In some ways, the war in Iran has proved inglorious for those of us who specialize in energy market analysis. Had we been given the events of the past 75 days and asked to wager on front-month Brent crude at $150 per barrel, we would have greedily pledged our homes to take the over. While we wouldn’t be the first to be made homeless by the brutality of the markets, anybody who claims to have correctly predicted how oil prices would unfold is, well, almost certainly lying.

Getting the future wrong on occasion is just part of the business. Nobody bats a thousand. Learning from reality as it unfolds is the ticket to commercial longevity.

More troubling to the profession is the relentless proliferation of wrongheaded takes on the state of affairs in the oil and gas industry—especially America’s. Such claims are spread by many whose pedigrees suggest they should know better. A common theme: The US is in far worse shape than “they” are telling you, and calamity lies ahead. Here is a paraphrasing of the more widespread—and erroneous—assertions:

“The US is not self-sufficient in oil.”

“US refiners cannot process the type of crude the country produces.”

“US oil storage tanks will run empty in early July.”

If you have read such assertions and thought, “That can’t be true,” you would be right. Other than California, the US is well prepared not only to weather the storms of war but to thrive amid the maelstrom. Using nothing but publicly available information, let’s walk through the reasons why.

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Just hours after the outbreak of war in Iran, we made a deliberate decision to plug into as much foreign propaganda as possible. We repurposed the all-powerful Twitter/X algorithm to identify a new list of high-signal/low-noise accounts with a pro-Iranian bent. Using a technique previously described here, we supplemented our standard approach to information-gathering with this new feed. In doing so, we were able to draw conclusions about the war’s arc days before they surfaced in legacy Western media outlets.

Take the fate of the US military bases sprinkled around the Middle East, presumably built at least in part for an inevitable clash with Iran. During the first week of hostilities, our new feed was replete with shocking footage and satellite imagery that strongly indicated Iran had inflicted massive damage on these bases, far more than the Pentagon was admitting. Much of it seemed “leaked” from Chinese sources, having found its way to Twitter/X via popular Chinese social media outlets, and was mostly confirmed by Western-based satellite providers, at least before the Pentagon demanded they stop publishing it.

Because this material so mismatched what US and Israeli military leaders were reporting, we filed the information as a loose axiom in a developing mental model: Iran was outperforming expectations, a quick and decisive defeat of that country was not in the cards, and no amount of jawboning would alter events on the ground. Although, in many cases, it took several weeks, traditional news organizations slowly began to confirm what by then had become old news to us, culminating in this remarkable investigation by The Washington Post, published Wednesday:

“Iranian airstrikes have damaged or destroyed at least 228 structures or pieces of equipment at US military sites across the Middle East since the war began, hitting hangars, barracks, fuel depots, aircraft and key radar, communications and air defense equipment, according to a Washington Post analysis of satellite imagery. The amount of destruction is far larger than what has been publicly acknowledged by the US government or previously reported.

The threat of air attacks rendered some of the US bases in the region too dangerous to staff at normal levels, and commanders moved most of the personnel from these sites out of the range of Iranian fire at the start of the war, officials have said.”

This affair drives the importance of not only casting a wide net for inbound information but also having a disciplined process to grade it for veracity. The Washington Post has historically printed many stories we find dubious, but this one revealed sources and methods beyond the standard “people familiar with the matter” trope, adding to its credibility. In other words, it rang true under our own internally developed mosaic.

On May 2, potentially momentous news broke out of China that, if verified, might mark the beginning of the end of US dollar hegemony, the durable rise of a multipolar world, and an even greater role for gold in geopolitics and international trade. We speak, of course, of the ongoing sanctions war between the US and the other great powers, and China’s possible decision to draw a line in the sand and defy Washington in a way it has not yet been willing to do. We say “possible” because, almost immediately after the news broke, efforts were made to downplay it, putting us in a strikingly similar position to that first week of the war: We are pretty sure something incredibly important is happening, but we are getting strongly mixed signals on the matter.

With US President Trump allegedly traveling to Beijing soon for what may be a historic summit with Chinese President Xi Jinping, making sense of the conflicting headlines has never been more urgent. Let’s work through the evidence together, ponder the consequences, and get ready for the big show ahead.

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Within the Washington establishment, few periodicals are adorned with the stature and prestige of Foreign Affairs. Published by the powerful Council on Foreign Relations, the magazine is known for its thoughtful, US-centric essays, whose ideas often gain acceptance within its elite readership. As a means to understand where US government policy and legislation might be headed, Foreign Affairs is an invaluable resource.

In a recent contribution titled “The Real Threat to Taiwan: America Is Preparing for the Wrong Kind of Crisis,” author Eyck Freymann—whose credentials quite literally could not be more pedigreed—opens with an ominous but entirely plausible hypothetical: In small but measurable steps, China begins to implement something of a soft blockade on Taiwan, all but daring the US to intervene. Although no individual provocation rises to the level of casus belli, before long, China has a stranglehold over the island—leverage it steadily uses to achieve Xi Jinping’s vision of reunification.

Suitably hooked by Freymann’s scenario, we were taken aback by the casual way in which he framed possible US countermoves (emphasis added):

“The White House quickly recognizes the core issue: the burden of escalation is now on the United States. China’s actions, although deeply alarming, do not automatically rupture any supply chains. They are not traditional acts of military aggression. Taiwan’s most important exports—the GPU chips that power the artificial intelligence revolution—can continue to flow to the United States, at least for now. But if Washington accepts this new normal, it will have been checkmated. Starved of the tools to defend itself, Taiwan will soon lose its leverage to resist China’s coercion.

Washington cannot trust that Beijing will let Taiwan export GPUs freely forever. At any point, the United States could theoretically destroy or disable TSMC’s fabrication plants to prevent China from accessing them. But such an action would trigger a financial panic. China will therefore seize the advantage in cutting-edge AI capabilities unless Washington chooses to inflict a devastating economic blow against itself, antagonizing the entire world in the process.”

After rereading the passage several times to ensure we understood the message, it dawned on us that, if this is actually what the US foreign-policy establishment is telling itself, inner Washington’s assessment of China’s AI capabilities is so wildly detached from reality as to be dangerous.

Longtime Doomberg readers will know that China’s AI strategy is of great interest to us. In April of 2024, we published “Chip Shot,” a piece detailing how China systematically works to dominate strategic industries and how Western market leaders regularly downplay the risks as events unfold. In “Is the Chip War Already Lost,” published in December of the same year, we warned that analysts were wildly underestimating the pace of innovation in China’s chip sector—a development with far-reaching consequences for global trade. In May of 2025, we released “On the Ascend,” which focused specifically on what Huawei’s new chip architecture would mean for Chinese chip independence. Finally, last December, we returned with “Trump Card,” which speculated on the potential impact of China’s growing AI capabilities on the value of global equities.

Contrary to Freymann’s framing, we believe that by the time China makes its inevitable move on Taiwan, TSMC’s assets won’t be a prize Beijing needs to close the gap with US competitors, for that gap will already be good and closed. In fact, Beijing is almost certainly waiting for such a milestone to be achieved, at which point TSMC’s facilities become a source of leverage over Washington, not the other way around. If the headlines coming out of China in the past few weeks are to be believed, we are on the cusp of entering such an era. Let’s explore recent developments through this lens.

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Just after midnight on March 24, 1989, the helmsman of the Exxon Valdez made a fateful error. In an attempt to avoid ice while navigating Alaska’s Prince William Sound, he accidentally ran the tanker aground on Bligh Reef. The maneuver ruptured eight of the ship’s eleven cargo tanks, spilling some 11,000,000 gallons of oil into the surrounding environment. (The attentive reader might wonder why 260,000 barrels or 37,000 tonnes aren’t the more widely quoted figures for this memorialized disaster, to which we would say the legacy media would quote oil spills in ounces if they thought they could get away with it.)

As tanker spills go, the Valdez was nowhere near the largest, but its impact on the oil industry was unparalleled. The outrage that followed led to a complete overhaul of how oil shipping operates, and the industry invested huge sums to improve tanker construction, port safety, and other related operations and monitoring logistics. Most notably, the use of single-hulled tankers was phased out altogether, replaced with double-hulled variants designed to be far more difficult to breach.

Once new targets are set for the oil and gas industry, they tend to be achieved, and the decades after Valdez have seen a remarkable drop in tanker-related spills. While it was not unusual to experience hundreds of thousands of tonnes of oil spilled annually in the 1970s and 80s, the 2020s have averaged less than 10,000. In particular, double-hulled Very Large Crude Carriers (VLCCs)—leviathans that can handle upwards of 2 million barrels of oil at a time—have performed exceptionally well, with no major spills on record. Let’s hope we didn’t just jinx them.

Rare though large spills may be, zero remains an emotional construct, as no risk can be wholly eliminated. Even zero is never quite zero, as one can’t be 100% assured it will remain zero in the future, the future being infinite and unfalsifiable. Environmental groups regularly exploit the asymptotic nature of a line that might approach zero but can’t ever get there, and the Exxon Valdez affair still finds its way into many contemporary advocacy campaigns.

One such campaign unfolded in Canada nearly a decade ago, with far-reaching consequences that are now causing pain too sharp to ignore. Political action inspired by the ghosts of oil-covered birds, otters, and sea lions has cost Canada’s energy sector billions in lost profits, enriched its American neighbors by the difference, and stunted its geopolitical power—even as the war in Iran creates unprecedented demand for what the country could currently be offering. It’s no exaggeration to say the fallout for the Canadian economy risks national unity, adding momentum to separatist movements in the Western provinces. With a fresh move afoot in Ottawa to undo the damage, and given the stakes involved, it’s time to assess where the political puck is headed next.

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Shortly after missiles started flying over the Middle East in the latest forever war, a most unusual set of weather phenomena captured the attention of residents across the region. In late March, a rare, slow-moving storm system brought heavy rain, thunderstorms, and strong winds across much of the United Arab Emirates (UAE). In April, Saudi Arabia closed schools after severe floods raged across the country. Last week, reports of previously empty Iranian dams now overflowing with water filled social media. A post on Twitter/X that purports to show torrents of water filling various reservoirs across the region has 3.5 million views at the time of this writing.

Iranian officials have long accused Gulf states and US-Israeli military interests of cloud “theft” or weather manipulation. Many assumed this claim was an attempt to deflect political blame for the government’s alleged mishandling of the years-long drought that has besieged the country. Iran’s gripe is not without at least some plausibility, however. The UAE has publicly acknowledged its program to increase domestic rainfall, which involves an estimated 1,000 hours of cloud-seeding flights per year. The US military is also known to have used cloud seeding as part of a systematic “weather warfare” campaign in Vietnam during Operation Popeye more than 50 years ago.

Escalating the conspiracy speculation, perhaps knowingly, Iran’s official Kabul Embassy Twitter/X account, part of a cadre of verified, longstanding embassy accounts reactivated to spread wartime propaganda, tossed a match into this online tinderbox of intrigue. As Türkiye Today describes, the Iranians assert that their successful attack against a weather control center accounts for the sudden restoration of water to their lands:

“The since-deleted post stated that following what it described as Iran’s destruction of a ‘secret cloud seeding and climate change center’ operated by the UAE, weather patterns across the region transformed ‘overnight.’ Iraq and Iran, the post claimed, were now experiencing weekly heavy precipitation and significant temperature drops as a direct consequence.

In a rhetorical flourish that drew particular attention before the post disappeared, the account included a meteorological map based on the GFS forecasting model showing dense precipitation systems stretching from Türkiye’s western and southern coastlines across to the Middle East. A red circle was drawn around rain masses passing over Syria and Iraq. The account described the cloud formations on the map as curving in the style of legendary Brazilian footballer Ronaldo Nazario, a comparison that amplified the post’s viral spread for its surreal tone.”

While such speculation could be easily dismissed as just another artifact of social-media algorithm amplification, meaningful signals are exposed as the tide goes out: the critical role water plays in regional geopolitics, the mystique surrounding Western intelligence agencies and their rumored prowess, and how Iran is more than holding its own against the US and Israel in the propaganda arc of the current war. Let’s drink it in.

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As the world focuses on the conflict in Iran, we find it instructive to take a step back to consider the state of natural gas, America’s primary energy advantage. All wars are, in essence, energy wars, and the US’s foundational strength in the fuel, and North America’s more broadly, is consequential.

In this month’s presentati…

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Prior to the war in Ukraine, the port facilities at Novorossiysk had historically handled over 30% of Russia’s oil exports, making the city one of the most important chokepoints in that country’s vast export system. Situated along the now hotly contested Black Sea—a major strategic gateway to international waters for both Russia and Ukraine, and a body of water Western powers have been aggressively seeking to turn into a “NATO lake” since Russia’s annexation of Crimea in 2014—Novorossiysk had largely been considered an off-limits target. Its role in balancing international energy markets made attacking it too risky and potentially counterproductive.

That changed in November, when Ukrainian long-range air and sea drones hit, forcing a temporary halt in the port’s oil exports, arresting roughly 2.2 million barrels per day (bpd).

When Iran made closing the Strait of Hormuz a key response to the US-Israel attack in March, the world was thrown into an urgent energy crisis, the consequences of which have yet to fully play out. One immediate effect was the sudden increase in the strategic value of every other barrel of oil on the planet, especially those available for export. Given this development, you might have assumed that the European countries underwriting Ukraine’s military and budget needs would have cautioned their ally against further attacks on Novorossiysk. If they did, such advice fell on deaf ears:

“Explosions were reported overnight on April 6 in the southern Russian port city of Novorossiysk, with local residents saying drones attacked an oil terminal and damaged a residential building. The attack is the latest in a string of Ukrainian long-range strikes on Russia’s most important oil terminals on the Baltic and Black Sea coasts in recent weeks, as Kyiv looks to restrict the windfall gained by Russia from soaring world oil prices.

The strike was later confirmed by Ukraine’s General Staff and a source in the Security Service of Ukraine (SBU). Six of the terminal’s seven oil-loading stands, used to load and unload tankers, were damaged, the source told the Kyiv Independent. The attack also hit key ground infrastructure, including the pipeline control unit and the oil metering station.”

The latest attacks on Novorossiysk came just days after the US Department of State took the unusual step of publicly warning against such moves, issuing a formal demarche to the Ukrainian ambassador in Washington.

Among European leaders, there still seems to be, at best, indifference to the potential second- and third-order consequences of attacks on Black Sea oil depots. In fact, a week after the latest salvos, German Chancellor Friedrich Merz hosted Ukrainian President Volodymyr Zelenskyy in Berlin, where the two signed yet another strategic defense partnership, this time focused on how Germany could further help its ally with drone production. That those drones would eventually be used in similar future attacks on Russia’s oil export capacity seems a certainty.

Whether the indifference is justified will be determined in the weeks ahead, for Novorossiysk doesn’t just move Russian crude to international markets. It is also the primary outlet for 80% of the oil exports of a landlocked country that has become the second-largest source of imported oil for the European Union (EU). Soon enough, Brussels won’t just have a Hormuz problem.

It’s time we talked about Kazakhstan.

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Over 100 million years ago, South America and Africa began to drift apart, and in the narrow seas between them, thick layers of rock and salt gradually accumulated along what are now the coasts of Brazil and West Africa. Buried beneath those layers is an enormous amount of oil, with Brazil’s pre-salt resource commonly estimated in the tens of billions of barrels. Similar formations exist in the waters of Angola, Congo, and Gabon.

Although geologists long suspected it contained a large energy bounty, Brazil’s pre-salt was historically difficult to drill because it behaves like a slow-moving, plastic material that flows and squeezes around the wellbore, constantly threatening its stability and integrity. After years of intense investment by Petrobras and its international partners, sufficient technological advances were made, and the company estimates the breakeven cost of production from such formations at $30–40 per barrel. The oil majors are nothing if not deflationary machines.

The breakthroughs have catapulted Brazil into the largest oil producer in South America and among the top ten in the world. According to the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP), the country’s production recently surpassed 4 million barrels per day (bpd). If the current growth trajectory continues, it won’t be long before Brazil passes Iran on the leaderboard:

Adding to the importance of Brazil’s oil growth trajectory is the fact that the country has historically consumed only about 2.5 million bpd of the stuff, meaning each incremental barrel is available for export—all the more precious in the aftermath of the closure of the Strait of Hormuz. Anyone with spare production capacity profits handsomely from the resulting spike in prices.

While the economic benefits of being a global top-ten oil exporter are obvious, the associated risks were laid bare when the US military removed former Venezuelan President Nicolás Maduro and waged a pre-emptive war on Iran. The cover story for these operations may have involved, respectively, drug cartels and the well-worn “weapons of mass destruction” trope, but it would be naïve not to consider what is actually going on.

The fact that Brazil is the “B” in BRICS, and that one of our operating mental models sees the US immersed in World War III against all who support the main mission of that organization, means it’s time to speculate on the odds of a major hot war in the Western Hemisphere. When the totality of the evidence we are about to present is considered, there can only be one conclusion: The risk of a military conflict between the US and Brazil is far higher than most geopolitical analysts and political strategists are currently gaming. Let’s lay out the case.

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What is the appropriate price of oil? Given a set of supply, demand, and inventory numbers, where should the world’s most important commodity trade? For obvious reasons, the war in Iran and the closure of the Strait of Hormuz have brought this question to the forefront of market analysis, and a digital avalanche of opinions on the subject now proliferates across social media. Depending on one’s viewpoint—or, perhaps more accurately, one’s level of experience in studying such matters—current action in the oil markets is either a logical reflection of the integral of market forces or the greatest conspiracy of price suppression in the history of finance. Determining which end of this thought curve is worthy of occupation motivates today’s missive.

One significant challenge is that the question itself involves an important bit of trickery, as there is, in fact, no singular price of oil. Absent the specification of grade, location, and especially timing of delivery, the price of a barrel of oil has no meaning, and yet market reporting necessitates a gross simplification of the matter.

When quoting the price of oil in North America, commentators are almost always referring to the front-month futures contract for West Texas Intermediate (WTI) on NYMEX/CME, with physical delivery at Cushing, Oklahoma. When the rest of the world quotes the price of oil, they are most often referring to the front-month ICE Brent crude futures contract in Europe, which prices a large share of globally traded seaborne crude. To confuse matters further, because exchanges often use different expiry schedules—the mechanics of delivery are not universal, after all—the definition of “front month” is not itself standardized.

That billions of dollars are traded daily, incorporating a plethora of nuances, makes the oil markets no place for amateurs—one of many reasons you will not find us in the pits. We have far too much respect for our limited capital and for the expertise of those who do it for a living to be the fools at that particular poker table. That does not mean useful information cannot be gleaned from the market action, however, and there has been no shortage of fascinating and unexpected developments in this regard since the war broke out.

One development that caught attention in the Twitterverse is the extreme backwardation seen in global oil prices—a phenomenon in which oil that can be delivered sooner is priced higher than oil promised to arrive at a later date. That backwardation is a normal market response to shortages has been obscured by the sheer scale of what the Iran war has triggered and by how unfamiliar such behavior is to the cadre of newly minted expert oil traders on social media.

To visualize the phenomenon, consider the price spread between Dated Brent—oil with a delivery date attached to it and thus a proxy for spot prices—and its associated front-month contract. During normal times, this spread is minimal, but the Iran war pushed it to levels far exceeding those observed during the early weeks of the war in Ukraine:

To some, this price action is not normal, but instead is proof that the “real” price of oil is much higher than the “fake paper” prices “they” are allowing to print on our collective screens. There are many versions of this claim, but this particular one—sent our way by many subscribers, with several hundred thousand views at the time of writing—captures the essence:

“I’m watching the numbers flicker on the screen -- Brent crude at $92, WTI hovering near $97 -- and I feel a profound sense of dread. This isn’t a market; it’s a meticulously crafted fiction. We are being lied to on a scale so vast it defies comprehension. The current paper price for oil is a government-constructed lie, a narrative woven by desperate authorities to maintain a false sense of stability while the physical foundations of our world crack beneath us.

This manipulation isn’t just an economic curiosity; it’s a trap. While futures traders cheer a modest pullback, the real cost of a barrel -- the tangible liquid that powers tractors, heats homes, and transports food -- has already rocketed into another dimension. This divergence between paper and physical represents the single greatest threat to global order I’ve witnessed in decades. It’s a dangerous fiction masquerading as reality, and its inevitable collapse will redefine everything we know about energy, money, and power.”

There is, of course, a much more innocent explanation for these prices, one that does not involve a grand conspiracy of manipulation. Instead, it involves a fair probability-weighting of two outcomes so unprecedented in their polarity that there is no accurate historical precedent by which to model them. Once properly contemplated, not only does the recent price action make sense, but the volatility that will surely follow does as well. Let’s unravel the mystery and brace for impact.

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At its zenith, the German nuclear power sector was the envy of the world. By the turn of the century, the country operated 19 of the most sophisticated and reliable nuclear reactors on the planet, churning out 170 terawatt-hours (TWh) of baseload electricity per year. With proper care and maintenance, these facilities could have been effectively immortal, a perpetual anchor to a globally elite economy. What followed—which is well-trodden territory in these pages—was one of the greatest own goals in geopolitical history.

Those 170 TWh of power would come in handy for the European Union (EU) now, as it stares down the barrel of what looks increasingly likely to become the greatest energy crisis of this generation. While much attention will understandably be paid to upcoming regional stockouts of jet fuel and diesel—and the degradations to modern life they will trigger—a slower-rolling yet equally challenging crisis is unfolding. In a scandal that defies belief, the member states of the EU have exited the winter of 2025–2026 with disastrously low stores of natural gas just as the war in Iran has closed the Strait of Hormuz, taking 20% of the world’s supply of liquefied natural gas (LNG) offline.

To quantify the scale of the challenge, it is best to combine the production and consumption statistics of the EU, Great Britain, and Norway (collectively, the EU+2). The latter two, the largest natural gas producers in Europe, are not members of the EU itself but are fully connected to it via pipeline. A quick perusal of the Statistical Review of World Energy indicates that the EU+2 produces less than half the gas it consumes, a gap of roughly 20 billion cubic feet per day (bcf/d). This is approximately equivalent to the entire natural gas output of the mighty Permian Basin.

As the refilling season begins in earnest, there is little room for error and no tolerance for a long, drawn-out war in the Middle East. A bad outcome is all but guaranteed—energy prices will rise, and deindustrialization will continue—but whether a true catastrophe can be avoided is the question at hand.

Gauging the EU’s progress on its upcoming journey requires mapping major gas inflows, assessing whether those pathways are in significant jeopardy, and listing the risks to keep a close eye on as geopolitical developments evolve. Having done this work over the past week, we present our findings here.

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Few practitioners enjoy wrapping linguistic complexity around straightforward concepts more than biologists, which explains how Nietzsche’s 1888 truism on resilience came to be rebranded as “stress-induced mutagenesis” a century later. Among those who study living organisms and life processes, the term is applied to situations in which external stresses trigger an increase in mutation rate that boosts genetic diversity and can accelerate adaptation.

The phenomenon is especially evident in the field of oncology research. When doctors treat cancer with novel therapies, the treatments themselves place tumor cells under intense stress. In response, some cancer cells switch into a kind of “error-prone” mode in which they start making more genetic mistakes than usual. Most of those mistakes are useless, but a few can give cells the ability to survive the very drugs meant to kill them. Over time, this stress-driven trial-and-error process can leave behind a tougher, more drug-resistant cancer that is harder to treat, let alone cure.

As Nietzsche astutely observed, this concept thrived in the theater of war long before it was discovered in the lab. Consider the impact of the sanctions war on the Russian economy after the conflict broke out in Ukraine. The avalanche of sanctions was historic, forcing Russian President Vladimir Putin to oversee the selection of “resistant” traits across nearly all aspects of Russia’s domestic economy by rapidly hacking together parallel imports, homegrown substitutes, and yuan-denominated finance to emerge as a stronger industrial power than before the war began.

The war with Iran can be modeled as a set of two competing attempts to impose sufficient stress to overwhelm mutagenic responses: (1) the longtime sanctions against Iran, which have forced an unexpected resiliency, and (2) the current oil blockade in the Strait of Hormuz, which will come to strengthen energy markets against future concentrated points of control. Each side is racing to adapt at a pace that dulls its opponent’s efforts. Which camp prevails will undoubtedly shape the next several decades of geopolitical evolution. Let’s contextualize the metaphor further in search of clues as to how this war will ultimately end.

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Although it is difficult to say with certainty, there are strong indications that the war in Iran may be past its apex. Yes, the current ceasefire is shaky, hostilities will likely continue in fits and starts, and the reopening of the Strait of Hormuz is unlikely to be accomplished in a linear manner, but the odds of worst-case outcomes—the complete destruction of critical oil, gas, and civilian water infrastructure in the Middle East, or the use of nuclear weapons—seem to be ebbing. Predictably, the deluge of after-action assessments has begun.

There are many questions to ponder. Here is a partial list of some of the big ones: Who won the war? How did the war impact America’s global standing? Iran’s? Israel’s? Was the NATO alliance strengthened or weakened by the war? What does the war teach about the effectiveness of modern weaponry? How will it impact the relationship between the US and Israel, or shape President Trump’s standing on the global stage? What will become of the US dollar, its dominance in global trade, and the effectiveness of sanctions as a tool of coercion? Is the aircraft carrier era over? What other military technology might be made obsolete because of advanced missiles and drones?

Much ink will be spilled in pursuit of the answers to such questions, and we certainly have thoughts on many of them, but our mission is to contemplate how the war impacted energy markets. Some of the price action across the hydrocarbon complex has been downright confounding, leaving many investors frustrated that things didn’t go as they had predicted, or wagered.

History teaches that while price signals are imperfect, they often reflect hard and unforgiving truths. Having studied the behavior of various oil and gas markets throughout the war, we arrive at three important conclusions that energy investors should internalize before committing their capital going forward. Let’s take each in order.

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We begin with two objective facts. First, no country should be more vulnerable to an oil shock than China. To a rough approximation, China consumes 16 million barrels per day (bpd) of oil while producing only 4, relying on imports to close the gap. Despite Herculean efforts spanning decades, the country has yet to crack the technical challenges associated with exploiting its vast shale oil resources, nor have its ultradeep drilling efforts borne significant fruit. According to the Statistical Review of World Energy, China produced only as much oil in 2024 as it did in 2014, while consumption grew nearly 50% over the same period.

The second undeniable axiom is that China has done its level best to assist Iran in the current war. The two nations signed a 25-year comprehensive strategic partnership agreement in 2021, and open-source intelligence points to extensive collaboration between them as Iran resists the combined onslaught of the US and Israeli militaries. Several recent articles lay bare how China is providing dual-use industrial goods, satellite intelligence, and other technologies that enhance Iran’s missile and drone performance and air defenses. It is also providing diplomatic cover at the United Nations and undoubtedly pumping Iran with all manner of critical goods to help its population deal with the hardships of war.

These two truisms make the fact that Iran has made closing the Strait of Hormuz a central element of its war strategy a bit of an enigma. Yes, the maneuver is undoubtedly the most effective card Iran has in hand, and playing it has exacted huge pain on global economic interests and generated disproportionate leverage with a clearly frustrated US President Trump; however, it also puts serious pressure on China, dependent as it is on the flow of oil from the Middle East.

Effectively, China has decided that it is in China’s interest to help Iran hurt China.

Pulling on this string over the past several weeks has led us to a new mental model to explain the war, pointing to a post-conflict geopolitical realignment that will profoundly reshape global energy markets. Let’s explore the confines of it and see where that leads.

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Just hours before the war in Iran kicked off, North Dakota District Court Judge James D. Gion issued a final judgment ordering several Greenpeace entities to pay $345 million to Energy Transfer to compensate for their destructive role in the 2016–2017 Dakota Access Pipeline (DAPL) protests.

Among those ordered to pay was Greenpeace USA—and because the judgment is larger than its yearly revenues and far exceeds its readily available assets, the case is understandably considered existential for that organization.

For a US state with a population just under 800,000, North Dakota punches well above its weight in global energy markets. Representing one of the Union’s more conservative states, local leaders made the political decision to aggressively develop the Bakken Formation, an attractive shale play that helped push oil production to over 1 million barrels per day (bpd) in just a few years. Local politics also made it a particularly poor place for Greenpeace and its allies to pull the stunts they did a decade ago—the DAPL project got built despite their protests, and now they are effectively insolvent.

Halfway around the world and on the opposite end of the hydrocarbon political spectrum sits Australia, whose population of over 28 million could have the entirety of its oil demand met by North Dakota’s production. The Land Down Under consumes roughly 1.1 million bpd of oil, but only meets about a third of that with domestic production. Worse still, Australia is no longer a major oil refiner, with nameplate capacity to produce fuels like gasoline, diesel, and jet fuel able to cover only a fifth of its needs. It’s not that the country can’t operate refineries; it simply chose to stop building them and allowed existing facilities to wither into obsolescence. Greenpeace Australia Pacific surely celebrated those decisions.

Iran’s closure of the Strait of Hormuz has laid bare the folly of Australia’s energy stance, and the country barrels towards shortages and catastrophe. Although hardly to blame for the crisis, current Prime Minister Anthony Albanese is in the unfortunate position of having to deal with it. There are few good options available to him, and several bad ones. Recently, he bowed to political pressure and made a decision that will only make matters worse:

“Australian Prime Minister Anthony Albanese said on Monday the government would halve the excise on ‌fuel and diesel and remove the heavy road user charge for three months to help households cope with a surge in costs driven by the Iran war.

Halving the tax would reduce the cost of fuel by 26.3 Australian cents per litre, Albanese said.”

As good as such gestures might feel, cheaper fuel will boost demand and make it more difficult to allocate limited supplies to the parts of the economy that need them most. Given their critical roles at the front end of Australia’s economy, farmers and long-haul truckers would seem to need priority access to diesel, for example, but the frenzy of crisis can make rational decision-making all but impossible.

The world might be in the early stages of what will become the most significant energy shock in modern times, but that hasn’t stopped policy advocates from aggressively pre-positioning for what comes after the crisis abates. Will the coming shortages be the death knell of the hydrocarbon era and herald an acceleration of the so-called green energy transition? Or will the disastrous consequences of flouting basic physics finally convince the pro-renewables crowd that it’s time for a serious rethink? For clues to where things are headed, the twin stories of Australia and North Dakota will almost certainly be instructive. Let’s find out why.

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Throughout the month of March, we wrote extensively on the happenings in Iran, sharing our methods for seeking information and interpreting events as they unfold. For this month’s Pro Tier presentation—After Hormuz: Punctuated Equilibrium in the Energy Markets—we’re taking a longer view and speculating on the global reorganiz…

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In July of 2016, the South Korean government of Park Geun-hye formally agreed to host America’s Terminal High Altitude Area Defense system (THAAD), the most powerful and reliable missile-interceptor technology in the US repertoire. The decision was not without controversy, both domestically and with China, South Korea’s largest trading partner. The Chinese argued that THAAD’s X-band radar could surveil deep into their territory and warned its installation would destroy relations between China and South Korea.

Despite these fervent objections, the Seongju THAAD battery was installed in 2017, with six launchers at that single site. After a period of economic reprisals, the South Korean government agreed to something of a détente with the Chinese, and no additional THAAD batteries have been installed since.

Although the fog of war is blinding, open-source intelligence and, eventually, reporting in legacy media outlets confirmed that Iran made targeting THAAD installations across the Middle East a priority mission in the early stages of the current conflict. Judging by what has been allowed to appear in print, it seems to have shocked US military planners with its success:

“New satellite images from several key military bases in the Arabian Peninsula suggest that Iran is seeking to degrade air defenses by destroying US-made radars that detect incoming missiles and drones. The radar system for an American THAAD missile battery in Jordan was struck and apparently destroyed in the first days of the US-Israeli strikes on Iran, a satellite image taken on Monday shows. Buildings housing similar radar systems were also hit at two locations in the United Arab Emirates, CNN analysis shows, although it is unclear if the equipment was damaged.”

Further evidence for the effectiveness of Iran’s THAAD strikes emerged with news that the US was removing at least parts of the Seongju installation and rushing them to the Middle East theater:

“A Washington Post report on Tuesday [March 10] citing two unnamed US government officials said that the United States had been moving parts of its Terminal High Altitude Area Defence (THAAD) anti-missile system stationed in South Korea to the Middle East, where the US is fighting a war against Iran.

According to South Korean media reports, the US has also begun sending Patriot missile defence systems to Saudi Arabia and the United Arab Emirates. Seoul has indirectly confirmed the moves.”

To most analysts, these events are but a notable detail in a much larger conflict. They might indicate Iran was more prepared to fight a protracted war than US military planners realized, or that the much-publicized US missile-interceptor shortage is as bad as feared. To our eyes, however, this news flow painted a confirmatory pattern for one of our most out-of-nowhere calls of 2025—namely that the physics of Korean reunification make it all but inevitable on a timeframe few are anticipating.

If we are right, such an event would provide critically important clues for the new geopolitical order that will emerge from the war with Iran. Let’s head to the Korean Peninsula and revisit this important question.

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What does it mean to win a war? The question is a particularly tricky one because it seems the answer should be obvious, and most people assume everyone agrees what winning looks like.

Conventional thinking dictates that a war is won when one side capitulates. This usually happens when the losing side’s capacity to fight is exhausted or when physical territory, like a capital city, is occupied. It was clear when the European and Pacific theaters of World War II were won by the Allies because representatives of Germany, and then Japan, signed agreements of surrender.

Assessing how a war is going while it is in progress is a trickier thing to ascertain, particularly in modern times. First, there is the blinding gloss of propaganda from both sides, which makes separating fact from fiction incredibly challenging—especially now, with the twin proliferation of social media algorithms and artificial intelligence (AI) deepfakes. Second, there is often a visceral personal bias at play that calls upon our instincts of survival and patriotism. This is nearly impossible to put to one side, understandably so.

For our purposes, a war is won when one side inflicts more pain than the other can tolerate, and a side is winning when it demonstrates the ability to do so. This immediately invites four questions, written in the first person for clarity: How much pain am I inflicting on the enemy? How much pain can my enemy tolerate? How much pain is my enemy inflicting on me? How much pain can I tolerate?

Having carefully defined the terms, let’s apply this framework to the current war with Iran.

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Panic buying during shortages is a classic example of human psychology driving herd mentality. Fear of going without, mixed with the belief that shelves might not be restocked quickly, makes it feel safer to overbuy than risk being caught short. The sight of empty shelves and other shoppers filling their carts to the brim with a sense of urgency can quickly trigger a collective stampede. The speed with which ample inventory goes bare often shocks management, both within the stores themselves and among those in government whose job it is to keep the calm.

In what must be one of the most predictable crises of the modern era, the leaders of Australia are currently grappling with an outbreak of preemption in the aftermath of the war in Iran:

“Prime Minister Anthony Albanese on Thursday urged Australians to avoid panic ‌buying of petrol and diesel, which he said had led to shortages in some rural regions, and stressed the nation’s fuel supply levels remained stable. Australia is dependent on imports for about 90% of its fuel needs, and fear ​of supply disruptions due to the escalating war in the Middle East has led to a ​doubling of fuel demand in some regions resulting in localised shortages.

Albanese said the ⁠federal government had already taken steps to ensure an uninterrupted supply of fuel into the ​country.

‘Our fuel supply is currently secure. However, I want us to be over-prepared,’ Albanese told reporters.”

The war in Iran—and the disruption of global crude and refined product supplies it has created—is simultaneously exposing how critical hydrocarbon fuels remain to the operation of all modern economies and how leaders of many important countries chose to deny that axiom. Through a mix of climate ideology and ignorance of basic physics, so-called progressives eschewed domestic oil and gas production and refused to stock sufficient inventories for times of geopolitical stress, as though not liking something diminishes its essentiality. Their populations are now set to suffer.

As the cases of Australia and its similarly unprepared neighbor, New Zealand, clearly demonstrate, island nations are particularly vulnerable to global energy shocks, dependent as they are on a steady procession of tanker ships to keep the pumps from running dry. Although islands have historically been more difficult to attack, they are far easier to embargo, and starving a garrison of supplies is typically a certain path to victory for the patient antagonist. The US famously demonstrated both sides of this strategy against Japan in World War II.

Almost lost in the headline-grabbing events in the Middle East are two separate and developing island standoffs that are not getting the attention they deserve on an individual basis, and we believe nearly everybody is missing how directly related they are. In our view, Russian President Vladimir Putin and Chinese leader Xi Jinping are setting a trap for US President Donald Trump, one that he looks all but certain to walk right into. If we are correct, World War III is about to take on a wholly more precarious dimension. Let’s connect the dots weeks before they might dominate international affairs.

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Sometimes it’s best to just stick with your first instinct.

When the war with Iran first broke out, we were—quite naturally—horrified. Regardless of our views on the justification for the joint US-Israeli preemptive attack, a full-blown kinetic conflict in the beating heart of global oil and gas markets was always going to be fraught with enormous risk. In the days after the first missiles were exchanged, we posted a series of articles that outlined what market indicators to keep an eye on, what moves US President Donald Trump might make to protect US consumers, and even the most important question on the board for those gaming the odds of escalation:

Is Iran still firing advanced missiles and drones in large numbers?

Despite consistent evidence in the affirmative, two weeks of war produced what we considered to be a relatively docile response by energy markets, with benchmark oil prices hovering close to—or even under—$100 a barrel. This prompted us to reevaluate our own assumptions and consider whether the price action might be justified, thoughts we shared openly with our subscribers in our last piece.

On Wednesday, any pretense of a reasonable off-ramp took a serious beating when news crossed the wires that Israel had bombed Iran’s South Pars gas field, the enormous hydrocarbon accumulation the country shares with Qatar. Given our recent insight into how Iran’s leaders would likely respond—thanks in no small part to our newly curated list of pro-Iranian Twitter/X feeds—we knew the following catastrophe would swiftly follow:

“A Qatari complex housing the world’s largest liquefied natural gas export plant suffered ‘extensive damage’ after a missile strike, hours after Iran threatened energy facilities across the Persian Gulf.

The Ras Laffan Industrial City was hit by an Iranian missile after four others were intercepted, authorities said late Wednesday. The site hosts facilities including the LNG plant, which typically accounts for about a fifth of global supply. Production there was already halted after an Iranian drone attack earlier this month.

The incident marks yet another escalation in hostilities in the region and follows a string of attacks targeting oil and gas infrastructure in recent days.”

While damage assessments continue, QatarEnergy has confirmed that both a gas-to-liquids facility operated by Shell and its LNG trains were hit and suffered significant damage. Good luck to the European Union as it works to refill its depleted natural gas stocks ahead of the upcoming winter.

It is difficult to imagine how the escalator halts its relentless ascent now—Trump’s belated attempt to put the pin back in the grenade notwithstanding. The Strait of Hormuz is unlikely to be opened anytime soon, oil and gas facilities across the region are now considered fair game by both sides, and the rest of the world had better prepare accordingly.

Shocked back to the reality of just how bad things could get, we took another look at an earlier musing we posted nearly two weeks ago on Substack’s Notes. In it, we expressed a conjecture that feels real enough to ponder in full now:

So, is Fortress North America really in the offing? A full accounting of the relevant molecular distribution across Canada and the US makes it far more likely than most can conceive today. Let’s explore the numbers and ponder the consequences.

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We begin with a confession. If you had told us six months ago that US President Donald Trump would launch an oil embargo on Venezuela, snatch its president, and bring him back to the US to stand trial; that Trump would collaborate with Israel to launch yet another preemptive strike against Iran, but this time with much more devastating effect; that Iran would respond by effectively closing the Strait of Hormuz, destroying numerous oil tankers, and bringing the war to every Gulf nation that houses a US military base; that the two warring sides would come perilously close to an all-out assault on the oil-producing assets of the Middle East; and that Ukraine would not only continue its assault on Russia’s energy assets but also attack oil tankers in international waters, we would have guessed that oil prices would skyrocket to much higher levels than those experienced over the past two and a half weeks.

That they haven’t is, frankly, a bit of a mystery.

Not that there aren’t some potentially plausible explanations being put forth by those long oil and hoping for prices to go higher. Perusing Twitter/X, we find two dominant conjectures. The first is that the market is simply wrong. It is mispricing the risk of escalation, underestimating the length of time the Strait will be closed, and reacting to Trump’s mercurial and erratic social media posts, which are clearly designed to keep a lid on oil prices.

The second and somewhat more far-fetched explanation is that Secretary of the Treasury Scott Bessent is manipulating the price of oil by “shorting the futures,” something members of the Trump administration have certainly jawboned as a possibility. While we freely admit that we are not experts in market structure, this sounds rather similar to “naked shorting,” “synthetic shares,” and other market ghosts that have become a common lament among disappointed investors in the post-Covid era. Do interested governments sometimes intervene in strategic markets? Almost certainly. Is Bessent primarily responsible for the comparatively docile oil price action in the face of these headlines? Consider us dubious.

Of all the markets we follow, the market for oil and its related commodities is among the most brutally efficient. Major participants tend to be incredibly sophisticated players with intelligence capabilities rivaling those of small nations, and they often reside in locations less encumbered by insider-trading laws than the average retail investor. If an edge on the market can be developed, it will be ruthlessly exploited, and less well-informed players will be swiftly separated from their money. These attributes also make the market challenging to manipulate, especially during periods of extreme volume like those we are experiencing now.

Is the market often caught offside by a sudden, unexpected headline? Sure. But this many days into the war, isn’t it safe to assume that the various escalation pathways, off-ramps, and second-order consequences are already worked into the prices we see on the screen?

This line of thinking motivated us to engage in an exercise in lateral brainstorming, where we explored the following mental model: Assume the market is right and oil prices won’t explode much higher from here, even if the war drags on. What might explain this? What might we be missing?

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