Donald Trump has a real mess on his hands, not to mention a lot of blood, in the Mideast.
As the administration’s “four- to five-week” war approached its one-week anniversary, the overall death toll across Iran, Lebanon, Israel and including US service personnel, was nearly 1,000. Almost all the dead are Iranian and Lebanese.
Both Saudi Arabia and Bahrain were targeted by IRGC projectiles on Friday. Neither attack did much damage, but the incessant hail of missiles and cloud after cloud of kamikaze drones is very bad for business in the region, where America’s Gulf allies are keen to project an image of opulence and stability.
Oil’s quickly becoming a domestic political liability for Trump. Brent approached $90 on Friday and WTI $87, the highest since 2024.
As the figure shows, WTI was on track for a better than 25% gain on the week, on par with the spike seen around Vladimir Putin’s ill-fated bid to conquer his neighbor.
Suffice to say Trump’s insurance scheme and promise to provide warship escorts for tankers transiting the Strait of Hormuz hasn’t placated oil traders just yet.
Ironically in the context of major power “special military operations,” Trump’s Iran adventure could result in Treasury carveouts allowing for the purchase of sanctioned Russian crude.
The spike in oil and gas prices translated into what BofA called “forced capitulation” into energy shares.
As the figure above shows, energy equity funds just witnessed their largest weekly inflow on record, a $7 billion one-week haul.
The largest and most popular energy ETFs are up every week this year and several trade at record highs.
Meanwhile, back at the ranch, retail gas prices in the US averaged $3.32 on Thursday. That’s the highest ever under Trump, first or second term.
As part of my morning news binge, I saw that Iran no longer has a navy. It’s old news: the briefing by Admiral Cooper was yesterday, and the news was old even then. But yeah, Iran’s surface fleet has been taken to zero.
The article is here: https://maritime-executive.com/editorials/farewell-the-nedaja-the-extraordinary-ineptitude-of-the-iranian-navies
and my favorite thing is the bit of editorial snark at the end which you only find in small, niche journalism. For those who don’t read the article itself, bask in its final paragraph:
It feels like a TACO moment is coming sooner than later. He won’t stand continued deterioration in oil prices for another 4 weeks. If the TACO moment comes, it would nonetheless be shocking to me, since it would feel like the first ever kind of meme-war. Not an existential or necessary one, but one fought for the fun of showing pics of subs murdering harmless sailors. Quickly stopped when Trump finds out there is actually a lot of oil and gas going through that region, affecting gas prices in the US, crossing some sort of random red line ($150, $200?). At that point, Trump declares victory and retreats as fast as he started it. Then the question remains: is it done for Iran as well? It would be in their best interest, but who knows.
What does TACO look like in this context and how does it reopen the shipping lanes?
Trump truly screwed up this time and, unlike tariff or greenland, is not totally up to him to roll back the damage.
The “new” single, objective for the US foreign policy appears to be: we only care about oil prices. If we must get involved, it is restricted to air and taking out enough people to meet our single objective. That’s it.
We clearly don’t care about who leads a given country or if they can rebuild, we only care about oil prices.
As much as I love to travel- I will continue to keep Dubai off my list.
I don’t think that is new, have you met Iraq?
a quick edit, both Iraq (Hussein in the 1970s) and Iran (the Shah Pahlavi in the 1950s) were empowered (?), installed (?) for the sole purpose of access to oil – so no, not at all new.
The problem is there is no clear TACO out of this one.
May I suggest that a well-executed pretend stroke would make him an instant MAGA saint like Reagan the Alzheimer’s patient? Plus, it would shield him from the prosecutions that are waiting in the wings and allow him to enjoy a taxpayer-financed retirement at his all-new Trump Gaza Resort & Golf Club.
I am sure Vlad is happy with all of this. Such a difficult balance between the war you pretend you want to end the one you can’t help yourself but start.
I don’t think he’s happy about losing his #1 drone supplier.