing a US-Iran agreement intended to halt attacks in the waterway….
The strike has already raised fresh concerns among shipowners. Al Areesh, another LNG tanker that loaded in Qatar and was headed out of the Persian Gulf, appeared to turn before the strait on Tuesday before sailing in circles…
Other traffic continued to flow, however. A Japanese-flagged supertanker and another registered with Singapore appearing to sail through the strait on the Iran-approved route, together with a China-bound liquefied petroleum gas carrier. To the south, a convoy of at least six ships, including three very large crude carriers, appears to be approaching the Omani coastline on the way out of the Persian Gulf.
It also appears that Iran defeated US air cover:
And of course, this incident happened as the US Air Force ≈ $1 million/hour air cover including tankers aircraft, fighter jets, early warning aircraft, drones…. was active. https://t.co/nsm5PqxAL0 pic.twitter.com/EeSrd97L91
— MenchOsint (@MenchOsint) July 6, 2026
Reportingly two Iranian Anti-Ship missiles penetrated the U.S. aircover for the Omani route & hit two tankers
It becomes obvious that U.S. hesitance to send in Arleigh-Burke destroyer for ‘true escort’…
➡️ gives Iran the option to use either OWA-drones or Anti-Ship… pic.twitter.com/9XBrL0dbTF— Patarames (@Pataramesh) July 7, 2026
Having said that, it is curious as to why Iran is engaging only in some interference on the Oman side. Its hopes that limited kinetic action would scare off nearly all ship owners has not come to pass. Admittedly, Iran may have decided not to make any big moves while the services for the Supreme Leader and other martyrs are still underway.
Or it may be that they decided that a few actual strikes that seriously damaged tankers would be sufficient for Mr. Market, here insurers and reasonably-prudent ship operators, to pull back. As Shanaka Anslem Perera said on Twitter:
Iran fired missiles at two civilian ships in the Strait of Hormuz overnight, according to two US officials, and the missiles were never meant to actually sink them.
The missiles were rather meant to reprice them.
The tankers were hit for using the route drawn by Uncle Sam and Oman instead of the one drawn by Iran, and a single strike on that lane does something a blockade cannot.
It makes this particular whole route “uninsurable”. An uninsurable lane is actually a closed lane, and Iran just found how to shut the strait without shutting it. Classic!!
Let’s follow the real mechanism here, because it is not the explosion. War-risk insurance on a tanker through Hormuz can leap from a quarter of a percent of the hull toward three, a barrier of several hundred thousand dollars per ship, per crossing.
One missile attack by the IRGC on the American route reprices every vessel behind it. Iran does not need to hit the next hundred ships. It needs the insurance underwriters to believe it might.
That is the classic paradigm nobody is naming right now. The strait now has two maps.
One drawn by Washington, hugging the Omani coast to bypass Iranian control.
One drawn by Tehran, demanding permission.
Nearly a third of tankers / ships chose the American line last weekend.
Last night two of them burned, and the message was not to those two. It was actually to the marine insurers of all the rest.
We’ll see in the next few days how key players react.
We’ve been pointing to articles in Links showing that European gas (now meaningly largely LNG) stockpiles are at dangerously low levels versus where they ought to be:
I don’t want to alarm anyone, but Europe is now only importing 59% of the LNG they were exactly one year ago. It’s not a blip, either. Look at the trendline.
Are ANY politicians, in ANY EU country talking about this yet? pic.twitter.com/D7dfniOSu0
— EscapeFromUtopia (@utopia_escape) July 6, 2026
That situation got worse even before the Iran strike on the Qatar LNG vessel:
The global energy market just received a massive shockwave.
No Qatari LNG is expected to reach major European or Asian buyers until at least early September.
As Doha struggles with crippling structural fallout from the regional war, energy panic is officially back.
🧵🇶🇦🇮🇹🇵🇰👇 pic.twitter.com/z6vZNDevai— Francesco Sassi (@Frank_Stones) July 6, 2026
Back to commentary on the transits:
And on the “oil glut” versus “oil cliff” debate, as indicated at the top, it appears the last tankers trapped in the Gulf have finally escaped:
Following the exodus of Japanese tankers, there are very few stranded tankers left.
— HFI Research (@HFI_Research) July 6, 2026
But China just bought a whole lot of crude, a big departure from its recent practice of drawing down inventories…and then from pretty much everyone ex Iran, and at a discount too!
🇨🇳China just bought 26 million barrels of Middle East crude in a matter of days.
That’s well above normal.
26M+ barrels bought for July/August delivery via tenders and one-off purchases, from Qatar, Saudi Arabia, the UAE and Iraq
Saudi Arabia’s deep OSP discount, cut to -$1.5… pic.twitter.com/CfSmYlffLB
— Jack Prandelli (@jackprandelli) July 6, 2026
Some experts disagreed vehemently with claims that the Gulf State discounts on oil meant the market was saturated:
Completely wrong take
Let me repeat: Arab countries are offering aggressive discounts because there are very few ships available to go back into Hormuz to pick up that oil and till they don’t unload their tanks they cannot restart crude oil production
This is not a oil glut https://t.co/UMcS0R89wj
— JustDario (@DarioCpx) July 6, 2026
They have to cut prices not because there is no demand but because there aren’t enough tankers willing to enter the Gulf.
Imagine being a tanker owner whose ship was trapped in Hormuz for months while seeing other ships being attacked.
Would you be keen to send your ship and… https://t.co/MKOXTasewS
— Lukas Ekwueme (@ekwufinance) July 6, 2026
Lloyd’s List lends support to this about scarcity of tankers and high operator charges in VLCCs and suezmaxes riding high as peace deal hikes Hormuz flows
- West Africa-China VLCC rate index is at $127,708 per day, up from around $90,000-$100,000 per day prior to peace framework
- US Gulf-China VLCC index is at $115,749 per day, up from around $100,000 per day prior to the peace agreement
- MEG-China TD3C index is becoming a more relevant measure of physical fixtures; it is at $296,175 per day, more than double Atlantic indexes and TD3C’s pre-crisis level
Even with that explanation, some readers were surprised that China was not helping Iran by buying its oil,3 as it had during the days of the sanctions, and then at steep discounts. But that is based on the assumption that China is an ally of Iran, when China is also the biggest import supplier to Israel and third-largest buyer of Israel exports. China has and continues to support Iran in various ways but it would be a mistake to assume that the relationship rises to the level of an alliance.
In particular, China is not happy with Iran’s plan to control Strait of Hormuz traffic, and has said so more than once. Note that the issue is not fees but control. Shipping expert Sal Mercogliano unpacks why in a new talk:
From a lightly-edited machine transcript:
[Quoting an article headline] “China urges unimpeded passage of hormuz as fee chatter mounts.” So here’s China kind of jumping in here saying that listen, we don’t want fees in the Strait.
Now for China, this is really important because China is constrained by a lot of maritime passages. So this is a density map showing you the coast of China. So coast of China right along here all the way from Vietnam up to North Korea. But for China to get access to the sea, it runs through choke points between China and Japan, between the Japanese home islands by Taiwan, Philippines, and as you come down here through the South China Sea, through Singapore, Malaysia, Indonesia. I I mean, China is just constrained. If if you look at China, their entire coastline has a barrier across it. Nations like the United States don’t have that. There’s no impediment to leaving a US port and heading out. The only place that even comes close is is is Seattle where you have Canada to the north. Every other US port basically dumps out into the middle of the ocean which is great. China doesn’t. And so China doesn’t want to see unimpeded passages because of fear that that could be leveled against them by Korea, Japan, Taiwan, the Philippines, Indonesia, Singapore, you name it.
In other words, for China the issue is not even remotely money but setting a precedent that could harm its national security.
Contrast that posture with Iran basically talking past China’s concerns. From Bloomberg on July 4 Iran’s envoy to China says Beijing to get Hormuz concessions
Iran’s ambassador to Beijing said China and other friendly nations will be granted “special considerations” when Tehran determines the level and nature of service fees charged to ships using the Strait of Hormuz.
Abdolreza Rahmani Fazli said the critical waterway for energy supplies is now a matter of “national security” in the aftermath of the four-month US and Israeli war on the Islamic Republic. As such, “there will be new arrangements concerning the Strait of Hormuz with the collaboration and cooperation of the state of Oman,” he said.
“We will definitely have special considerations for China, because China is a friendly country,” Fazli said Saturday at the World Peace Forum in Beijing, without specifying what those concessions would entail. “Special treatment we should award to countries which are friendly to us.”
I doubt Chinese officials will take well to being condescended to by Iran. But what if anything will they do?
More on the state of the oil markets. Even mainstream commentators are clearing their throats about claims of abundant oil. From OilPrice in Fear of an Oil Glut May Be Overblown, Top Consultancy Says
Up to 75% of the previous oil flows through the Strait of Hormuz are expected to return to the market by the end of the year, but significantly lower oil prices aren’t guaranteed for 2027 as the ongoing U.S.-Iran tensions are unlikely to be resolved for good soon, Fereidun Fesharaki, chairman emeritus of FGE NexantECA, told CNBC on Monday.
Before the Iran war, the consultancy FGE NexantECA expected oil prices to be in the upper $50s low $60s per barrel next year. This could still be the case in 2027, but it rests on the assumption that a lasting peace will be reached, Fesharaki said.
Fesharaki said he personally sees as “impossible to imagine” a scenario in which the U.S. and Iran reach a lasting peace deal..
Other Wall Street banks have also started to predict a glut after the U.S. and Iran signed the MoU.
Morgan Stanley, for example, has slashed its oil price forecasts for the next 18 months as it expects the reopening of the Strait of Hormuz to accelerate a new supply glut.
Erm, Jeff Currie pointed out that Red Sea transits were 75% of the old normal a full two years after Ansar Allah had pretty much stopped its vessel target practice.
For nearer-term outlooks, Chris Martenson discussed the mystifying behavior of oil prices with Daniel Davis. He discussed why short interest is so large that is hard not to think a state actor is heavily involved. He also discusses the state of SPR inventories versus drawdowns, and has a very helpful graphic on the older versus newer design of the salt caves, and why the older ones can’t be emptied without destroying them.
However, Martenson’s discussion does not seem to fully allow for damage across all the caves which has the effect of raising the effective operating minimum. The big reason for the disparity in estimates and resulting uncertainty is the age of the salt caves (they have been in service far longer than intended when created in the early 1980s) plus poor management practices. From AAPG in 2016:
The U.S. Strategic Petroleum Reserve (SPR) is facing significant challenges related to the storage and availability of its crude oil resources. Approved for construction by the 1975 Energy Policy and Conservation Act (EPCA), the storage sites were envisioned to be needed for 25 years and are subject to an estimated five drawdown cycles (Shages, 2014). In retrospect, the design has not matched actual use, and this has led to degradation of the SPR and impacted its ability to perform its function.
The SPR stores crude oil (either sweet or sour) in 62 underground salt caverns located at four different sites in Texas and Louisiana. The official storage capacity is 727 million barrels, based on sonic measurements. A 2010 study concluded there was a significant mismatch in design and use of the storage caverns. Instead of the initial estimated five large drawdown cycles, a large number of small drawdowns occurred over the previous 20 years. From 1996 through 2014, there were 14 instances of oil removals less than 10 million barrels. These multiple drawdowns have caused cavern deformation, salt falls and other damage to the cavern integrity. In addition, these underground salt caverns are shrinking due to tectonic stresses. The cavern shrinkage (aka closure) is estimated to be approximately two million barrels per year – but may be significantly higher.
More commentary:
Is it an oil glut if commercial stocks & SPR are drained, it’s nigh impossible to hire a tanker to lift a cargo from inside the Persian Gulf, global refining capacity has been cut off at the knees, crack spreads in the US are at $60 but crude futures are $68?
— Ellen R. Wald Ph.D.🛢 (@EnergzdEconomy) July 6, 2026
Crack spreads are about to fly out of the stratosphere, and yet traders still believe to the oil glut fairy tale https://t.co/VubwwgkpJR pic.twitter.com/BZOs80wHNj
— JustDario (@DarioCpx) July 6, 2026
Sorry for stopping abruptly, but done for today (ex some possible small additions before 8:00 AM EDT). See you tomorrow!
______
President Vladimir Putin once said he would feel legitimate in using nuclear weapons if Russia was attacked, saying: “Why do we need such a world if there is no Russia there?”
Putin made the remarks in a feature-length interview with the pro-Kremlin journalist Vladimir Solovyov, which was aired on the state-run Russia-1 network in March 2018.
2 Again, raising considerations of morality may seen silly when the US and Israel triggered this crisis by launching an unjustified, illegal war. However, information war has become important, demonstrated by how Iran has built sympathy in global audiences via effective retorts by its officials and embassies to US nonsense on Twitter to Lego videos. At least Professor Marandi and I assume other important Iranians have stressed how Iran is a moral actor. Marandi makes that point explicitly in this talk with Max Blumenthal at roughly 56:00, of Iran having a moral duty to continue the Resistance.
But Iran is up against great power considerations along with moral aims. As the great philosopher, Jamie Lannister, said:
So many vows…they make you swear and swear. Defend the king. Obey the king. Keep his secrets. Do his bidding. Your life for his. But obey your father. Love your sister. Protect the innocent. Defend the weak. Respect the gods. Obey the laws. It’s too much. No matter what you do, you’re forsaking one vow or the other.
3 Yes, Iran has a lot of unsold oil sitting on tankers at sea. From Bloomberg on July 2 in Iran’s Floating Oil Hoard Swells as Major Buyers Stay Away:
More than 20 million barrels of Iranian crude have been idling in Asian waters for at least seven days, up nearly 18% from a week earlier, according to Kpler Ltd. Estimates for the overall volume of the country’s oil on water — either in transit or stationary — have ranged from 58 million to 68 million barrels since the US sanctions waiver kicked in last week, according to data from Vortexa and Bloomberg calculations….
More than 90% of these cargoes on water have no clear destination. The vessels are either indicating “for orders” or Singapore as their next port of call, a sign they may conduct ship-to-ship transfers in the Malacca Strait.
Demand from Chinese independent refiners — Iran’s main customers prior to the conflict — has been muted as the sector’s run rates crash to a nine-year low. China’s state-owned refiners have also stayed on the sidelines, citing concerns over the ability of banks to finance any deals.
And consider:
Iran does not lean on China for friendship. It needs a buyer for its oil, a way to move money around the dollar, and a ceiling on how hard Washington can push. That is why the Iran-China relationship is economic long before it is anything else.https://t.co/TBeVkay0ko
— MENA Unleashed (@MENAUnleashed) July 4, 2026
‘The Financial Times has estimated that the turnout will be 12 to 15 million. If it exceeds 15 million, that would top the largest funeral gathering to date, that for Indian leader C. N. Annadurai in 1969.’
The Iranian turnout is more serious. Back in 1969 the population of India was about 545 million people so having 15 million people show up for a funeral was very doable back then. If Iran has 15 million people turn out for that funeral out of 90 million, that is about 1 in every 6 people turning out. The equivalent for the US would be to have about 55 million people turn out for a funeral. The guy had a following as their religious leader.
I had to laugh at the NBC News coverage last night. After reporting on the massive turnout, complete with video and even interviews with participants, it had to include the obligatory comment that “of course not everyone was a supporter of the Ayatollah.” But they had to follow it up with: “So far the opposition has been quiet.” Yeah, I’ll bet!
Of course your right that its impossible to make an apples to apples comparison, but your example/comparisson has the same flaw.
India is a significantly more spread out. I dont know the precise funeral route/arrangements of either, but i think it fair to say it was much harder to get around in India in 1969 where much of the country was rural. Compare that to Iran today which has 15 million people alone in the Tehran metropolitan area. 1 to 6 turning out isnt as informative if its easier to turn out. (Also wasn’t part of the funeral in Iraq – are those numbers counted?)
C.N. Annadurai was a regional leader in the state of Tamil Nadu, whose approximate population was around 39 Million back in 1969. India is Extremely Regional with each state having its own language, culture , norms etc. Back then (and even now for the most part) politics and political leaders influence is very much limited to that state.
If the turnout and the state population is right, the ratio is every third person attended Annadurai’s funeral, which is not surprising considering what India as a whole and Tamil Nadu were going through at that time and the impact Annadurai had on the people.
On the SPR caves… it’s dawned on me that since they are so old and have not been well maintained, one strategy that could be deployed would be to drain them or some of them well below their operating minimum and just sacrifice them or some of them. This isn’t necessarily the soundest long term logic, but I don’t assume logic given the yahoos in DC these days. Granted this still only buys time.
I am not an expert, but a collapse during an emptying might get so much cave debris in the oil as to make it not usable.
Note that because oil comes out of the ground, it does have to be cleaned. Stas Krapvinik has talked about removing squirrels, eek. But there may be a level of contamination by solids that would make unduly costly to clean the oil
they could prolly frac it out, but it would be a big honkin mess.
i remember a salt dome collapse(not full of oil) next to a swamp in louisiana many years ago, where it the whole area turned into a giant violent whirlpool, with big trees being carried down swirling….and another, outside of boling, tx that we almost ran off into(several ppl did). i dont remember the precipitating circumstances…likely either drought or inundation.
from memory(and intertubes are shaky out here, due to the rain last night(hamsters drowned))…salt is not oil soluble, so is relatively easy to separate(thats one reason they did it this way)….but the rocks and dirt and trees, cars, houses,lol…not so much. kinda sililar to the pre-proccessing for other dirty oil.
again, from long ago memory of living next door to a guy who worked at one of these sites, as well as just eavedropping on dad’s fishing buddies.
all this spr talk, as well as refreshing my memory online, have caused a lot of that to bubble up,i guess.
Re:Louisiana
Was this THE one ?
https://www.youtube.com/watch?v=a7cOSzEKvrQ
i remember that video,lol. but nah. the one i witnessed was deep in the Atchafalaya Basin, long before cell fones. my Cajun/swamp people friends called it something in their weird language, but i never learned their dialect. spent 9 months with them, too…and i tried.
we were in a pirogue, hunting and fishing, and heard a loud noise, and paddled/poled thataway,lol.
and i lashed us to a tupelo and we watched something similar.
terrifying to behold up close, in a lil plywood boat.
damned maelstrom was taking tupelos down with it just like the one we were lashed to.
gulf coast is full of salt domes, even offshore.
the one in Boling, that we almost drove into…it was at 4am, and cold, as we were going duck and goose hunting in the rice fields down thataway.
dad noticed that the truck in front of us disappeared, and slammed on the brakes.
there were already rescue types on the other side with boats, but no gumball machines, as yet.
High Island, tx, at the ne end of Bolivar Peninsula is a really big one. you can see it for miles…must be 60 feet above grade.
as a kid, thats what first prompted me to look that sort of thing up(in the pre-internet: deluxe encyplopaedia britannica)
salt domes are relatively stable, geologically, becauseof how salt behaves, relative to other stuff…but they aint permanent…and artificial caverns like that(carved out with copious hot water, no less) are even less so.
i allege that there aint as much recoverable oil in the spr as advertised.
prolly a lot less.
No, I think this is referencing Lake Peigneur.
https://youtu.be/p_iZr2-Coqc
one i witnessed was deep in the swamp, and circa 1990, maybe.
pretty sure it is unrecorded.ie: nobody but us, no evidence afterwards…because water finds its level…and the swamp would have looked just the same if somebody unfamiliar had come upon that spot the next day.
(that whole part of my life is sorta outside of time.(lotsa acid,lol))
and my cajun buds said it was a natural thing…although they had no love for Big Oil, and all the damage they had done, and were doing(which was evident).
they bitched about the oil companies all the time….even though they’d do work for em sometimes.
“Squirrels In The Oil” sounds like some sort of weird novelty country tune (cf. “Dead Skunk”) that would get regular rotation on Dr. Demento…
I can also see one of those Two AM commercials:
“Got squirrels in yer oil? Get new Rode-Out and the pesky critters are a thing of the past. Order in the next thirty minutes and we’ll include a chipmunk filter and a fully electric ‘possum smoosher…”
But just how in the name of Ghu’s Bushy Tail does a squirrel get into the oil supply? Them thar Texas/Oklahoma squirrels must be tryin’ to bury their acorns waaaaaaay below the frostline…
I think Dave Barry would say that ‘Squirrels In The Oil’ would be a great name for a rock band.
I suspect the ones found in the oil were surprised to find themselves there, unintentionally.
Davis-Mortenson vid is well worth the listen!
I am not sure what format applied to the drawdown over the RF SMO in 2022, but not that much was returned by Feb 2026.
This current SPR draw down, according to Martenson, are “loans”. He said a 15 to 20% premium. His point is according to the payback period return 70 million barrels plus 20% will raise crude prices. The mix of heavy and light will be set on returned loan blend?
In the late 1980’s I had intermittent AF reserve duties in Defense Fuel Center, and once casually talked with the AF officer managing the center’s support to SPR. IIRC the center contracted for the purchase of crude. We did not discuss anything technical. Long ago!
FYI, the way the SPR caves work is that they pump in water to extract the oil, which floats on top. The water provides an outward pressure on the cavern walls, so they don’t collapse.
I believe the issue is that salt will dissolve in water, but not in oil. So having the caves mostly filled with water means the walls are being eaten away more than usual and the caves are gradually ruined, perhaps to the point of eventual collapse.
I’m thinking a solution could be to pump in water that is already super saturated with salt. This would prevent salt from the cave walls from going into solution and eliminate this problem. I imagine there are technical problems with coming up with billions of gallons of super saturated salt water, but this doesn’t seem like the hardest problem in the world. (There are lakes in eastern California full of super saturated saltwater; maybe we could all line up and form a bucket brigade across the country!)
Then why did Martenson say the older SPR caves will be destroyed if emptied, and so he and many others omit them as not recoverable?
Geologist here:
Salt is plastic at geologic pressure- it is a solid but behaves like a liquid. Salt is also a much lower density than most kinds of rock. These two properties combine when salt is buried- the salt will slowly rise in balloon shaped stocks through the overlying rock. I’ve intentionally avoided the oil patch as a career, so I can’t speak to the specifics of these structures, but I am a bona fide sinkhole expert. I can guarantee that the salt structures are not layer-cake shaped.
I assume that these are actual caverns, developed using water to dissolve the salt. There has to be enough pressure in the cavern to keep the plastic salt from flowing and closing the cavern. Oil won’t dissolve the salt but can keep the cavern open for a while. Understand that the salt is also deforming due to external lithic pressure plus it’s own buoyancy relative to the surrounding rock. If you use water to move the oil, water will maintain pressure but dissolves the salt.
If enough salt dissolves, the structure can collapse, horizontally or vertically, and form a sinkhole, which might be take a while to form following a collapse.
If the pressure is too high, the salt can fracture, resulting in oil loss or collapse.
If the pressure is too low, the salt will flow and seal itself or make the cavern smaller.
Part of the volume problem is that the cavern shapes are constantly changing as the salt flows in response to internal and external pressure, water dissolves salt, and oil flows into and through fractures within the salt. This is a dynamic system even when left alone.
There are geophysical methods to monitor the salt caverns, but these are not cheap. I can’t imagine anyone would want to spend that kind of money on a geophysical investigation of that magnitude unless they had no other choice.
Wow
A Solid behaving as liquid under geologic pressure…bet the discovery of Salt’s material properties is fascinating also
Thanks for the explainer, as I was curious too.
Truly, NC’s Commentariot is the best
Iran could restart the kinetic war at any time just by issuing a hard deadline for US getting Israel out of Lebanon and delivering the money the MoU requires it to fork over. Since neither of those things will happen, it could then resume flattening Israel and hitting any US military assets within reach on the grounds that the US has not honored its agreed upon terms. At that point the strait control issue will get back-burnered till the kinetic phase resolves one way or another. So it’s just a matter of when Iran decides to do that, either based on some strategic consideration or until popular outrage helps its leaders work up the gumption for that (pick your choice).
That deadline is already in place with the MoU suppose to be only for 60 days. After that, who can tell what will happen? But having won the war, I cannot see Iran doing nothing and just letting the US & Israel winning the peace. And that massive funeral shows that they have the people on their side.
Iran has not hit Israel all that much compared to the Gulf States. It has left that significantly to Hezbollah, which Israel dares not nuke due to proximity. Israel could use nuclear weapons on northern Iran where Ted Postol has opined that fallout risk to Israel would be nil.
Depending on general wind patterns, fallout could hit Turkey, Turkmenistan, Armenia/Azerbaijan or even Pakistan. Sadly, I doubt many think about Afghanistan.
Izzys would be taking a huge risk nuking any part of Iran, would they even get a green light from trump?
I wondered if the qyestion really is that of Iran having the right missiles and drones, after all. Israel is far. You need big and/or sophisticated weapons to do real damage, damage that hurts. Iran can’t have that much of them, certainly compared to fairly short legged stuff for the Gulfies.
I’ve thought that the pretty-well-known possession of nukes by Israel, combined with a perceived recklessness or existential desperation by them has made a significant difference in Iran’s decision making in regards to executing the war. It would explain to me, especially, why they’ve been quite diffident about attacking Israel directly.
This has occurred to me as well.
The MOU was never more than aspirational, but a roadmap assuming Good Faith given the stakes involved. The US has shown itself to be operating in Bad Faith. So, is there a need for Iran to let the 60 days run out?
Only if they wish to milk it for more legitimacy, stressing the illegitimacy of the other side (the truth being that neither side has been an angel here.) Or they may want to get all their own oil out, or for other tactical considerations. Otherwise, nothing is accomplished by waiting.
It’d seem that the nearer the blunt reality of the Oil Cliff looms the better to motivate the US, from the Iranian perspective, hopefully avoiding more outright war, but if it comes it comes. And any creative military Hail-Mary’s by the US will be that much tougher in the heart of the summer versus September/October. Nevermind it would avoid giving Trump the ability to leverage active kinetics to declare a National Emergency during the midterms, which I suspect Iran understands is the biggest thing truly motivating him. Nevermind, as well, that the Iranian people are, at least at the moment, suffering far more than anyone else as things drag on.
In short, isn’t the timing better for Iran to press the issue now?
As to the Iranian oil sitting at sea: Ultimately, with the straits effectively closed, the only thing that matters is physical inventory; The future value of that inventory at sea is a luxury only those with excessive production have, and then only when it is sellable: ie, at sea. And on the basis of its value in a few months, doesn’t it make sense to sit on it?
Maybe I’m missing something here and would be happy to be educated, but that Iranian oil stands to be worth far more when the crunch really falls, and Asia will feel the full brunt first. OTOH, maybe the US has some clever plan to steal their oil (or deny Iran those inflated proceeds), given that the ‘rules’ of adverse position (theft) are in the final analysis what you can get away with.
Iran is showing the Empire that two can play the “mowing the lawn” game. 😼
Regarding the two tankers that were hit as they were making a run for the Strait. It occurs to me that perhaps the Iranians are looking at this the wrong way around. Instead of trying to attack ships escaping, they should direct their efforts to attacking tankers who are trying to enter the Gulf. Consider. There are about 2,000 ships of all types locked up in the Gulf I believe but if they all left tomorrow, there would be a one-off pulse in world supply and that would be it. But by attacking tankers trying to get into the Gulf, it would deter ship owners from the whole idea and it would be like a lock-out which would serve the same purpose for Iran but with less chance of pollution leaking from a damaged ship. Bonus points because those ships would, being empty, be riding high so would present bigger targets.
“But two tankers on the Oman side most assuredly were hit, and in what no doubt is meant to be seen as an escalation, by virtue of Iran using ballistic missiles as opposed to the drones it had employed earlier.”
I’m pretty sure they used cruise missiles, not ballistic missiles, to hit those two ships.
Or drones, yes. Ballistic missiles on tankers would seem to be a waste and would likely do a lot more damage than a “fire.”
But maybe there are smaller missiles and if they’re able to be dropping them onto tankers, albeit slow moving ones, that does present some interesting questions.
Why now?
The Zionists have been trying to get the USA to attack Iran for half a Century, why now?
Credible reports that Trump has been experiencing cognitive decline since at least September last year may play a part.
Insanity.
As the pain killers kicked in last night I had a half waking dream, I was in the same room as Bibi, David Barnea, Jared Kushner and THE DONALD.
Bibi: “Don, you would be the GREATEST American President in History!, No you are ALREADY the Greatest, you would be GREATER THAN THE GREATEST AMERICAN PRESIDENT IN HISTORY!”
Barnea cuts in “Mr President all of out assets are in place, once we cut off the head of the Snake the people will rise and topple these tyrants, they will cheer you to the Skies, they will erect statues to honor you that will outshine the pyramids!”.
And finally, Jared “” Dad, THINK OF THE MONEY.
You will control ALL of the oil in the Mid East, YOU!.
You will be RICHER than ELON MUSK!!!.
The Donald cuts loose with a quiet fart and yells YES,YES, I AM THE GREATEST!
Do it.
I was thinking today that maybe Trump has heard of Emperor Augustus’s boast that ‘I found Rome a city of bricks and left it a city of marble.’
And in his own mind he wants to boast that ‘I found Washington a city of marble and left it a city of gilt.’
But that bit about Jared I found highly believable.
Why now?
On the US side, the original PNAC crew knew it there was a time limit on the US extending control. They weren’t unaware of the concept of missiles and drones. Besides dementia, their idiot confidantes/yes-men are in their 50’s which is the age of people who provide options for the decision makers. Marco Rufio instead of Dick Cheney. Both are evil, but one is…stupid. I don’t think they understand the situation they operated under in the 90’s into early 00’s has radically changed. Bill Kristol is not under these illusions, but he’s not one of the advisors anymore along with his old peers who are dead or retired.
I also suspect that the Israeli side was being driven by a combination of world reaction and Netanyahu’s own legal troubles. They hoped for a US rally around the flag vibe to use an excuse to wreck Lebanon which makes sense as an alternative to Israel for commerce. I tend to think Israel and the GCC Plantations are largely dedicated to preventing Islamic-heavy republics in the region. We may not care about the Baath Party, but that sentiment is what keeps the GCC up at night. Kinder, gentler Baathists -Kofi Annan suggested Hussein should start wearing suits- would be much more attractive for commerce than what we are seeing out of Israel.
Yes, and I think Netanyahu and his neocon allies in the US also perceived a time limit based not only on Iranian strategic capacities but on the length of Trump’s term in office. So they applied maximum pressure to get him to pull the trigger and persuade him of a happy outcome. Both Trump and Netanyahu are amoral con men, but both have supporters who are non-rational True Believers in the Cause who think God is on their side. Of course the hypocritical neocons like Kristol or Robert Kagan who have criticized Trump’s Excellent Adventure also want to dismantle Iran. But as you say, they understand the stupidity of a hot war of this type at the present time. For them the slower strangulation of hybrid warfare favored by the Democrats is now the necessary long-term strategy.
Do you think that any other president, Republican or Democrat, succeeding Trump would constrain Israel? Over the past half-decade+ I have not seen any evidence that would even remotely suggest that possibility.
Perhaps those who planned for total spectrum dominance did not foresee total spectrum resistance.
For Iran the logic of ‘What do we care if there’s no world economy if our economy can’t be stable because most of the world is US sanctions compliant.’ may be more implicit than explicit.
I don’t think a country like Iran would be explicit about such a position for diplomatic reasons. And I don’t know if publicly taking positions like that would improve Iran’s situation in any way.
Iranian officials have repeatedly stated that they take a stance of “either we all benefit, or none of us do” in terms of oil exports and power generation as their reasoning as to why they would blow up all the region’s energy infrastructure if theirs is destroyed. It’s just conventional mutually assured destruction in lieu of a more “traditional” (well, as of the last ~75 years) nuclear MAD, and it’s been fairly successful at keeping their infrastructure intact so far, albeit with some notable failures like the attacks on the Pars oil field and the destruction of some of Tehran’s oil storage near the start of the war.
Of course, Iran knows that if they do blow everything up, a Hormuz toll becomes rather moot – you can’t toll ships that aren’t coming because there’s no oil to carry. But the US and Israel clearly see it as a very credible threat. The people hitting children’s schools with ballistic missiles obviously aren’t holding back on blowing up Iran’s infrastructure because of humanitarian considerations. Unlike Russia, at least for the first few years of their own war.
But the US and Israel clearly see it as a very credible threat.
I’m not sure the decision makers do. They haven’t been humbled/removed yet in a direct way. Yes, Trump was booed at the Knicks game and the 250th was a joke, but accountability hasn’t been part of the equation yet. The Trump/foreign policy eco-system is made up of the doofus sidekicks/yes men of Cheney and Rumsfeld types: guys who didn’t understand why 41 thought bombing the surrendering Iraqis was wrong.
With the apartheid nature of Israel, don’t underestimate the ability of Tel Aviv to consider the Iranians are a full-fledged nation state and assume this will be like Iraq in 2002. I’ll notice Trump used that 90 million number yesterday which leads me to believe someone had to explain the differences between Iraq and Iran recently.
They will just order more missiles even if they are none to be had because these are stupid people who long ago should have been forced into exile or forced to shape up and find a willing general from the go-along to get-along Pentagon to approve them. There are 300, and the history of warfare is usually about what a moron the loser actually was.
I believe the Iranians know round 2 is always looming until the midterms, Vance is sworn in, or Trump fires people like Rubio/Hegseth and tries to pin the blame on them. They don’t want to enter actions that will result in civilian deaths, so they will make seemingly odd decisions to string it out.
Iran did appear to fire at tankers attempting to run the strait. Washington and Tel Aviv are still testing the waters.
An aside: Friend of mine was an intelligence officer then and flew down the Highway of Death in a copter. He said it was the most sickening thing he ever saw. IIRC, that’s why 41 ordered a ceasefire shortly afterwards.
Our brigade CO had the officers watch hours of that as training back in 1992. Interestingly, it was a combination of targeting training (field artillery brigade, so yeah) and ethics training. Very good and frank discussions of what was and wasn’t a war crime. It was as bad as you say, as we had unredacted video and audio. It also could have been worse, as we got to see and hear pilots say “no I can’t do this” and hold fire. One could argue that the survivors suffered more than the dead. I know I’ll never forget what I saw and I wasn’t even there. God help those people.
Per the Secretary of
DefenseWar, the military doesn’t do ethics anymore. Go figure.Gulf War memories… there’s this too:
Iraqis Buried Alive — U.S. Attacked With Bulldozers During Gulf War Ground Attack
The U.S Army division that broke through Iraq’s defensive front line used plows mounted on tanks and combat earthmovers to bury thousands of enemy soldiers – some still alive and firing their weapons – according to U.S. Army officials…
Reporters were banned from witnessing the Feb. 24-25 attack…
I didn’t take any joy for my little part in that war, but I’m damn glad I don’t have some things on my conscience.
China: China has already won. The US has squandered its offensive capability in Ukraine and Iran. The best the West can hope for in Ukraine is a partition of the country and a frozen conflict that periodically goes hot. Ukraine will be a demographic and economic basket case, and while it may tie up the Russians, it does nothing strategically to strengthen the US. The US has no capability to fight a ground war in Europe and if it attempted to do so, it would just put the US in the same trap they laid for the Russians.
Iran is just going to be a loss, but even if the US was able to squeeze out regime change, it does nothing to advance US interests, other than punish Iran for revolting against their CIA-installed puppet ruler. A declining empire cannot afford to waste resources on a vanity project. The US can’t challenge China in the First Island Chain, and can’t probably even do so in the Second Island Chain, so Southeast Asia is by default going to be under permanent Chinese influence and eventual control. Not to mention China’s control of the rare earth supply chain necessary for the US MIC. Its over before it started in the South Pacific. The benefit to China is seeing the US/Iran conflict continue, as the more it goes, the weaker the US, the less their influence, and the lower their prestige and international standing. If the oil market blows up, no one is going to blame China, they will blame Israel, the US and Iran.
China has very limited interests in the ME, other than insuring it gets enough crude to keep its economy going. If it had a direct interest, it would be much more deeply involved militarily, and it would commit to a side in the regional conflict rather than playing both sides. If Iran does something China doesn’t like viz. Hormuz, they will issue some kind of negative statement and that will be that. They won’t stop buying cheap Iranian crude. They won’t stop with Chinese military assistance because they want to see how their stuff performs against the US war machine. China is interested in positioning, acting like the responsible one from an international perspective, without putting any real skin in the game, while letting the US/Israel continue to engage in suicidal aggression.
United States: Trump signed the MOU because the US was militarily exhausted, and he wanted to get petroleum flowing before the world market went over the cliff. Trump, good con man that he is, promised Iran a bunch of b.s. that the US has not intention of following. You can make a strategic case for why the US should normalize relations with Iran, but it doesn’t matter. The Zionist lobby has too much influence over the elected US government and is too deeply embedded in the Deep State to allow the US to change its position. Plus, the US is still mad that the Iranians revolted against the government they installed there, and miffed about the hostage crisis which made the US look weak. The US will never satisfy the demands of the Iranians until the world moves over the cliff, and it is unclear what will happen after that happens. A case could be made for why the US will dig in, although ultimately, it is likely that Iran will be more resilient than the US (although maybe China and/or Russia can pressure Iran into caving).
Iran will assert full control over the Strait of Hormuz and shut down shipping through the Oman Lane. This will happen whether or not the MOU continues in some form. Iran understands that the Strait is their leverage, and they will use it, right or wrong. They also understand the US is not agreement capable, is profoundly in the throes of Zionist interests which seek the destruction of Iran, and will promise anything then renege. Their only hope is to inflict enough economic pain on the US (and the World) that the US has to cave. The US is the world hegemon, and acts like it, and it will take an enormous blow before it capitulates to some upstart theocracy in the ME. (It would be helpful if Israel got smashed hard enough to rattle them without triggering a nuclear strike, but that is a delicate balancing act.) We can speculate on what the US can do, but what it will do is probably best expressed by Rubio, a good bellwether of the median geopolitical orientation of Washington, D.C. The US is not going to surrender, and the US is not going to change its orientation (e.g. move in the direction of normalization), its going to hold those dastardly Iranians feet to the fire to meet their commitments under the MOU (as interpreted by the US), and if they don’t, by God they will teach them a lesson they won’t forget. Rubio is still binge watching Top Gun and living in 1996.
We currently have a game of chicken, currently both sides are pretending to be in a ceasefire, but there is no peace and no prospect of peace until there are far more casualties, both physical and economic. Yes, Trump is a short-term thinker, so he will make all sorts of promises to try and avoid the brink, but the lack of substance will eventual cause reality to overtake even the illusions of the Great Oz. Get ready for the roller coaster ride!
You mean like this one?
https://www.youtube.com/watch?v=DgRLlqEvOT8 (24 secs)
By now Rubio is planning how he can dump the whole mess on Trump and try and skate free so that it does not spoil his chances of becoming President. Maybe as soon as 2028. Vance had better watch his back.
Thanks. A couple additional observations on China via the JustDario and Jack Pramdelli tweets. One, China is prioritizing the Gulf States resuming production. Two, more speculative, China maybe restocking rumored hidden XL SPR with massive purchase.
From the bottom of my coffee cup, “What of this massive store of Iranian oil sitting out there on the high seas?”
Will the US try to seize it? Will China, as a way of clearing her throat over freeing up the Strait?
Iran is hoarding oil outside the Strait, which is a waste of resources unless Iran anticipates that the future price of oil will be substantially higher than the current price of oil. The question is whether Iran is privy to nonpublic information influencing their decision to hold and not sell compared to other market participants, and the nature of that information.
Is it indeed a case of hoarding, and not a case of there being no takers? (In good faith, I know not the answer.)
How does Iran protect these assets floating out in (international?) waters? Seems like a juicy target.
No, Iran is not hoarding oil. It has not secured buyers.
India just said it might buy if the US extended its waiver beyond August 21, which seems unlikely.
Yesterday, on July 6, 2026, published in Naked Capitalism Yves Smith/ Iran Update per quote of Wade comment:
Most of that ostensibly stranded oil looks deliberate rather than accidental. TankerTrackers recorded roughly 20 mb leaving Iran in a single day on 19 June. Historically, Iran’s exports to China have been around 1.4 mb/d, with reported short-period peaks around 2.2 mb/d. So this single convoy was the equivalent of nine to fourteen days of Iran’s normal sales to China. That looks less like normal spot selling than pre-positioning: either for pre-arranged buyers, for floating storage near Asia, or for optionality ahead of another possible disruption. This fits the earlier point made in Better Flows more reasonably than an account of Iran being caught out by the market. Iran was positioning ahead of a possible new closure of the strait, not caught out by a market it didn’t see coming.
Mortenson said there are buyers, he did not think Iran would have trouble selling its floating inventory. OPEC is not selling levels it sold before the war.
He went into depth on all the shorts re: Brent. My thought is oil sellers do not think SPR draws are done, l am aghast on the U.S. drawing SPR, as I was in Spring 2022.
The gas station on Main St just lowered regular again, today.
Whistling past the grave yard….
“The US is the world hegemon, and acts like it, and it will take an enormous blow before it capitulates to some upstart theocracy in the ME.”
I’m still sticking to my story that neoliberal economic ideology is the world hegemon. It will find its protectors wherever necessary.
Yesterday China completely lifted the export ban on distillates for July, bringing the teapot refineries back on the crude market:
https://www.reuters.com/business/energy/china-further-eases-fuel-export-curbs-july-sources-say-2026-07-08/
How reliable are the “media reports” and “US sources” thar Iran attacked oil tankers on the Oman side? Has Iran confirmed this? If not, why not? Serious threats backed up by confirmed action are more effective than random hits.
There is so much fog and so many bad actors, that I have to question any unconfirmed reports. Bad actors have their motives. Some of them are known—gin up more war; some unknown.
Couldn’t find anything on PressTV.
These are not “media reports”. Iran warned the Qatar LNG ship.
Qatar and now the GCC have severely rebuked Iran. The Qatar LNG tanker really may blow up.
Iran has not issued a denial.
Iran is no longer trustworthy after its fabrication of cargo ship (supposedly freshly) running aground when the ship ran aground in March on the Iran side.
From Aljazeera:
https://www.aljazeera.com/news/liveblog/2026/7/7/iran-war-live-khameneis-body-arrives-in-qom-hamas-cedes-gaza-governance
I wrote the below to a friend a month or two ago, and it still seems the core of the issue:
“Iran has discovered MAD (Mutual Assured Destruction), which used to be discussed in relation to nuclear weapons during the Cold War. Iran has said, and seems capable to execute, a MAD strategy–if US/Israel destroy our infrastructure, we will destroy that of the neighboring Gulf Arab countries who are allied with the US and with Israel.”
I think Iran is seen as credible on this issue, at least by the Gulf countries, based on Iran’s actions to date. Israel and the US are not rational actors, however, so any version of MAD which they don’t think includes themselves will not be a deterrent.
“The next move is not $150. It is whichever direction breaks first.What I am watching next?
August 21 first: the Iran license expiry decision.
Then the Aramco September OSP in early August, because if Aramco holds at -$1.50 or cuts further, the OSP is a floor, not a signal.
The next IEA Monthly Oil Market Report mid month, for revisions to Chinese demand and OECD inventories.
CFTC positioning every week, because if money managers cover that record net short violently, that is the range breaking upward in real time. And the yuan: if the PBoC defends below 7.20, Beijing is buying itself room to pay up for energy imports.
The June 11 thesis got the direction right and the magnitude wrong, and that is what admitting a partial mistake looks like in real time.”
China Got The Price It Was Waiting For, What Happens Next?
3 weeks ago I called this in 4 to 8 weeks. The tripwires fired on schedule but the physical deficit did not. Here is what changed, and why oil is stuck in a range. Giacoma Prandelli
I have been following some recent discussions about restarting the manufacturing line for the C-130 cargo aircraft. (By coincidence, my son now works in the very building in Long Beach that used to be the C-130 manufacturing plant.) And without fail, all the commentators make this exact same point, that the C-130 manufacturing line cannot be put back together again, or at least not with that tremendous difficulty and cost.
I see what is going on with this statement, but at the same time it seems like these types of tragedies could be prevented without much effort. When Hitler attacked the Soviet Union at the start of World War II, Stalin carried out as (one of) his many operations in response the movement of Russia’s entire Western industrial base to the eastern part of Russia so as to be out of harm’s way. My point is that even very large and complicated industrial operations are in some sense portable, and can be taken apart and put back together again if circumstances demand it.
A business consists of (1) knowledge locked up in people’s heads, (2) information residing outside of people’s heads, and (3) physical equipment and materiel specific to conducting the business operations. Obviously the first one is the most perishable, as people age, move away, or die. The other two seem much easier to preserve at least in the form of exemplars that could be easily duplicated if needed.
Perhaps the hardest thing about this is selecting which businesses should be subjected to this treatment of being put into suspended animation, as it were, and obtaining the money and physical space to do it.
Interesting research program for some business school to take on.
Just got time for a quick comment before I log off. What you said about Russia is true but those Russia workers went east with their factories. Where are the workers now in the US? The ones fired years ago. They are all old or retired or dead. I think that when they started to produce Stinger missiles again, they had to chase down all those old boys to come back and flash them a lot of money as nobody else knew how to do their work.
Those Russian workers were highly motivated to move at the time. The recalcitrant weren’t going to find support among their neighbors either if they wanted to stay.
As I recall, Dimitry Orlov had that if a nation loses capability, it is better for the capability collapse to happen quickly, not over a long period of time.
He pitched that Russia’s collapse occured quickly, so bringing back capability involved re-activating people, factories and supply chains that were not degraded much by the passage of time.
He suggested the USA’s long manufacturing decline has made it far more difficult to bring back capability, with knowledgeable people dead or age compromised, factories gone or moved overseas, lower level suppliers gone.
Even mothballed equipment may not work after years of sitting in storage, or it may have been canibalized or scrapped as not essential.
Holding stuff in storage comes at a cost that hits the bottom line, unless there is a customer with a large budget (USA Dept of War?) willing to financially support the long term storage.
Perhaps the silver lining of USA financialization, outsourcing manufacturing and “just in time” inventory management is that US military actions will be more constrained in the future.
Peace through a bloated financial industry.
The discontinuance of Shure pnono cartridges may be a small indicator of the USA’s manufacturing problems,
In my youth, Shure phono cartridges were prized.
Shure has survived well and the phono cartridge market is still there due to vinyl record fans.
But:
“Shure officially discontinued all phono cartridges in Summer 2018. This ended a 90-year legacy of making famous models like the M44-7 (a DJ favorite), M97xE, and V15.The company stated that making these parts while keeping their strict quality rules became too hard and costly. The supply chain for their manufacturing process could no longer meet their high standards”
IMO another obstacle is neoliberal economics. Long term investments take far too much from this q bottom line. Much better to max current profits as you go through long term decline. Sears is great example… it could have been Amazon, but bits were sold cheap to fatten somebody’s short term profit.
I imagine the country’s willingness to start from scratch to build those transports… maybe better/cheaper/faster to buy them from china.
Stalin wasn’t working on the fly. The five-year plans though not ignoring rearmament were about development, and what the Soviets had to do was not dissimilar to what they were doing. With the invasion, people who would have been much more willing to consider relocation. The methods to relocate and operate the machinery were already underway if not finished as part of the preceding plans.
The US has no industrial policy or the bureaucracy capable of even putting something together. There was a bit of one for microprocessors out of the pre-Neera, Biden White House, but for the most part, the best planning the US has is localities kind of figuring out the sprawl has been bad and working against it. We have “learn to code”, AI, NFTs, and the gig economy while our math scores plummet.
The Soviets had problems ultimately coming from democracy and “Sovietization” -they could build toasters but religious devotion meant they had to build really bad toasters, but the five-year plans weren’t a few politicians going “let’s have a blue ribbon committee.”
Even going back to the public option arguments of 2007, one argument was the US simply lacked the bureaucracy to manage Medicare-for-all and it would need to build out.
I agree with you that the US lacks the ability to organize any non-trivial effort. It seems like our government is in an iron lung compared to how it was in the mid 20th century.
My point was to underscore the fact that it’s possible to take businesses apart and put them together again.
Don’t sell the US short. Our English scores are plummeting too!
The biggest impediment is the system itself. Russian, although to a lesser extent than USSR, are still basically state enterprises.
The US system of graft, corruption, kickbacks, buybacks, dividends and excessive salaries means nothing will come together in less than a decade even if those with the knowledge and experience were still alive and kicking. The only way the US could ever compete with the Russian or Chinese system is to nationalize the entire defense establishment.
Look at all the benefits the US gained from NASA. That is until Obama screwed that up too and gave it all away to Musk.
The biggest impediment is the system itself. Russian, although to a lesser extent than USSR, are still basically state enterprises.
The US system of graft, corruption, kickbacks, buybacks, dividends and excessive salaries means nothing will come together in less than a decade even if those with the knowledge and experience were still alive and kicking. The only way the US could ever compete with the Russian or Chinese system is to nationalize the entire defense establishment.
Look at all the benefits the US gained from NASA. That is until Obama screwed that up too and gave it all away to Musk.
“Interesting research program for some business school to take on.”
If instituted as disciplines and fields of study, I wonder if “resilience and contingency” will fare much better than “ethics and morality”.
Ever since financialization made it all about stripping businesses down, “resilience and contingency” has belonged to an era when the health of communities and states were a priority. The transatlantic class doesn’t have those loyalties or concerns.
I probably should say “transnational” class…not “atlantic”.
It best matches the scale of the capture.
When I entered USAF weapon systems management in mid 1980’s the policy was to receive and warehouse all products tooling, jigs and forms. To acquire review and library all production drawings and process directives. Those were the days we reviewed production readiness against audited data and schematics. C-130 is old that those assets are available.
Two issues today: could Lockheed find engineers who can read drawings, two newer stuff DoD did not audit like it did when well managed before Cold War ended.
It takes two to tango. The US could easily (!) agree to all the points in the MOU and all of this would be over tomorrow. And of course the US has been machine gunning Iran since 1979, so there’s that.
We often hear this kind of language during labor strikes, when everyone blames the stubborn and greedy workers for the ongoing work stoppage. Of course, the employer could immediately give the workers the $0.25 raise or whatever their demands are, but somehow that’s never considered an option.
In any event, I honestly don’t think letting the US “win” is going to be any kind of solution here except perhaps in the very short term; it will just kick the can down the road.
It seems to me that Iran must understand by now that the attacks by US/Israel, in whatever form, will not stop, ever. What is Iran to do? They are seeing what has happened, over time, to numerous other ME countries, who were first used, then destroyed. The US/Israel want what the ME has: oil. Iran has no choice but to forcefully assert its power. An alliance of all ME countries is what is needed and what the US/Israel entity always works to prevent. Divide and conquer. Iran is saying Enough. Stop.
Mirandi a few weeks ago discussed the distributed nature of Irans government, which also includes parallel structures.
The response to the attack was the 40 day war, all planned, agreed and distributed prior to the event.
The MOU period has seen all the competing interests of that distributed, parallel structure contending with themselves.
The funeral period we’re now seeing is defining a legitimate, popular mandate for a very firm position. We’ll next see if that civic outpouring can refocus and align the distributed and parallel state functions.
I expect more clarity in Irans next act, something more like the 40 days, but per Yves, I may be snorting hopium.
Certainly the US has form for kicking the can down the road – look at the state of US infrastructure, or educational system – report after report and yet the announcement projects the resource allocation onto a future administration.
@XXYY at 11:09 am
“It takes two to tango”. Exactly. The US has been attacking Iran without provocation since 1953. Since the Iranian revolution in 1979 US attacks via proxies and directly have been relentless and brutal. Iran is fighting for its existence. The attacks will continue until Iran is no more even if it takes another 50 years. The most effective card Iran has to play to defend itself is closure of the Strait of Hormuz.
China, India, many others, may be unhappy about that but what are they doing to fend off the US-led attack on Iran? Have they sent expeditionary forces to West Asia to support Iran or end the Holocaust of our time in Gaza? Sure, China has given some support but not all that much given the stakes for Iran.
If the Iranian leadership does want to defend its people and civilisation, and that remains to be determined, it will have to clear the US out of West Asia. No direct attacks on Israel will be necessary. Without US support Israel will be defanged.
Regarding the desire, or not, of the Iranian leadership to defend its people, I note there is the recent precedent of the betrayal of the interests of almost all European peoples by their respective leaders through the imposition of self-damaging sanctions on Russian energy followed by dependency on the US. Then there is their expressed desire for war with Russia which could lead to the permanent disappearance of their countries in a nuclear cataclysm. How many Satan 2 thermonuclear bombs would be needed to glass over the UK? Six? Ten?
Keith Newman: Agree with all you’ve said, but please note, the US Senate is about to vote to merge the Israeli military with the US military, and merge the intelligence agencies of both countries. There will be no separation after that, and no ‘defanging’ of Israel. This is flying way under the radar in the US and will make for some serious ugliness in the future. Note also the huge increase requested in the US’ military budget.
EY: but Israel needs the US military to do most of the fighting for it. My understanding is that the “merger” is does not do that.
I’m having a hard time conceptualizing an over-supply in the oil markets, so some random questions, these in good faith.
Could there be an oil glut without demand destruction? If not, is there observable demand destruction to account for an over-supplied market? Does demand destruction imply reduced consumption/productivity? Where is the pain felt?
“But that is based on the assumption that China is an ally of Iran, when China is also the biggest import supplier to Israel and third-largest buyer of Israel exports. China has and continues to support Iran in various ways but it would be a mistake to assume that the relationship rises to the level of an alliance.”
Not only China considers Israel an important trade partner.
This is part of the result of decades of sanctions against Iran. Iran can show that the Strait of Hormuz is important to the world economy. But other countries have trade partners they consider more important.
“But to punish the US and Israel, Iran will wind up machine gunning down a crowd to get to them.”
Which plays into the hand of the hardliners in the US and Israel who have desires beyond disarming Iran’s nuclear problem.
Not sure I agree: The long-term plan to take out Iran will continue until the US is no longer able to project power in the region, regardless of what Iran does (short of capitulation). The nuclear issue has always been an excuse. Iran must be weakened, regime changed and/or broken into smaller stateless in order to prevent Iran from projecting its regional power and resisting US/Israel dominance. The very existence of the Islamic Republic of Iran represents a threat to US hegemony. The rest of the countries have been eliminated already, Iran is the last one. And so far, Jordan and all of the US vassal states in the Gulf are still intact
Those in the US and Israel who have desires beyond disarming Iran’s nuclear program…
I was indeed saying it’s always been an excuse.
Iran doesn’t have ‘a nuclear problem’. The US and Israel have an Iran problem. And it’s not just ‘the hardliners’.
I actually meant “program”. Better fit.
The overarching point: it’s not really about the nuclear program for some of Iran’s opponents.
I’m also having another imaginative take about the situation in the Strait of Hormuz…but folks are nowhere near ready for it.
One more comment. :-)
Suppose, hypothetically, every country running traffic through the Strait of Hormuz came out tomorrow and said
Unless the US itself wants to take on the task of instituting its own blockade, this seems like it would let most of the air out of the conflict.
Would this be bad somehow?
Well, and the US sanctioning a few of them for giving in to Iran as an example pour encourage les autres. The rest would fall back in line quickly, I’m sure.
But to punish the US and Israel, Iran will wind up machine gunning down a crowd to get to them.2
The horns of the dilemma, they are cruel and sharp and the dilemma itself is a nasty, ill-tempered, and unforgiving beast. What does Iran, as a moral nation, do? Its own survival? Or the survival of the crowd?
It would be logical for many buyers to feel that way, though the biggest, china, disagrees on principle.
It’s not just us/israel objecting, so are the Arab gulf states that imo are the effective payers of the tolls (they must compete on price/ cost of delivery etc, against other sellers, just as they did before the war.) If it was really the buyers that paid imo those states would not be so opposed.
“Jeff Currie pointed out that Red Sea transits were 75% of the old normal a full two years after Ansar Allah had pretty much stopped its vessel target practice.”
How much of that is never to return because alt routes and sources have been found?
“Never” may be doing a lot of work there…
It’s also possible some vessels may return temporarily and then change again. So indeed it won’t be the old higher numbers, but that doesn’t mean the goods and services have disappeared from the markets at the same rate.
A 25% loss is comparable to the worst of prior oil crises. And that is the good news. It would be informative reporting to report on cumulative loss, but I suppose that would contradict the happy talk!
25% loss of shipping transits.
Main comment was that if Iran were to hit ships hard now, the US would certainly rain on the funeral, which would be domestically a bad decision.
Minor comment on China’s shipping restraint. The US faces the same bottlenecks if it tries to move vessels west from East Asia. If China wants to send ships to the US, there are no bottlenecks (gaps in some of Japan’s Islands are hundreds of miles); just as there are no bottlenecks for the US to send empty containers to China. (Listening to Sal at 2X is fun).
China is working hard to avoid these bottlenecks via rail and alternative pathways, not for economic reasons, but for US plans to shit down the bottlenecks in its planned war with China. My SWAG is that one cannot interpret Chinese strategy on a quarterly or even a five-year basis. China has a long history of long-term planning, including the potential (and incalculable economic damage) for a US war. My point is that this balances the economic argument in a pro-Iran direction, as an important (perhaps regionally dominant) power node that challenges US power in West Asia.
“Commentators have regularly pointed out that wealthy nations, and in particular the US, will be less harmed by choking the Strait of Hormuz than poor nations. Look at Sri Lanka, India, Indonesia and the Philippines as poster children.”
I’m going to take into account that there could be some Modi administration hype to some of this, but…
(from Sunday’s NC links)
https://www.deccanherald.com/india/fearmongers-wallowing-in-depths-of-despair-after-india-successfully-navigated-energy-crisis-pm-modi-4062131/
Probably not out of the woods, but not necessarily trapped in the woods?
Mark Sleboda in his CANADIAN PREPPER talk in today´s NC links briefly also comments on Iran in the end:
He “advises” Iran to exclusively go to war. No negotiations.
US is using the current “peace” trying to dissociate Oman from Iran and achieve – as I conclude – with talk and bribery what their military cannot.
Also he addresses rifts within the Irani leadership which US tries to capitalize on.
If these are correct observations I have no way of judging.
While Sleboda is gold for Ukraine/RU, Crooke is for Iran.
You cannot be expert on everything.
According to the AP, three projectile strikes on Tankers causing damage in the Omani Passage today, including fires on an LNG Tanker:
https://apnews.com/article/iran-us-israel-war-oil-4732228810c9839a1258309ad43b8289
Surely “fire” and “LNG tanker” has the potential for the sort of “boom” that would make the DC fireworks show look like a damp sparkler.
Crude moving up after Axios’ Barak Ravid reporting that the US is revoking Iran’s oil waivers in response to the tanker strikes today:
https://www.axios.com/2026/07/07/us-revokes-iran-oil-waivers-hormuz-strait-attacks
That would be the predictable move by the US, yet Iran could have hoped for 2 attacks to be dismissed as a signal. Not that it matters any longer, apparently.
I wonder whether Axios is reliable for even this sort of pretty straightforward reportage.
Assuming this is true, I suppose Iran could still sell that oil, either now or later, at whatever price the market allowed, at a discounted price to whatever stray buyer emerges, for the inconvenience of essentially laundering it?
Davis Deep Dive now reporting that sanctions back in force (per Treasury) and US is attacking Iranian coastal sites in Hormuz.
Friendly reminder: every single one of Taco’s attacks is illegal on a statutory basis, now that the hostilities have passed the 60-day threshold of the War Powers Act.
Somebody should be writing this down; each violation is a separate count in an impeachment trial, hello, Democrats?
It should be noted that Obama once passed the 60-day threshold of the War Powers Act in Libya and Congress said meh. The uniparty at work.
Larry Johnson substack article with details on salt caverns and their longevity, or lack of same;
“Part II: The Sour Crude Problem: How Long Can the Salt Caverns Keep Bridging the Gap?”
7-10-26
Excerpted:
The Salt Cavern Problem
The SPR’s roughly 60 caverns were solution-mined into Gulf Coast salt domes, and the same physics that created them slowly consumes them. Oil is withdrawn by injecting raw (unsaturated) water at the bottom of a cavern; the water displaces the oil upward and out, but on its way to saturation it dissolves the surrounding salt. Every drawdown therefore enlarges the cavern. Sandia National Laboratories, the SPR’s geotechnical adviser since 1980, models each complete drawdown as growing a cavern’s volume by roughly 15 percent, and the caverns were designed on the assumption that each could be emptied approximately five times over its service life. Sandia’s Level III structural criteria require that the pillar-to-diameter ratio between adjacent caverns remain adequate after those five cycles; beyond that point, the salt webs separating caverns thin toward instability.
Critically, the five-cycle figure is a design average, not a per-cavern guarantee. Sandia’s published geomechanical work — and the lab’s own project managers, on the record — state plainly that the fleet is heterogeneous: some caverns retain a full five drawdowns, some three, and certain caverns should only be completely drawn down one time, after which they cannot be used again. Sandia now produces an annual report tracking the remaining available drawdowns for each individual cavern, precisely because the answer differs cavern by cavern. That cavern-level report, not any headline inventory number, is the authoritative measure of how much structural life remains.
The fleet’s history compounds the problem. A 2010 review found a fundamental mismatch between design and use: the caverns were engineered for a small number of large emergency drawdowns, but between 1996 and 2014 the reserve executed fourteen separate removals of under 10 million barrels each — congressional deficit-financing sales, test sales, and exchanges — and small partial drawdowns leach the salt in irregular “flare” patterns concentrated at the injection depth rather than uniformly. These repeated partial cycles have caused cavern deformation and salt falls. During the 2021 sales alone, over 45 million barrels of raw water went into 26 caverns, and Sandia’s monitoring flagged leaching-induced features of concern in 11 of them. On top of the 2022 Biden-era release of 180 million barrels, the 2017–2023 congressional sales, and now roughly 91 million barrels drawn since March 2026, substantial portions of the fleet — the sour caverns especially — have consumed one to two of their nominal cycles in the past four years, unevenly distributed. The reserve’s own history offers the cautionary tale: Weeks Island, an original SPR site built in a conventional salt mine, was decommissioned in 1999 after a sinkhole allowed fresh water intrusion that began eroding the facility.
https://larrycjohnson.substack.com/p/part-ii-the-sour-crude-problem-how