The movie “It’s a Wonderful Life” (1946) features what is today the most famous bank run. It’s film and fiction, yes, but fits with a scenario that has been common for centuries. When the movie came out, the bank runs of 1930–1932 were very much in people’s memory. For older people, they remember the Panic of 1907. Before that, there was the Panic of 1893, the Panic of 1873, the Panic of 1837, and the Panic of 1819.
Panics and banking go together and have for 500 years.
It’s funny that we call them panics, as if people randomly start hurling themselves around in irrational fear. All that’s really going on is that people want their own money and ask for it. Customers grow concerned that the bank—which makes loans on deposits—has overextended and cannot make good on its redemption promises.
It’s a test that the bank passes or not. The bank run is nothing more than a rational check on the soundness of the bank. It’s not “panic” but merely a demand for one’s own property.
The bank run also serves a hugely important market function. The fear of one inspires banks toward prudence. Any attempt to suppress them invariably leads the banking system to become overextended, pushing out leverage beyond a sustainable point. When conditions change, unsound and overextended banks go belly up. This is nothing more than the market at work.
From 1913, with the establishment of the Federal Reserve, the driving ethos of banking and monetary policy has been to reduce bank runs and failures. It was to broadcast a message of confidence in the financial system so that people would no longer panic. It did not quite work, however, as evidenced by the vast bank failures of the early 1930s. President Franklin D. Roosevelt even declared a bank holiday to stop them, which didn’t work, so he turned to gold confiscation and devaluation.
All this is background to a note I just received from my own bank. It’s an update to the terms of service. Here is what it says:
“Added a new Section 8(e) (Digital Wires—Transaction Limits) to clarify that, to protect your account, online wire transaction limits may have daily or rolling 30-day restrictions and that we may establish or modify limits on the amount, frequency, or type of transactions you can initiate using our payment services, or your transaction limits may be temporarily reduced or subject to additional restrictions. Subsections following this one have been renumbered accordingly (Sections 8(f)–8(l)).”
Hardly anyone reads updates to terms of service. I’m probably in the 1 percent of customers who even clicked on the link. What it means should be obvious. My bank can restrict my access to money anytime it wants and by any amount. I might want to take it all in cash or move it to another institution. My bank has told me that this is entirely up to them. By continuing to bank with this famous institution, I have implicitly agreed to this.
To be sure, we should be grateful for banks that protect our accounts. That’s fine. What’s not fine is preventing access to money that is ours. It’s hard to know which is which, and while I would not suggest that banks would naturally lie to us, enterprises are not beyond some limited duplicity when financial survival is at stake.
Should I change banks? It’s probably pointless. Every bank, if it doesn’t have this as part of its terms of service, will adopt it anyway. You could say that this means nothing. Maybe that’s right. Or maybe the bank is just preparing for a rainy day that never comes, and so this update to the terms of service is practically meaningless. One hopes so.
But it did get me thinking: How would a bank run look today?
There will be no George Bailey rushing to the Building and Loan to calm the panicked depositors, explaining how the institution works (e.g., “Your money’s in Joe’s house”). These days, banks are not even very busy with customers. Every time I need to go to one, I walk right up to the window because no one is there. Nearly all money flows and banking services are done electronically.
I’m grateful for this change. My monthly bill-paying efforts take less than a minute. My childhood memories of my father on bill-paying day still stick with me. He had a small room off the kitchen that was his office. Once a month on Saturday, he would go inside. The kids knew not to disturb him. He had a stack of bills. He would write checks and put them in envelopes with stamps. With each bill paid, he went to his ledger and balanced the checkbook.
As he watched the family accounts drain more and more with each bill, he would grow ever more frustrated and upset. He made a salary of $14,500 and supported two kids, a wife, a home, and two cars, and we took plenty of vacations. In real terms, that’s about $114,000 today, a full household on one income. We made ends meet, but it was often a struggle, one from which he protected the family.
Our entire lives were being held by the bank.
There were never issues of trust.
I doubt that my father ever considered the possibility.
These days, money flows are throttled in every direction even without banking panics.
Venmo limits unverified weekly sending and spending to $300. Verified accounts allow up to $60,000 per week for payments to others. Outgoing bank transfers are limited to $5,000 per transfer and $20,000 per week as long as it is verified. Zelle’s limits vary by the bank: Bank of America permits $3,500 per day up to $20,000 per month. The others are the same or similar.
If you want to move real money, you have to go to ACH (automated clearinghouse) or FedWire (an improvement over old-style wiring) or get a crypto account and use a stablecoin (which moves $1.2 trillion per month, making it dominant). Regardless, it is not easy, and most depositors do not avail themselves of it.
Banks made ACH rather difficult, with pull-down menus of verified recipients. It can be extremely difficult to get serious blocks of money from here to there already. Mostly we don’t need to, so the system has not been really tested. Most people have no idea how much the system of electronic payments and withdrawals is already throttled.
As for cash, it is mostly out of the question. Your bank will give you the stare-down if you ask for $5,000 and make you fill out some law enforcement forms for $10,000. You dare not attempt to carry this kind of cash through an airport. You will be taken aside and asked to provide a full accounting for it. It’s even true for driving: If you are stopped and searched, you risk everything.
To the original question, what would a bank run look like?
It would involve millions of people simultaneously attempting to max out their withdrawals, perhaps to buy gold. It would be the raiding of ATMs until they are empty, which would take about 30 minutes. All the while, the institutions would assure you that they are fully sound and there’s nothing about which to worry.
The same would continue the next day as the banks doled out allotments as necessary and only for verified purposes. You might have a million dollars in the bank, but it would only be numbers flashing on a screen, interesting to look at but impossible to use. There is simply no way to get to it. And forget going to your branch. They would likely put up signs with the explanation that withdrawals are limited to $1,500 or so.
In other words, a serious bank run today would be a quiet and strangely uneventful financial apocalypse in which money movements would be effectively frozen. The Federal Reserve would get to work flooding the entire system with liquidity, unfreezing withdrawals even if they are still throttled. The new money flooding the system to bail out the banks would result in hyperinflation about nine to 12 months later, after which your money would have lost half its value anyway.
What could kick it off? Could be the default of a financial product. Could be the collapse in commercial real estate or a sudden plunge in artificial intelligence asset valuations. Or it could be nothing other than an online rumor that goes viral. This happened often in the 19th century: One person starts the fear, and it spreads like wildfire.
We will not likely ever see a bank run like we did in past times. That’s not a good thing. The system today provides the illusion of liquidity, but take a look beneath the surface. A genuine financial crisis—which we have somehow avoided even during these tumultuous times—would be a civilizational disaster.
This column is not intended to scare you. It might do that anyway.
One Reason This Energy Shock Is Not Like The One 15-Years Ago
Arend Kapteyn, the global head of economics and strategy research and chief economist at UBS, told clients that one key reason the current Middle East conflict-driven energy shock “is not like 2011-2014” will be the absence of a comparable response from the shale patch, suggesting consumers are more likely to bear the brunt of the pain.
Kapteyn noted that, on an inflation-adjusted basis, oil prices in 2011-2014 were actually higher than they are today, yet the U.S. economy absorbed that shock because the shale boom provided a lift to the industrial base. Soaring WTI crude prices at the time spurred oil/gas companies to increase drilling activity, production growth, and energy-sector investment. This helped create a tailwind for the US’ manufacturing base and offset some of the drag from higher fuel costs.
However, this is where the bullish U.S. economic case starts to look a little shaky. As Kapteyn noted, “The oil sector is much less responsive to prices than a decade ago.”
The Trump administration has indicated that the oil price shock is temporary, suggesting shale drilling is unlikely to increase meaningfully or provide much of a tailwind for the manufacturing base.
That means this time, the pain from higher energy prices is more likely to hit consumers directly through weaker spending power, with less offset from booming domestic oil investment.
A common question is why current oil prices should be a concern for the U.S. economy when prices were substantially higher in 2011-2014 and growth held up well. Over that earlier period, Brent averaged around $110/bbl—close to $145/bbl in today’s dollars, roughly 23% above today’s spot prices—yet U.S. GDP growth still averaged just over 2%.
There are, of course, many differences relative to then: today’s labor market is weaker, households are more liquidity constrained, and the inflationary impulse is sharper, reflecting a much faster run-up in prices (oil prices never rose more than about 55% year-on-year in 2011-2014, versus close to 100% if today’s prices are sustained). But the key difference—and the focus here—is shale.
At the start of 2010, the U.S. mining sector (largely oil and gas) accounted for roughly 14% of industrial production. By 2012-2013, it was generating well over half of total U.S. IP growth, with brief periods in which mining effectively accounted for all of it. After oil prices collapsed in 2015-2016, U.S. mining output rebounded mechanically from a low base—but shale did not return to its pre-2014 investment or rig intensity. Oil production still responds to prices at the margin—via well completions, higher utilization, and productivity gains—but investment has become far less elastic. In other words, if current oil prices are perceived as temporary, the U.S. is unlikely to see anything resembling the 2011-2014 shale-driven supply response to offset the net income erosion that is likely to hit consumers.
Overnight developments, including Israeli and Iranian retaliatory strikes on upstream energy infrastructure across the Gulf area and Qatar’s warning that Iranian attacks on its LNG complex – the world’s largest – could leave capacity offline for months, if not years, only reinforce the view that global energy markets are set to tighten further. The risk now is a pump price shock, which could begin to weigh on sentiment in the weeks ahead if energy market turmoil persists. At the same time, signs of stress are emerging in credit markets, adding to concerns that the broader economic outlook could deteriorate.
Costa Rica’s President Rodrigo Chaves revealed Wednesday that his government has ceased recognizing the legitimacy of Cuba’s communist regime and ordered the Cuban embassy in San José to close.
In a press conference in Peñas Blancas during the inauguration of new U.S.-donated mobile drug scanners at the northern border with Nicaragua, Chaves said the decision was a stand against the Cuban government’s oppression of its people.
“Costa Rica does not recognize the legitimacy of Cuba’s Communist regime, given the mistreatment, repression, and undignified conditions endured by the inhabitants of that beautiful island,” Chaves said. “We must cleanse the hemisphere of communists.”
During Wednesday’s press conference, Foreign Minister Arnoldo André Tinoco said the government chose to shutter its Costa Rica embassy in Havana and asked Cuba to remove its diplomatic personnel from San José, while permitting consular services to continue for practical purposes.
The decision comes as the Chaves administration positions itself against perceived leftist influences in the region and transnational crime syndicates. Meanwhile, Costa Rica and the United States increased collaboration on stopping drug trafficking.
Chaves doubled-down on the country’s security infrastructure at key ports, including Japdeva’s Gastón Kogan port, Peñas Blancas, Paso Canoas, and Caldera. Chaves on Wednesday connected the technology’s rollout to his administration’s campaign against organized crime.
Chaves said the new scanners would play a key role in blocking cocaine and fentanyl flows, crediting American support while condemning past domestic setbacks.
Cuba’s foreign ministry said it was informed on Tuesday of Costa Rica’s order for diplomatic staff to withdraw, leaving only consulate staff in place starting April 1. It said Costa Rica offered no justification and called the decision “arbitrary,” claiming it was made under pressure.
“The Costa Rican government, which displays a history of subordination to United States policy against Cuba, once again joins the offensive by the U.S. government in its renewed attempts to isolate our country,” the ministry said in a statement.
The move follows Ecuador’s decision on March 8 to close its Cuban embassy and declare Cuba’s ambassador Basilio Gutierrez and his diplomatic staff “persona non grata,” giving him 48 hours to leave the country.
Cuba’s Foreign Ministry condemned the move, blaming the United States for Ecuador’s decision.
“This is an unfriendly and unprecedented act that significantly damages the historic relations of friendship and cooperation between both countries and peoples,” the ministry said in a statement on March 8.
Netanyahu Declares Iran’s Nuclear Program & Missile Production “Destroyed” – Denies Israel Influenced Trump
Summary
Netanyahu: Iran can no longer enrich Uranium; missile production destroyed; says Israel acted alone against Pars oil field; claims Trump was not influenced by Israel to go to war.
F-35 stealth jet takes on Iranian fire, emergency landing: CNN
Trump dials up threat, seeking leverage, denies approving Israeli Pars strikes; however, reports from The Wall Street Journal and Axios say the White House was aware. US sending more troops to region.
Energy war hits breaking point: Qatar’s Ras Laffan damaged, KSA, Kuwait, Bahrain sites attacked; Saudi trust in Iran “completely shattered.” Iran’s navy in the Caspian Sea reportedly destroyed. Missile strikes key Israeli refinery. Qatari PM confirms damage to 17% of Qatar’s LNG exportcapacity for three to five years.
Iran signals not done exacting revenge: IRGC warns retaliation “not yet finished,” vowing escalating strikes across region as Gulf states, Iraq, and shipping lanes absorb widening fallout.
Strait of Hormuz a de facto economic war zone as prices rise at the pump with oil spiraling higher: Iran’s parliament is floating tolls on shipping – weaponizing control.
Netanyahu: Iran Can No Longer Enrich Uranium; Missile Production Destroyed; Acted Against Pars Alone
In a rare wartime press conference, Israeli PM Benjamin Netanyahu opened with a jab at rumors about his condition: “First of all… I’m alive.” He went on to claim that Israel and the US are “protecting the entire Middle East… the entire world” – and after 20 days, he asserted: “we are winning, and Iran is being decimated.” Netanyahu further claimed that Iran’s missile and drone stockpiles are being “massively degraded” and “will be destroyed,” framing the campaign as an all-out dismantling of Tehran’s capabilities. Bust most importantly he said production capability has been ended.
He further addressed claims Israel dragged the US into war, calling it “fake news” and adding: “Does anyone really think that someone can tell President Donald Trump what to do? Come on.” He praised tight US-Israel coordination: “We are achieving goals in lightning speed” – and said he and Trump “see eye to eye,” adding the world “owes a debt… to President Trump for leading this effort.” He also stated that Israel acted against Pars alone, but that he will hold off on ordering future such attacks without US consent. Netanyahu also said the war will end “much sooner than people think”. And another key aspect to his remarks:
Iran No Longer Able to Enrich Uranium
Iran Lost Ability to Manufacture Missiles
US, Israel Destroyed Iran’s Fleet in Caspian Sea
“What we’re destroying now are the factories that produce the components to make these missiles and to make the nuclear weapons that they’re trying to produce,” Netanyahu said, however without providing evidence of the claim. Just before he spoke, Israel’s military said it anticipates the anti-Iran campaign is only half complete.
NOW – Netanyahu: “I want to close these opening remarks with one other fake news, and that is that Israel somehow dragged the U.S. into a conflict with Iran. Does anyone really think that someone can tell President Trump what to do? Come on!” pic.twitter.com/eYXzvqReJp
Iran through its Foreign Minister has made clear on Thursday it will show “zero restraint” if energy infrastructure is targeted again. President Trump on the same day responded to reports the US has sent more troops to the region.
Europe’s Top Naval Powers See No Short-Term Path To Reopening Hormuz Chokepoint
European leaders are resisting Trump administration pressure to send warships to shadow tankers through the Hormuz chokepoint, citing the heightened risk of Iranian attacks and the lack of a clear U.S. strategy, according to Bloomberg.
UK Defense Minister Al Carns was quoted by the outlet as saying discussions on warship escorts in the Strait of Hormuz are in the “very early stages.”
Carns said allies are currently focused on “trying to conceptualize the totality of the problem and make sure that we’ve got a clear path toward the next stage.”
He warned that the conflict in the Middle East is raging on. The risk is that warship escorts aren’t enough to defend tankers from IRGC drone and missile attacks and naval mines. He said the situation requires a “deeply complex” multinational range of air, maritime, and strike capabilities.
UK Defense Secretary John Healey warned about Iranian naval mines in the Strait.
Earlier, President Trump said that Iran “is close to being demolished, the only thing is the strait: It’s very hard. You could take two people and they could drop little bombs in the water, and they’re holding things up.”
A partially paralyzed Hormuz has also been compounded with Israeli attacks on Iranian upstream energy assets, as well as retaliatory attacks by the IRGC on Qatar’s gas complex. Qatar has warned that its LNG export capacity could be severely hampered for years to come.
Qatar: Energy Strikes to Spark Serious Lasting Repercussions
Qatar’s Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani confirmed on Thursday that there were no human casualties while assessing damages at the country’s main LNG export hub, Ras Laffan, which was struck by Iranian missiles. He went on to angrily dismiss Iran’s claim that it was actually targeting US bases, calling the narrative “rejected and unjustified”. Bloomberg: Iran’s strikes to this field has damaged 17% of Qatar’s LNG export capacity for three to five years. And a new alarming headline via Reuters:
QATARENERGY CEO TELLS REUTERS: WE MAY HAVE TO DECLARE FORCE MAJEURE ON LONG-TERM
CONTRACTS FOR UP TO FIVE YEARS FOR LNG SUPPLIES TO ITALY, BELGIUM, KOREA AND CHINA
US F-35 Hit By Iranian Fire, Damaged, In 1st of War
CNN is reporting that a US F-35 stealth fighter jet made an emergency landing at US air base in the Middle East, in an incident confirmed by the Pentagon.
Capt. Tim Hawkins, a spokesperson for US Central Command, said the advanced fighter was “flying a combat mission over Iran” when it was forced to make an emergency landing. CNN specifies it was based on taking fire from Iranian forces, while the Pentagon has been scant on details, only saying the warplane landed safely and the incident is under investigation.
“The aircraft landed safely, and the pilot is in stable condition,” Hawkins said. “This incident is under investigation.”
CNN underscores in its reporting, “The incident would be the first time Iran has hit a US aircraft in the war started in late February. Both the US and Israel are flying F-35s in the conflict; the aircraft costs upwards of $100 million.” However, March 1st saw three US F-16s go down over Kuwait, with six crew ejecting to safety, in what the Pentagon claimed was a ‘friendly fire’ incident. But it raised suspicions the Iranians shot them down.
One regional war correspondent notes: “The Haifa refinery (Bazan) is the country’s largest and most critical fuel facility, supplying about 50–60% of national fuel (≈60% diesel, 50% gasoline).”
Hegseth announced in a Thursday morning Pentagon briefing that the US military – presumably alongside Israel – has completely destroyed Iran’s submarine fleet and significantly damaged the military ports of the Islamic Republic.
We reported earlier that Wednesday into overnight hours saw the first heavy Israeli attacks on vessels in the Caspian Sea, which marked a geographical expanse into the north. Meanwhile there are reports of a successful Iranian hit in the vicinity of Israel’s Haifa oil refinery:
ISRAEL’S BAZAN OIL REFINERIES HIT IN IRAN MISSILE BARRAGE: N12
US Sending More Troops To Region, Eyes Ultra-Risky Kharg/Hormuz Op
There remain few (or no) options for guaranteeing tanker traffic through Hormuz. After the Pentagon bombed some 90 military sites on Iran’s oil export hub Kharg Island last weekend, the US is running up against the obvious limitations of a purely air and naval campaign.
In a scenario that screams escalation, discussions now include deploying US troops directly to Iran’s coastline to secure the passage, per Reuters and others. The even more aggressive option is potential ground operations targeting Kharg – again given it is the nerve center handling roughly 90% of Iran’s oil exports. Of course, Trump strongly campaigned against such a scenario as ‘boots on the ground’ in a new regime change war. The admin has also been busy vowing ‘no quagmire’.
Trump Threatens To “Massively Blow Up” South Pars, Tries To Distance US & Israel Ops
In a late-night Truth Social post, President Trump has once again cranked the rhetoric to eleven, warning he’ll “massively blow up” Iran’s crown jewel gas field if Tehran dares hit Qatar’s LNG infrastructure again. Trump insisted the US “knew nothing” about Wednesday’s Israeli strike on the shared South Pars field, claiming neither did Qatar, while simultaneously declaring “no more attacks will be made by Israel”there – unless Iran escalates.
Then came the kicker: “In which instance the United States of America, with or without the help or consent of Israel, will massively blow up the entirety of the South Pars Gas Field at an amount of strength and power that Iran has never seen or witnessed before,” he wrote.
However, US media reports have been quick to say otherwise – that the US did actually know about it and greenlit the risky escalation. The Wall Street Journal reports the White House was aware – and also Axios’ Barak Ravid insists so too, and he’s seen as very close to the Israeli government.
Heavy Air War Ongoing Amid Potential Energy Point of No Return
Meanwhile, the Gulf is still being lit up by tit-for-tat major attacks on energy, as Western populations brace for severe impact at the gas pumps. Iran’s retaliation is already hitting energy nodes across the region after Israel’s Wednesday South Pars strike, pushing tensions with neighbors past a potential point of no return. Qatar quickly expelled Iranian military attaches after missiles caused “extensive damage” at Ras Laffan – its main LNG export hub, while Saudi officials say “the little trust that remained in Iran has been completely shattered.”
The air war is continuing against Iran, with retaliatory strikes still raining down on Israel, but reportedly at slower pace when compared to the opening days of the war. A strike in western Iran’s Dorud county reportedly killed at least a dozen civilians, Al Jazeera has reported.
Iran Signals No Signs Of Stopping Revenge Attacks
Tehran, however, is signaling the opposite of de-escalation, perhaps seeing Trump’s latest Truth Social post claiming no foreknowledge of the Israeli attack on Pars as a sign of weakness. A spokesman for the IRGC Khatam has newly warned retaliation is “not yet finished,” adding:
“We warn the enemy that you made a major mistake by attacking the energy infrastructure of … Iran… the next attacks on your energy infrastructure and that of your allies will not stop until their complete destruction.”
Kuwait: Iranian drones attacked one of the largest oil refineries, Al-Ahmadi Refinery.
The last 24 hours saw unprecedented destruction on key Gulf energy sites, summarized in the following:
Separately, UAE authorities said they were responding to incidents at the Habshan gas facilities and at the Bab oilfield caused by falling debris from intercepted missiles. The Abu Dhabi Media Office said the facilities were shut down and no injuries were reported.
Saudi Arabia said it intercepted and destroyed four ballistic missiles launched towards Riyadh on Wednesday and an attempted drone attack on a gas facility in its east. On Thursday, Iran targeted the Saudi capital, Riyadh.
Attacks on Kuwait and Bahrain were also reported.
Elsewhere, Iraq has shut its airspace, vessels are taking hits in the Gulf, with on Wednesday Trade Winds having reported: “A ship is on fire after being hit by an unknown projectile near the United Arab Emirates deepwater port of Khor Fakkan.”
WTI-Brent Spread Explodes As U.S. Export Ban Priced In
RBC Capital Markets analyst Julian Triscott told clients, “Our boots on the ground in D.C. suggest the administration favors a crude export tariff over an outright ban, though a full ban remains a tail risk.”
Triscott said the Trump administration is likely weighing intervention in the oil market as gasoline and diesel prices at the pump surge, with a crude export tariff seen as more likely than an outright export ban, though the analyst said a full ban is still a major risk.
Triscott said the idea would be to shield U.S. consumers by making crude exports less attractive to foreign buyers, while potentially offsetting the impact with a pause or reduction in the federal fuel excise tax.
Triscott pointed out that traders are already beginning to price in this next intervention, with the WTI–Brent spread widening to its highest level since about 2012.
The market is largely pricing in a US oil export ban: Brent less WTI spread is the widest in decades (ex the negative WTI print). Export ban would landlock US oil, sending it sharply lower while sending Brent soaring pic.twitter.com/3YSLlVNZcx
Triscott’s conversation with sources in D.C. about what the Trump administration may do next to combat surging pump prices comes as the Trump administration appears to be following the six-option playbook laid out by JPMorgan analysts last week.
On Wednesday, the Trump administration waived the Jones Act to allow foreign vessels to ship crude to US ports. That was Option 3 on the list, while last week’s SPR release was Option 1. Option 2 is export restrictions.
We suspect the administration is following the six-point playbook, and here’s what may come next (read the report).
Energy Market Shockwaves After Iranian Attacks on Gulf Energy Assets
Brent crude futures surged toward $120/bbl, while WTI remained muted around $96/bbl, as Wednesday marked a major escalation in the US-Iran conflict. Israeli fighter jets struck Iran’s giant South Pars gas field with air-delivered munitions, triggering a retaliatory chain reaction in which IRGC forces targeted critical energy infrastructure across the Gulf.
Iranian drone and missile strikes caused heavy damage to Qatar’s Ras Laffan LNG hub, while gas plants in Abu Dhabi shut down, Kuwaiti refineries were hit by drones, and Saudi refining assets on the Red Sea were targeted.
Unlike temporary shipping disruptions in the Gulf waters or the Strait of Hormuz, damage to upstream energy assets, such as production and LNG facilities, is far more serious and could take months or even years to repair, raising the risk of prolonged tight global supply.
Some 20% of global LNG exports originate from Gulf countries, and the latest round of Israeli and IRGC attacks on upstream energy assets shows how the conflict has entered an entirely new phase where energy infrastructure is being directly targeted.
Disruptions at Qatar’s LNG facilities threaten to tighten the global gas market, with ripple effects quickly spreading worldwide – across Asia, Europe, and even U.S. gas prices.
European natural gas benchmark futures jumped as much as 35% today, pushing prices to more than double their pre-war levels, as traders brace for what only appears to be a prolonged period of disruption from critical LNG hubs that account for a fifth of the world’s total supply.
QatarEnergy warned earlier that LNG facilities inside its Ras Laffan Industrial City were attacked by missiles, “causing sizable fires and extensive further damage.”
“This could be a game changer for the LNG industry, akin to the attack on Nord Stream or possibly even worse,” Susan Sakmar, visiting assistant professor at the University of Houston Law Center, said, quoted by Bloomberg. “This is a sudden disruption, with no indication that Qatar could restart anytime soon.”
Global Risk Management analyst Arne Lohmann Rasmussen warned, “LNG from Qatar could in principle be offline for months and, in the worst case, for years. For the gas market, the crisis does not end simply because the war ends and the Strait of Hormuz reopens.”
UBS analyst Matt Salmon commented on the exploding energy risk premia due to overnight war developments:
Geopolitical risk premia in the energy complex rose further following attacks on energy infrastructure in the Middle East, after President Trump failed earlier this week to establish an international coalition to support the resumption of shipping through the Strait of Hormuz. In a clear escalation of hostilities, Iranian energy infrastructure was targeted for the first time in the conflict, with Israel striking the South Pars gas field, while the US claimed no prior knowledge.
Iran had warned early in the conflict that there would be “no red lines” around retaliatory actions, and it made good on this threat with two strikes in less than 12 hours on Qatar’s Ras Laffan Industrial City, home to the world’s largest LNG facility, with state operator QatarEnergy reporting “extensive damage.”
Trump subsequently pressed for de-escalation of attacks on gas facilities in Iran, but moves in Brent were muted, reflecting diminishing confidence that the US has a credible off-ramp. Brent crude is currently trading around $112/bbl, Asian LNG prices are above $20/bbl, and Asian refining margin proxies exceed $40/bbl, amid rising investor anxiety over disruptions to global fuel and gas supplies.
Macron Urges Direct Talks: ‘Return to Reason’
At a moment Gulf shipping lanes are freezing up with tankers idling in the Gulf of Oman waiting for a greenlight through what’s been for most a no-go zone, Iranian lawmakers have proposed a plan to impose tolls and taxes on ships passing through the strategic Strait of Hormuz– which of course would not include passage of US and Israeli ships, or others deemed participants of Operation Epic Fury.
Europe is watching nervously from the sidelines, itching for some kind of presentable offramp, also after NATO allies this week snubbed joining Trump’s coalition to seek to militarily open the strait back up to global shipping. Germany’s Friedrich Merz welcomed signals that Trump might dial things back, saying “I am particularly grateful that the US president sent a signal last night that he prepared to bring the fighting to an end” – while France’s Emmanuel Macron warned of a “reckless escalation” as energy infrastructure becomes the primary battlefield, and so has called for direct talks between Washington and Tehran. Here’s what he said in part before an EU leaders’ summit in Brussels on Thursday:
“We will obviously defend a de-escalation, a return to stability in the Middle East,” Macron said, adding that he spoke to Qatari emir Tamim bin Hamad Al Thani and Donald Trump about the war on Wednesday night.
“I think that everyone should calm down and the fighting should stop at least for a few days to try to give negotiations a chance again,” the French leader added. “I hope that, in any case, everyone will return to reason.”
⚡️ The US military has released documentation of the destruction of Iranian naval ships pic.twitter.com/tWeyUWoPFb
US LNG Export Terminals “Running Near Maximum” As MidEast Energy Infra Descends Into Chaos
The attacks on upstream oil/gas assets across the Middle East this week sparked turmoil across global energy markets.
Israel set off the chain reaction with its attack on Iran’s South Pars gas field on Wednesday morning, followed by Iran’s retaliatory strikes on Qatar’s LNG plant, Saudi Arabia’s Red Sea export hub, and other targets across the surrounding Gulf states.
This week’s attacks on critical upstream energy facilities across the Middle East, by both Iran and Israel, suggest the risk of prolonged outages and tighter global gas markets.
Iranian ballistic missiles struck Qatar’s Ras Laffan Industrial City in two waves over 12 hours on March 18-19, causing extensive damage to both the Shell-QatarEnergy Pearl GTL facility and the LNG complex. The Pearl GTL complex, the world’s largest gas-to-liquids facility processing approximately 1.6 Bcf/d of feed gas, was hit first on Wednesday evening. A second wave early Thursday struck LNG facilities directly. QatarEnergy confirmed sizeable fires and extensive further damage but did not specify which trains were affected.
QatarEnergy Statement on Missile Attacks on its LNG Facilities
In addition to the previous attack on Ras Laffan Industrial City on Wednesday 18 March 2026 that resulted in extensive damage to the Pearl GTL (Gas-to-Liquids) facility, QatarEnergy confirms that in the early hours…
Qatar’s Ministry of Defence reported five ballistic missiles were fired at the complex; four were intercepted, and the fifth struck home. No casualties were reported, and all personnel had been evacuated hours earlier after the IRGC issued explicit warnings naming Ras Laffan among five energy complexes across Saudi Arabia, the UAE, and Qatar that it designated as targets. The fires have been showing up on NASA satellite flyovers, affirming the situation on-site.
The attacks were retaliation for Israeli strikes on Iran’s South Pars gas field. The IRGC named five energy complexes across Saudi Arabia, the UAE, and Qatar as targets. Key developments across the Gulf:
Saudi Arabia intercepted missiles targeting Riyadh and the eastern region
UAE shut its Habshan gas facility and Bab oil and gas field after falling debris from intercepts
Brent crude briefly touched $119/bbl before settling around $114; TTF jumped 16%+ to 63.7 euros/MWh
Strait of Hormuz remains effectively closed to tanker traffic
Trump warned the U.S. would destroy the entirety of South Pars if Iran strikes Qatar’s LNG facilities again
What’s Offline
Ras Laffan houses roughly 77 MTPA of liquefaction capacity, approximately 20% of global LNG supply. That capacity had already been offline since March 2, when earlier Iranian drone strikes forced a halt and triggered force majeure. The market initially treated the shutdown as temporary. Confirmed physical damage from this week’s strikes changes the calculus:
Prior restart estimates assumed 2 weeks to resume + 2 weeks to stabilize
Structural damage to LNG trains, if confirmed, could push the timeline to months or years
Pearl GTL alone may face a multi-year outage if reports of destroyed air separation units prove accurate
US LNG: Running Full Out Into the Gap
While roughly a fifth of global LNG supply sits offline and damaged in Qatar, US export terminals are running at or near maximum capacity.
Per Criterion Research, total US LNG feed gas flows surged to 19,982 MMcf/d on March 19, recovering sharply from a brief dip the prior day. The current weekly average of approximately 19,883 MMcf/d represents a step-up from last week’s 19,731 MMcf/d, and forward nominations suggest flows could climb toward 20,234 MMcf/d in the days ahead as commissioning activity progresses at multiple facilities.
The Math
Qatar’s 77 MTPA offline equates to roughly 10.2 Bcf/d removed from the global market. US terminals at ~20 Bcf/d cannot physically replace it. No combination of non-Qatari suppliers can.
Goldman Sachs estimated a one-month Hormuz halt could drive TTF toward 74 euros/MWh, the threshold that triggered demand destruction during the 2022 European energy crisis. We are now well past one month of disruption, with infrastructure damage escalating. European storage sits at ~29% full, down 20+ points YoY, with injection season starting in April. In Asia, Qatar supplied ~53% of India’s LNG imports, 72% of Bangladesh’s, and 99% of Pakistan’s.
Cheniere just kicked off the commissioning process for CCL Stage 3 Train 6, requesting FERC approval to introduce propane to the thermal oxidizer and hot oil furnace. Fuel gas and feedgas requests should follow in the coming weeks. Commercial ops expected by late May or early…
Every incremental MTPA of new US capacity, whether from Golden Pass, Corpus Christi Stage 3, or Plaquemines, now carries outsized significance. The commissioning trajectory at these facilities is no longer a corporate milestone. It is a global supply security question.
Leaks Allege Drones Spotted Over Base Where Rubio, Hegseth Live
Unidentified drones were allegedly detected above the Washington Army base where Secretary of State Marco Rubio and Defense Secretary Pete Hegseth live, according to three insiders who leaked the information to the Washington Post. Officials were unable to determine where they originated, two of the leakers said.
Multiple drones were allegedly spotted over Fort Lesley J. McNair on a single night over the last 10 days, prompting increased security measures and a White House discussion on how to respond, said senior admin official “who spoke on the condition of anonymity.”
The drones over Fort McNair prompted officials to weigh relocating Rubio and Hegseth, two of the people briefed said. The senior administration official said the secretaries haven’t moved. Their quarters on the base were publicly reported by multiple outlets in October.
Chief Pentagon spokesman Sean Parnell declined to discuss the drones. “The department cannot comment on the secretary’s movements for security reasons, and reporting on such movements is grossly irresponsible,” he said. -WaPo
And in leaks spanning both the Trump and Biden administrations, similar drone threats surfaced after Trump took out Iranian general Qasem Soleimani in 2020, according to the report. There were also unidentified drones spotted by Trump’s Secret Service detail during the 2024 presidential race (or they may have just been inebriated?) during a news conference in LA and a motorcade ride through rural western Pennsylvania, where a bunch of regular people own drones.
The news comes after officials locked down facilities at MacDill AFB in Tampa, Florida – home to US Central Command, which is conducting US military operations in Iran – after a suspicious package resulted in the closure of the base’s visitors centers on Monday, while a second, unspecified security incident on Wednesday left the base under a shelter-in-place order for several hours.
“To ensure the safety and security of our people and the mission, commanders adjust their installation’s security posture in accordance with local threat assessments,” a spokesperson said in a statement.
The Post also reports that a leaked diplomatic cable from the State Department on Tuesday ordered all US diplomatic posts worldwide to “immediately” undertake security evaluations, citing “the ongoing and developing situation in the Middle East and the potential for spillover effects.”
Fort McNair is home to the National Defense University as well as some of the Pentagon’s most senior military officials. While it has not traditionally housed political leaders, several Trump officials, including outgoing DHS Secretary Kristi Noem, have been calling area bases home. McNair is close to Capitol Hill and the White House.
For those keeping track, that’s at least six leakers, leaking to the Post. That’s a lot of ‘trust us, bro.’
Also, and probably unrelated, remember all those weird ‘car-sized’ drones reported in Dec. 2024 that had zero explanation? Pepperidge Farm remembers.
China Buys Gold For 16th Straight Month, Wall Street Sells As Retail Loads The Bullion Boat
For the 16th month in a row, China bought gold into reserves in February even as bullion prices hovered near record highs.
The People’s Bank of China (PBOC) added another 30,000 troy ounces last month, lifting official reserves to approximately 2,309 metric tonnes (74.22 million ounces), valued at $388 billion.
This represents roughly 9-10% of China’s total foreign reserves.
At this pace, China is closing in on the top global holders (still behind US ~8,133t, Germany ~3,352t, but climbing fast).
Since November 2024, the PBOC has increased its gold holdings by a total of 1.4 million ounces.
Central banks are not alone, as CoinTelegraph’s Martin Young reports, retail gold purchases have tripled over the last six months, while Wall Street selling has accelerated over the past four months, according to data from the Bank for International Settlements (BIS).
“Retail-driven exuberance,” increasingly channeled through exchange-traded funds (ETFs), “set the stage for outsize moves,” continuing the precious metal rally from 2025, reported the BIS in a quarterly review released on Monday.
Since Q2 2025, retail investors have bought around $70 billion in gold ETFs, and these purchases have more than tripled over the last six months, observed the Kobeissi Letter, citing BIS data on Thursday.
“Retail investors are all-in on precious metals,” it noted.
Gold has surged 60% over the past year, and some crypto proponents have speculated it has come at the expense of Bitcoin, which some argue competes with gold as a store-of-value asset.
BIS data shows cumulative retail inflows effectively tripled from around $20 billion to roughly $60 billion over the six months from late Q3 2025 to the end of Q1 2026.
However, institutional selling started around mid-November and accelerated after the precious metals market began to correct in January, according to the data.
Prices of precious metals such as gold and silver reversed abruptly in late January and February 2026, while the “daily rebalancing of leveraged ETFs and margin‑triggered liquidations amplified the swings,” particularly in silver, BIS reported.
Smaller speculative derivatives traders, or “non-reportables,” had built up heavily leveraged long positions in silver heading into the crash, it added.
Gold prices are in ‘correction’ currently, down over 16% from its record highs in January.
The abrupt price drop and the spike in precious metal volatility “point to the role of retail flows, and amplification of price moves due to forced sales by leveraged ETFs, trend-following investors such as commodity trading advisers, and margin dynamics,” BIS stated.
The U.S. Senate on Tuesday once again rejected a motion to discharge S.J. Res. 118, a joint resolution to withdraw American armed forces from military actions in Iran sans Congressional approval. The motion was shot down in a 47–53 vote.
The measure, introduced by Sen. Cory Booker (D-N.J.), is an attempt to invoke the War Powers Resolution of 1973 to require explicit congressional approval for ongoing U.S. military involvement in the region.
The motion was rejected mostly along party lines, with Sen. Rand Paul (R-Ky.) providing the lone Republican supporter and Sen. John Fetterman (D-Pa.) voting with Republicans.
“If there’s anything that is plain in that Constitution, it is that a president does not have the power to unilaterally bring a nation and its treasure, to bring a nation and its men and women into conflict without a say of Congress,” Booker said on the Senate floor.
“This is not a partisan issue. This is not a left or right issue. It is a right or wrong, do you stand with the Constitution of the United States of America?”
The U.S.-led military campaign against Iran entered its third week on Wednesday as Iran engages in retaliatory strikes across the region, disrupting global energy flows and driving up oil prices. Iran launched missiles and drones late Wednesday night a toward Israel and several Persian Gulf countries, continuing a trend of targeting its neighbors.
The Israel Defense Forces, as well as defense measures in the United Arab Emirates, Qatar, and Saudi Arabia, have responded to Iran’s attacks. Israel conducted strikes in Tehran Tuesday, killing Ali Larijani, a top Iranian security official, as well as Gen. Gholam Reza Soleimani, head of the Islamic Revolutionary Guard Corps Basij force.
Meanwhile, Brent crude prices have skyrocketed above $100 per barrel as Middle East oil exports have been halted. Strikes against Iranian gas fields have contributed to the increase in oil prices. Two Canadian cargo ships are stranded in the Persian Gulf, unable to pass through the waterway.
U.S. intelligence says Iran’s regime remains in power, but it’s deteriorated.
Director of National Intelligence Tulsi Gabbard has said it would likely dedicate years to rebuild drone, missile, and other capabilities if it does not fall as a result of the conflict.
Update (1226ET): President Donald Trump and Japanese Prime Minister Sanae Takaichi announced a roughly $40 billion collaboration to build advanced small modular nuclear reactors (SMRs) in the United States. The project, involving U.S.-based GE Vernova Inc. and Japan-based Hitachi Ltd., targets sites in Tennessee and Alabama. Officials described it as a step to stabilize electricity prices, expand power generation, and bolster energy security amid global tensions, including the ongoing Iran conflict. The deal builds on last year’s U.S.-Japan trade framework and investment commitments, with no major new military pacts emerging from the talks.
The joint press conference following the extended Oval Office meeting – long enough to cancel the planned working lunch – was overshadowed by a viral moment. When asked about the lack of prior coordination with allies on strikes against Iran, Trump turned to Takaichi and quipped: “We went in very hard and we didn’t tell anyone about it. Who knows better about surprise than Japan? Why didn’t you tell me about Pearl Harbor?” The remark elicited a mix of nervous laughter, groans, and stunned silence in the room, quickly dominating social media reactions.
HILARIOUS: President Trump to Japanese PM Sanae Takaichi after being asked why he didn’t coordinate with allies prior to attacking Iran: “We went in very hard and we didn’t tell anyone about. Who knows better about surprise than Japan? Why didn’t you tell me about Pearl Harbor,… pic.twitter.com/cEZPrl24ek
Trump praised Takaichi repeatedly, calling her “a very popular, powerful woman” and “a great woman” after her recent landslide election win. He expressed particular delight when she spoke English directly, noting it was “so nice that we don’t have to sit through that [translation].” Takaichi reciprocated warmly, addressing him as “Donald” and stating, “I firmly believe it is only you, Donald, who can achieve peace across the world,” while condemning Iran’s nuclear program and actions in the Strait of Hormuz, though urging de-escalation.
On the security front, Japan held firm on constitutional limits, with Takaichi explaining what her country “can and cannot do” militarily—no warships were committed to Hormuz despite Trump’s earlier pushes for allied naval support. Broader discussions covered trade implementation, critical minerals, Indo-Pacific stability, defense cooperation, and countering China.
As noted below on the nuclear deal – GE Vernova and Hitachi, under their existing joint venture GE Vernova Hitachi Nuclear Energy (GVH), will construct BWRX-300 small modular reactors (SMRs) in Tennessee and Alabama, with the projects valued at up to $40 billion. Specific timelines for operation remain under wraps, but the deal highlights accelerating momentum for advanced nuclear technology.
This announcement follows the first tranche of commitments under the fund, which we covered in detail last month. Those initial projects totaled $36 billion and focused on a massive natural gas facility in Ohio, a synthetic diamond plant in Georgia, and a Gulf Coast crude export terminal.
The BWRX-300 units, each roughly 300 MW, are designed for faster factory-built deployment than traditional gigawatt-scale plants. Sites in Tennessee tie into the Tennessee Valley Authority’s Clinch River development, while Alabama locations will partner with private developers. No SMRs currently operate on US grids, but the Trump administration has prioritized regulatory streamlining and federal support to shorten timelines that have historically stretched a decade or more.
We previously covered the US-Japan trade deal and the surrounding agreements back in October of last year when investments worth over $500 billion were pledged by Japan. At the time, the announced value of investments for GE Vernova reactors was $100 billion, so this barely represents even half of that previously announced commitment. It remains unknown where the other $60 billion will be directed to.
There are also outstanding commitments from Japan to support NuScale with up to $25 billion, and Westinghouse with an additional $100 billion. The $100 billion for Westinghouse will most likely be in the form of funding the $80 billion agreement between the US, Cameco, and Brookfield for 10 AP1000s.
* * *
President Donald Trump is expected to use today’s White House meeting with Japanese Prime Minister Sanae Takaichi at 11:15 ET to press Tokyo for naval support in the U.S.-Israeli campaign against Iran – specifically requesting minesweepers and escorts to reopen the Strait of Hormuz, tapping their oil reserves, developing missiles, and in non-Iran news, are expected to announce a $40 billion nuclear power project in the southern US.
WATCH:
Despite publicly declaring that the United States “does not need the help of anyone,” Trump has repeatedly lashed out at allies for their lukewarm response and continues to urge partners to clear mines and escort tankers through the critical waterway. The request places Takaichi in an awkward position: Japan relies on the Gulf for 95% of its crude oil imports, yet any deployment of the Maritime Self-Defense Force would clash with the country’s pacifist constitution and deeply unpopular domestic sentiment toward the war.
“Japan gets 95 percent of its crude oil supplies from the Gulf,” US Treasury Secretary Scott Bessent told Fox Business on Thursday ahead of the meeting. “I would expect that they would want to ensure its supplies are safe.”
Japan’s Navy notably has some of the best minesweepers and mine detection capabilities in the world, according to Bessent, who said it puts Tokyo in a perfect position to assist – and that they should release their oil reserves to ease pressure on global oil markets.
“I think we’re going to have a very good discussion with the prime minister,” he said. “President Trump has an excellent relationship with her.”
Trump may also seek Japanese production or co-development of missiles to replenish U.S. stocks depleted by the Iran conflict and Ukraine war. Japan maintains ties with Tehran, potentially offering a diplomatic channel, though past mediation efforts failed, Reuters reports.
Unlike Washington, Tokyo has diplomatic relations with Tehran, creating a potential avenue for diplomacy in any moves to end the war, although past attempts by Japan to mediate with Tehran in 2019 were unsuccessful.
Takaichi will also tell Trump that Japan intends to join the “Golden Dome”, opens new tab missile defense initiative that is meant to detect, track and potentially counter incoming threats from orbit, two Japanese government sources said. –Reuters
Takaichi, Japan’s first female prime minister, has so far offered no concrete assistance. Speaking to parliament on Monday, she confirmed no official U.S. request had been received but said officials were “checking the scope of possible action within the limits of its constitution.” In public comments before departure, she described the trip as “very difficult” and stressed that her “top priority is the early de-escalation of the situation.”
The visit – Takaichi’s first to Washington since taking office – was originally designed to burnish the U.S.-Japan alliance, remind Trump of the China threat ahead of his now-postponed trip to Beijing, and announce a fresh wave of Japanese investment in the United States. Tokyo had already committed $550 billion in projects to win tariff relief; a second tranche of roughly $60-100 billion in critical minerals, energy, and other sectors was expected to be unveiled during the visit.
$40 Billion Reactor Project
Trump and Takaichi are also expected to unveil a major nuclear initiative at the White House today, channeling fresh capital from the US-Japan $550 billion investment fund created under their bilateral trade agreement.
Trump and Japanese PM Takaichi are set to announce a $40BN nuclear power project in the southern US, the latest initiative stemming from an investment fund the countries established as part of a trade pact.
GE Vernova and Hitachi, under their existing joint venture GE Vernova Hitachi Nuclear Energy (GVH), will construct BWRX-300 small modular reactors (SMRs) in Tennessee and Alabama, with the projects valued at up to $40 billion. Specific timelines for operation remain under wraps, but the deal highlights accelerating momentum for advanced nuclear technology.
This announcement follows the first tranche of commitments under the fund, which we covered in detail last month. Those initial projects totaled $36 billion and focused on a massive natural gas facility in Ohio, a synthetic diamond plant in Georgia, and a Gulf Coast crude export terminal.
The BWRX-300 units, each roughly 300 MW, are designed for faster factory-built deployment than traditional gigawatt-scale plants. Sites in Tennessee tie into the Tennessee Valley Authority’s Clinch River development, while Alabama locations will partner with private developers. No SMRs currently operate on US grids, but the Trump administration has prioritized regulatory streamlining and federal support to shorten timelines that have historically stretched a decade or more.
We previously covered the US-Japan trade deal and the surrounding agreements back in October of last year when investments worth over $500 billion were pledged by Japan. At the time, the announced value of investments for GE Vernova reactors was $100 billion, so this barely represents even half of that previously announced commitment. It remains unknown where the other $60 billion will be directed to.
There are also outstanding commitments from Japan to support NuScale with up to $25 billion, and Westinghouse with an additional $100 billion. The $100 billion for Westinghouse will most likely be in the form of funding the $80 billion agreement between the US, Cameco, and Brookfield for 10 AP1000s.
Exact unit counts, financing splits, and commercial operation dates were not detailed ahead of the formal announcement. Additional energy, minerals, or defense deals could surface during the visit.
So – Iran, Oil, and Nuclear power are on the agenda, officially or not.
If the unstated intention of the Iran war was to give far more leverage to Russia, and – paradoxically – to Iran, by legitimizing their sanctioned oil exports in a world suddenly starved of energy, then mission accomplished.
Just days after the US “temporarily” lifted sanctions on Russian oil stored on sanctioned tankers, Secretary Scott Bessent said Thursday that the Trump administration may suspend sanctions on Iranian oil already at sea in a bid to clamp down on energy prices.
“In the coming days we may unsanction Iranian oil that’s on the water, about 140 million barrels,” he said on Fox Business, adding that “In essence, we will be using the Iranian barrels against the Iranians to keep the price down for the next 10 or 14 days, as we continue this campaign.”
It’s the latest play weighed by the administration to stabilize the oil market against price shocks since the U.S. and Israel launched their joint operation in February. The maneuver could free up 140 million barrels of Iranian oil for global use, Bessent said.
It’s one of several “levers” Bessent said the administration has at its disposal, as Iranian attacks cripple the Strait of Hormuz, whose blockade has shuttered roughly 20% of the world’s oil supply. The administration could also make more oil from the Strategic Petroleum Reserve available, Bessent added. The administration already started making 172 million barrels from the SPR available.
“So we have lots of levers, we’ve got plenty more that we can do,” Bessent said. “Some countries are going to do more, the U.S. could unilaterally do another SPR release to keep the price down.”
The White House has discussed adding up to 100 million more barrels to the administration’s pledge last week, Politico reported citing a person familiar with the plan.
“Some military advisers are concerned [about] draining so much, and are pushing for more like 50 million barrels on the concern that further destruction of oil and gas infrastructure in the [Middle East] region could leave the country vulnerable from a reserve standpoint,” this person said.
A spokesperson for the Department of Energy — which controls the SPR — said in a statement following Bessent’s interview there were currently no plans for another release.
“The United States has taken several actions thus far to mitigate disruptions to energy markets,” DOE spokesperson Ben Dietderich said. “While the U.S. continues to consider all options to keep markets supplied, there are currently no plans for an additional SPR release.”
Bessent comments come a day after the US Administration announced a 60-day waiver of the Jones Act shipping law, temporarily allowing foreign-flagged vessels to move fuel, fertilizer and other goods between US ports
Which leaves unsanctioning Iranian oil as the most likely next step.
The plan is being floated at a time when a massive, nearly $70 gap has opened in price between oil delivered to Asia via Oman, which is now trading at $167/barrell and WTI which serves the US market at $97. Meanwhile Brent, last trading at $113, is rising and is increasingly disconnected with WTI on fears the US may ban oil exports, undoing Barack Obama’s 2015 decision, and landlocking US production.
What is remarkable about the Bessent proposal is that it comes just as Iranian oil exports surged on March 17 to over 4 million barrels after being heavily depressed for the past few days. If Iran can sustain this level of exports, it would be more than double the pre-war daily average of just over $2 million barrels!
Oil and product flows through the strait have plummeted from roughly 20 million barrels a day to just “a trickle,” the International Energy Agency reported last week, marking the largest supply disruption in history. U.S. gas prices are up by more than 85 cents per gallon from the start of the war. Bessent called the blockade a “temporary chokepoint” and implored American allies to help secure the strait.
“They’re the ones who need this oil,” he said. “The U.S., we’re an oil exporter.”
Yet while China is especially reliant on Gulf oil, having been traditionally the biggest customer, China also has a strategic petroleum reserve that it quietly filled up in recent years, and which currently has ~1.5 billion barrels, or more than the entire 1.2 billion reserve across IEA member nations. The question then becomes is Beijing willing to dip into its reserve while Asian prices remain elevated (or perhaps stoop so low as to purchase US oil), or is it waiting for a more strategic moment, like the invasion of Taiwan before starting the SPR drain.
