G-7 Panic? World Leaders Weigh Emergency SPR Dump As Oil Prices Erupt Into Triple-Digit Territory
Asian and European equities traded lower, while U.S. equity futures fell 1% as Brent and WTI futures traded in triple-digit territory following the weekend escalation in Middle East tensions. The energy shock we have been warning about for the past week, citing top institutional desks from JPMorgan, UBS, Goldman, and others, is now staring G-7 leaders directly in the face as energy market panic erupts.
You know conditions are deteriorating very quickly when the Financial Times reports that G-7 finance ministers are set to hold an 8:30 a.m. New York time call to discuss a possible coordinated release of strategic oil reserves to combat runaway crude prices, as Brent crude hit $119/bbl overnight. Such a move to dump SPR on global markets shows just how afraid policymakers are that the oil shock could crush consumer sentiment and, in turn, hit economic growth.
There have been five coordinated SPR dumps onto the global market with the International Energy Agency. The last two occurred in 2022, in the early days of the Russian invasion of Ukraine, which sent energy prices through the roof. However, as we must note, dumping SPRs in 2022 did not work so well, and the market will likely look beyond current flows and focus on overall stockpiles being drained (read: here & here).
The scramble by G-7 leaders comes as Brent crude hit $119/bbl in Asia, up from about $72 before Operation Epic Fury kicked off more than a week ago, now in its second week. With the Strait of Hormuz effectively closed and Gulf producers cutting output as storage fills up, the worst-case scenario appears to be unfolding: an energy shock.
To cushion the shock, potentially bridging some of the supply gap of a short-term war (but definitely not a longer term or wider disruption) FT sources said world leaders could release 300 million to 400 million barrels, or about 25% to 30% of the 1.2 billion-barrel reserve.
Given the extreme moves, any announcement is likely to move prices (and indeed is already being somewhat discounted) but the question remain of whether that will actually impact the cost of pump prices in America (which are set to soar to $5 a gallon, however briefly, on a lagged response to WTI and RBOB price surges currently).
As Goldman’s Rich Privorotsky noted:
Such a release would buy time. If the disruption proves temporary, a coordinated SPR release makes sense. If the disruption persists for months, those reserves might arguably be more valuable at higher prices or in a more acute shortage
WTI is down $20 from its overnight highs on the report of the coordinated SPR release…
Late last week, JPMorgan’s top commodity strategist, Natasha Kaneva, did the ‘Hormuz Math‘ and warned that production shut-ins were imminent – hence the weekend production cuts by major Gulf states and Brent crude spiking into triple-digit territory.
Additionally, energy economist Anas Alhajji warned UBS analysts last week about SPR limitations:
“The impact of the U.S. SPR is limited. Saudi Arabia is completely out of the picture. All of that spare capacity in OPEC is out of the picture. So what do we do? We are then left relying on demand destruction to curb prices. And because of the panic buying, prices would go above $100 easily in this scenario.”
Even if the conflict in the Middle East ended today, Alhajji explained that returning Gulf oil and gas production to a ‘normal state’ would take two months because of logistical and technical issues. This only implies that an energy shock has begun. Deutsche Bank warned in recent days that this was an “existential threat” to airlines, and next could very well be a shock to consumers. The only question now is whether the shock is big enough to cause a financial blow to countries that are among the largest importers of crude from the Gulf region, such as China and other Asian countries.
As geopolitical tensions in the Middle East have escalated into direct conflict involving Iran, the global energy market is once again reminded of its precarious dependence on critical chokepoints. Shipping through the Strait of Hormuz slowed to a crawl amid threats and attacks, while QatarEnergy halted LNG production following strikes on its facilities.
For economies reliant on imported fossil fuels, it’s a stark warning.
In contrast, nuclear power plants around the world continue to hum along largely unaffected, chugging steadily forward while fossil markets panic. With fuel assemblies stockpiled for one to two years or more of operation, nuclear facilities don’t rely on daily tanker shipments or volatile global supply chains. Their high capacity factors provide consistent baseload power regardless of weather, politics, or the status of distant straits. This resilience stands in sharp relief to the chaos in oil and LNG markets.
The current disruptions highlight nuclear energy’s unique advantages for energy security. Uranium fuel is compact and can be sourced from diverse, stable suppliers or even domestic reserves in many nations. Once loaded, a reactor operates independently of the geopolitical storms that buffet fossil fuel transport routes like the Strait of Hormuz, which handles roughly 20% of global oil and significant LNG volumes from Qatar.
Europe finds itself particularly exposed. The continent’s energy import dependency is already over 50%, with countries like Germany historically even higher. Decades of policy prioritizing renewables and phasing out nuclear power, epitomized by Germany’s failed Energiewende, left the region overly reliant on imported natural gas and LNG. After the loss of cheap Russian pipeline gas, Europe turned to seaborne LNG, much of which now faces indirect risks from Middle East instability. The irony is hard to miss: nations that shuttered reliable nuclear plants in the name of safety and green ideals are now scrambling as fossil fuel prices soar, contributing to industrial strain and higher consumer costs.
France, by maintaining a robust nuclear fleet accounting for about 70% of its electricity, has enjoyed relatively greater stability and lower import dependence. Its experience suggests that a balanced energy mix with substantial nuclear baseload offers a buffer against external shocks. Even German Chancellor Friedrich Merz recently acknowledged that the nuclear phase-out was a “severe strategic mistake,” underscoring the long-term costs of those earlier decisions.
Beyond security, nuclear power aligns with decarbonization goals. It produces low-carbon electricity at scale without the intermittency challenges of wind and solar. As demand surges from data centers, AI, and electrification, nations are eyeing a nuclear renaissance.
Of course, nuclear isn’t without challenges. High upfront costs, lengthy regulatory approvals, and lingering public concerns from past incidents require careful management. Waste disposal and proliferation risks demand ongoing attention. Yet, the technology’s track record for safety and reliability, combined with modern engineering, makes it a worthy path forward.
The latest events in Iran and the Gulf should serve as a catalyst for policy reevaluation. Governments would do well to streamline permitting for new reactors, invest in domestic fuel cycles, and educate the public on nuclear’s role in a secure, affordable, low-emission future. Short-term pain from energy price spikes may finally translate into long-term strategic gains if it accelerates the adoption of power sources immune to the whims of distant conflicts.
Rep. Darrell Issa (R-Calif.) said he will not seek reelection in his southern California district, which had been redrawn to favor Democrats in last year’s redistricting.
On March 6, the longtime congressman announced, shortly after the candidate filing deadline passed, that he would retire at the end of his term.
“This decision has been on my mind for a while, and I didn’t make it lightly,” Issa said in a statement announcing the end of his reelection bid.
Issa said he had built a strong campaign operation, enjoyed broad support, and believed polling showed he could win. But after roughly a quarter-century in Congress and another quarter-century in business, he said it was time “for a new chapter and new challenges.”
“First, we built the right campaign infrastructure, support has been overwhelming—including from President [Donald] Trump—and our polling was unmistakable: We would win this race. But after a quarter-century in Congress—and before that, a quarter-century in business—it’s the right time for a new chapter and new challenges.”
Issa endorsed San Diego County Supervisor Jim Desmond, a fellow Republican, to succeed him. Desmond filed paperwork on the morning of March 6 amid uncertainty over whether Issa might be dropping out of the race.
“He understands this community, was born and raised here, and will make a terrific Congressman,” Issa said of Desmond.
A former Army officer and tech entrepreneur, Issa was first elected to a San Diego-area House seat in 2000. He chaired the House Oversight and Government Reform Committee from 2011 to 2014, overseeing high-profile investigations during the Obama administration, including probes into the 2012 attack on the U.S. consulate in Benghazi, Libya, and “Operation Fast and Furious,” where ATF agents allowed illegal gun purchases in an effort to map Mexican cartel networks but lost track of many of the weapons.
Issa left Congress in 2018 after Trump, then in his first term, nominated him to head the U.S. Trade and Development Agency. Although his nomination never advanced in the Senate, he mounted a successful comeback in 2020, winning a seat that had remained safely Republican until the latest remapping shifted the partisan balance of his 48th District.
After the lines shifted, Issa briefly floated the idea of running in Texas, but later said he would stay, declaring he “wasn’t quitting on California.”
Several Democrats are already in the race for the now-bluer 48th District, including San Diego City Council member Marni von Wilpert and Navy veteran Ammar Campa-Najjar, and Democrats quickly framed Issa’s decision as a sign the seat is ripe for a flip.
“Issa abandoning his voters now is the clearest sign yet that Republicans know he can’t win,” Anna Elsasser, spokesperson for the Democratic Congressional Campaign Committee, said in a statement. “Any Republican who tries to parachute into this race with the same extreme agenda will face the same fate.”
Republicans, meanwhile, praised Issa’s tenure and said they expect to remain competitive in the district even as the party defends a narrow House majority. Republicans currently hold a 218–214 edge in the chamber, with vacancies.
“We are grateful for Congressman Darrell Issa’s decades of dedicated service to the people of California and our nation,” a spokesperson for the National Republican Congressional Committee said in a statement to The Epoch Times. “We are optimistic that this district will continue to be represented by a Republican.”
Issa’s announcement capped a day of California election shake-up. Rep. Kevin Kiley, a two-term Republican, on March 6 filed to run in the 6th District as “no party preference,” citing frustration with congressional “hyper-partisanship” and gerrymandering.
“It is no secret I’ve been frustrated, at times disgusted, by the hyper-partisanship in Congress,” he said in a statement.
“In the last year, it’s led to the longest government shutdown in U.S. history, a massive increase in healthcare costs, and, of course, a pointless redistricting war. The epidemic of gerrymandering has spread from Texas to California to states all across the country. Both parties are complicit.”
India To US: We Don’t Need Permission To Buy Russian Oil
India has really been walking a careful geopolitical tight-rope, wanting keep relations on good terms with the Trump administration, but also wanting to defend its energy sovereignty and decision-making.
On Saturday the government issued a somewhat surprisingly feisty statement, in terms of its tone, after the United States just granted a sanctions waiver that allows for Russian oil shipments currently stranded at sea to be unloaded to Indian buyers.
India’s Press Information Bureau wants the world to know New Delhi was never dependent on “a short-term waiver” to buy Russian oil.
This is clearly a bit of a loud brush-off to Washington, and Moscow is certainly going to welcome it:
“India has never depended on permission from any country to buy Russian oil,” the government said in a statement.
And further, as the AFP also reports, the New Delhi statement reminded the West: “India is still importing Russian oil even in February 2026, and Russia is still India’s largest crude oil supplier.”
Meanwhile in Washington US Treasury Secretary Scott Bessent has clearly indicated the Trump administration is considering lifting sanctions on more Russian oil.
As a reminder of the initial huge Thurs-Fri complete U-turn, coming months after Trump slapped tariffs on Indian goods in a bid to pressure Prime Minister Narendra Modi’s government to abandon energy purchases from Russia, which of course India never did…
“To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil,” US Treasury Secretary Scott Bessent said in a post on X. “This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea.”
Since China gets about 45% of its oil from the Strait, should Iran agree to allowing Chinese ships through, and should Russia be able to fully supply India’s needs, andif Saudi Arabia can reroute as much as 7 million bbl/d from the gulf to Yangbu via the East-West pipeline, as we touched upon earlier…and suddenly the Hormuz blockade will seem far less ominous, as most of the oil blocked finds alternative ways to continue on its way to its final destination.
Hungarian authorities have detained seven Ukrainian citizens and seized tens of millions of dollars, euros, and gold that were being transported through the country in armored vehicles, triggering the latest diplomatic dispute between Budapest and Kyiv.
Hungary’s National Tax and Customs Administration (NAV) confirmed on Friday that criminal proceedings had been launched on suspicion of money laundering following an operation carried out on March 5. Authorities intercepted two armored cash-transport vehicles traveling through Hungary from Austria toward Ukraine.
According to the Hungarian authorities, the vehicles were carrying approximately $40 million, €35 million in cash, and 9 kilograms of gold.
Hungarian Foreign Minister Péter Szijjártó said the case raised serious questions about the movement of large quantities of physical cash through the country.
“Since January, a total of $900 million and €420 million in cash has been transported through Hungary, and 146 kilograms of gold bars have also been transported through the country,” he said, as cited by Magyar Hírlap.
“We have a number of serious questions about this. First of all, this is a huge amount of cash, and we wonder why Ukrainians need to transport such a large amount of cash. If it is true that this is a transaction between banks, then the question rightly arises as to why the banks do not settle this between themselves by bank transfer, why it is necessary to transport such a large amount of cash, and why it has to be transported through Hungary,” Szijjártó added.
“These questions arise mainly because these cash shipments are accompanied by people who have clear ties to Ukrainian secret services.”
🇭🇺Hungary confirms detaining seven people in an alleged money-laundering probe.
Authorities say the case involves $40m, €35m and 9 kg of gold.
🤡 Kiev calls it “hostage-taking.” Western media repeat it. Funny how anti-Orbán headlines appear just weeks before Hungary’s… pic.twitter.com/AkTHHsMbrA
Hungarian Prime Minister Viktor Orbán’s political director, Balázs Orbán, also commented on the case, raising concerns about the purpose of the funds.
“Hundreds of millions in cash and gold moving through Hungary toward Ukraine — escorted by people linked to Ukrainian intelligence. Armored vehicles, suitcases full of money, staggering sums,” he wrote on X.
‼️💵 💰 Hundreds of millions in cash and gold moving through 🇭🇺 Hungary toward Ukraine — escorted by people linked to Ukrainian intelligence. Armored vehicles, suitcases full of money, staggering sums.
“Whose money is this? What was it meant to finance? Who benefits from it? And why must such enormous amounts of cash travel across our country instead of being transferred through normal banking channels?”
He added that authorities would conduct a full investigation and argued that the Hungarian public had a right to know where such funds were coming from and what they were intended for.
Ukraine, however, has strongly rejected the allegations and accused Hungary of illegally detaining its citizens and confiscating bank property.
Ukrainian Foreign Minister Andrii Sybiha said the seven individuals were employees of the state-owned Oschadbank who were conducting a routine cash transfer between financial institutions.
“Today in Budapest, Hungarian authorities took seven Ukrainian citizens hostage. The reasons are still unknown, as well as their current well-being, or the possibility of contacting them,” Sybiha said in a social media post cited by Ukrinform.
According to Kyiv, the vehicles were transporting currency and precious metals between Raiffeisen Bank Austria and Oschadbank Ukraine as part of standard banking operations.
Sybiha accused Hungary of acting unlawfully. “If this is the ‘force’ announced earlier today by Mr. Orban, then this is the force of a criminal gang. This is state terrorism and racketeering,” he said.
Oschadbank also confirmed that two of its armored vehicles and a seven-member transport team had been detained in Hungary while carrying out what it described as a routine transfer of funds and banking metals.
“The value of the assets in the seized vehicles amounted to $40 million, EUR 35 million, and 9 kg of gold,” the bank said in a statement, adding that the transport had been documented in accordance with international banking and customs procedures.
According to GPS tracking data cited by the bank, the vehicles were last located in central Budapest near one of Hungary’s law enforcement agencies. Ukrainian officials said the whereabouts of the bank employees were not immediately known.
Ukraine’s foreign ministry has also issued a warning advising Ukrainian citizens to avoid traveling through Hungary following what it described as the “kidnapping” of the bank employees and seizure of state bank assets.
The incident marks the latest escalation in already strained relations between the two countries.
Zelensky issues dire threat to Hungarian PM Orbán if he continues to block €90 billion in loans to Ukraine.
“We hope this one person [Orban] in the EU will not block €90 billion aid. Otherwise, we will give this person’s address to our armed forces.”pic.twitter.com/ayoSJlDCEs
On Thursday, Ukrainian President Volodymyr Zelensky sparked outrage among European nationalist politicians by suggesting that Hungarian Prime Minister Viktor Orbán’s address could be given to Ukrainian armed forces so they could “speak to him in their own language.”
Hungarian officials interpreted the remark as a threat directed at Orbán amid ongoing disputes over Hungary’s opposition to a proposed €90 billion EU loan package for Ukraine.
Kurds Do Not ‘Trust’ US To Use Them As Proxy Force Against Iran
This should be obvious to any observer of Middle East history and US foreign policy over the last half-century, but a new Axios report cited Kurdish officials who say they don’t ‘trust’ the United States, especially in wake of recent reports suggesting the Kurds will be used as proxy ground forces against Iran.
Iraq’s Kurds have already made clear they oppose joining the US-Israeli attacks on Iran and warn they could face severe Iranian retaliation without ground or air defense support, Axios reported Saturday.
An earlier CNN report claimed the CIA began working to arm Kurdish forces hostile to the Islamic Republic of Iran after the United States and Israel launched Operation Epic Fury.
Initially, President Trump openly voiced support for Kurdish involvement in the conflict but then soon reversed that position on Saturday.
“The Kurds must not be the tip of the spear in this conflict,” Axios reported, citing a senior official from the Kurdistan Regional Government (KRG), which is the semi-autonomous region in northeastern Iraq.
The Iraqi Kurds are “staying neutral” because “there is no clarity” on whether Washington seeks full regime change in Iran or only a “change in personnel” – the KRG official said. Trump has stated the United States will be involved in deciding who leads Iran in the future but has not explained how that would really work in the end. The war objectives have seemed to shift rapidly, especially when it comes to daily public facing White House interactions with reporters.
Some military analysts and Middle East pundits online recently attempted to count the number of times the Kurds were effectively “thrown under the bus” in their total history of working with Washington, and concluded that it’s been at least nine times.
The last ‘betrayal’ was merely months ago – when the Pentagon quickly withdrew from northern Syria and simply told the Kurdish-led Syrian Democratic Forces (SDF) to become integrated into the Syrian state and army. The only thing is the Jolani/Sharaa government and its HTS militants hate the Kurds.
The SDF had long battled against the Sunni hardliners now ruling from Damascus at this point. The US also regularly failed to step in over years of Turkish aerial bombardment of both Syrian and Iraqi Kurds.
As for the idea of some kind of proxy Kurdish invasion force to use against Iran – some see the idea as being destined for failure, given an Iranian nation of 90+ million with a powerful IRGC ruling military structure would likely feel it as merely a pinprick. It’s anything but certain that it would actually have an impact on leaders in Tehran. Instead, blowback would fall hardest on Kurdish communities across the region, and Shia militias in Iraq might get involved on the other side as well.
Currently, many Kurdish leaders are outraged that US officials ‘leaked’ the arm the Kurds plan, given it effectively puts a big target on every Iranian Kurds’ back in eyes of military leadership in Tehran.
I’ve been a fan of Jim Rickards’ work for around 10 years.
He came onto my radar in 2016 when he predicted Donald Trump would win the election. I saw a clip of him saying the polls were crooked. And that turned out to be a great call.
Jim is never afraid to speak his mind. And his contrarian predictions have uncanny accuracy.
So I’ve been following Jim’s work on the Iran situation closely. Just today he put out a new Iran writeup with surprising, even disturbing ideas in it.
This is what Jim does. His research is sometimes unnerving, but it is always well thought out and logical.
Today, we’re going to cover a few key aspects of Jim’s new report and add context with maps and graphics.
Let’s get started…
Can Iran Wait it Out?
In a section titled, Can Iran Win?, Jim begins by acknowledging that the U.S. and Israeli forces have done far more damage thus far:
Notwithstanding Iran’s limited success in counterattacks, it’s clear that the U.S. and Israel have inflicted far more damage on Iran than Iran has inflicted on the region.
That asymmetric damage ratio will continue to grow. The U.S. and Israeli attacks will expand even as Iran’s capacity to strike back is being heavily degraded.
However, there are deeper considerations here. For example, while taking out the 86-year old Ayatollah Khamenei was satisfying to many, it also handed the Iranian regime a propaganda victory. Here’s Jim:
Martyrdom – The first point is that the deaths of Ayatollah Khamenei and many of the top leaders of Iran may not have been unwanted by them. This is something the Western mind can barely comprehend.
In Islam, martyrdom is considered a blessing from Allah. It guarantees the martyr a place in paradise.
Is it possible that Khamenei and other leaders gathered in one place intentionally knowing that they would eventually be hunted down and killed by the U.S. and Israel? Why not gather in one place and become martyrs together?
This idea of martyrdom applies to the successors and replacements of those killed on day one. Many of those successors have been killed also. To the secular West, this is counted as a military victory.
But to the theocratic Muslim, martyrdom is the victory. This process unites almost all of Iran in a celebration of Allah’s divine will. The more martyrs we create, the stronger Iran becomes as an Islamic Republic.
Again, this is hard for the Western secular mainstream to grasp, but killing their leaders is making Iran stronger. There’s an almost Nietzschean vibe for the Iranian survivors.
This is the type of analysis you won’t see on cable news. Martyrdom is a powerful force in the Islamic world, and there is a decent chance that Khamenei embraced the prospect of death. Even if this isn’t objectively true, what matters is how it is perceived by the world’s 230 million Shia Muslims. And they take this stuff very seriously.
The Ayatollah’s killing could lead to a more unified Iran, and even spread to neighboring Shia populations in Bahrain, Iraq, and beyond.
Challenging Topography
Jim goes on to describe how challenging a ground invasion would be due to Iran’s terrain:
The Terrain – Westerners also have little idea just how big Iran is. It’s the 17th largest country in the world by area out of 195 countries. It also has the 17th largest population in the world with 86 million people.
Iran is not a giant like India or Brazil, but it is far larger than Americans realize. The terrain is challenging with large mountain ranges and deserts. This is not a country ripe for a land invasion like Iraq or Syria.
Iran is far larger than Ukraine, which is still holding out against Russia after four years of war. Iran has what military strategists call strategic depth, which offers the ability to retreat without surrender. Iran isn’t going anywhere and it will not easily be subdued.
Here is a topographical map of the country. Note how mountainous Iran is compared to Iraq directly to the West.
Compared to Iran, Iraq is about as flat as Illinois. It would make an extremely challenging ground invasion. Still, President Trump is not ruling out the prospect of boots on the ground.
How Long Will U.S. and Israeli Munitions Last?
The next item Jim tackles is perhaps the most challenging. A looming shortage of key munitions.
A U.S. Munitions Problem – Most importantly, the U.S. and Israel are running low on offensive and defensive bombs and missiles. This is the result of the massive bombing attacks on Iran, the need to fire thousands of anti-missiles to shoot down thousands of incoming drones and missiles, the fact that the U.S. has allowed its military industrial capacity to atrophy, and the large number of weapons wasted in Ukraine.
The U.S. sent seven Patriot anti-missile batteries to Ukraine at about $1 billion each. All seven were destroyed by Russian hypersonic missiles. I’m certain the U.S. wishes it had those batteries today to protect U.S. bases and troops near Iran. The senile Biden and neocon warmongers may be to blame, but the damage is done.
The U.S. and Israel have inflicted enormous damage on Iran and will continue to do so in the short run. But within weeks, the magazines will run low, and the U.S. will be scrounging around in South Korea and Japan for replacements.
Good luck with that.
U.S. industrial output of 800 cruise missiles per year cannot keep up with Israel and the U.S. launching 100 per week. Ships need to reprovision. Repairs cannot be neglected. Diego Garcia is days away from the battlespace. The U.S. will be badly stretched.
So Jim estimates that America produces around 800 cruise missiles per year. And we’re currently launching about 100 per week. Maybe more. Not great. There are stockpiles, of course, but those are supposed to be for emergency use only. Does this qualify?
Additionally, many U.S. bases close to Iran have been hit by Iranian missiles and drones and have essentially been abandoned. Fortunately U.S. soldiers are largely out of the line of fire. But it also makes refueling and re-arming challenging.
Here’s a map, via the Wall Street Journal, showing the approximate positions of U.S. bases and naval assets in theater:
(Note: Since this map was published, the U.S.S. Gerald Ford carrier strike group has moved through the Suez Canal into the Red Sea, likely headed to the Arabian Sea.)
To refuel, re-arm, and repair, The U.S.S. Abraham Lincoln carrier strike group would normally go to Bahrain or another nearby base. But those bases have been hit hard. So now they will likely have to go to Diego Garcia, which is thousands of miles away. Here’s a map:
Source: RT
Jim closes his report with a note about the uncertain outcome of a war of attrition.
Iran has a united population; reports of internal protests are greatly exaggerated, especially after the ayatollah ordered the killing of 5,000 protestors just weeks ago.
It has a robust political system despite decapitation strikes. Drones are cheap and easy to manufacture. They can do just as much damage as an F-15 strike when targeted properly.
Iran has strategic depth, allies in Russia and China, and a strong survival instinct.
In a war of attrition, really a war for survival, victory goes to the last man standing.
That may be Iran.
This is why we read Jim Rickards. Smart contrarian takes you won’t hear on mainstream media.
In war, the number one mistake is to underestimate your opponent. We should be careful to heed this historic warning.
This war has the potential to escalate in unpredictable and dangerous ways. Economically, geopolitically, and kinetically.
Price Controls Arrive: South Korea, Taiwan Impose Fuel Price Cap
It’s a bloodbath across Asian markets this morning with Asia being the world’s largest oil-importing region. Based on a Goldman analysis of the impact of higher oil on real GDP growth (chart below), China is the most insulated from supply-driven oil price increases compared to other emerging Asian economies, with $15/bbl higher crude oil prices leading to 0-0.1pp lower GDP growth and 0.1-0.2pp higher headline CPI inflation. This resilience is partly due to the country’s economic structure and the potential for government intervention to dampen the pass-through of global price increases to consumers. Increased oil stockpiling last year – some estimates put China’s strategic oil resere at 1.5 billion barrels – and very low inflation over the past few years also make China less vulnerable to rising energy prices.
Conversely, Singapore, followed by Taiwan and Korea, will bear the brunt of it with a -1.6% hit to GDP growth and this is only assuming $85 oil. Brent has now crossed the $100 handle with risks to the upside.
Seen in this light, it is probably not a big surprise that South Korean President Lee Jae Myung said on Monday that authorities would cap domestic fuel prices for the first time in nearly 30 years to contain a spike in prices after the conflict in the Middle East sent global crude prices sharply higher.
Speaking at an emergency cabinet meeting, Lee said in the government would “swifly implement and boldly impement” a maximum price system on petroleum products.
The current crisis “is a significant burden on our economy, which is highly dependent on global trade and energy imports from the Middle East,” Lee said in opening remarks.
He added that South Korea will also look for sources of energy beyond supplies shipped via the Strait of Hormuz.
Having emerged as the most cartoonish “market” in the world – whether it is stocks, crypto, or oil, and where even the smallest downtick has to be stabilized by the government or else watch the momentum-chasing lemmings run over the cliff – Lee said a 100 trillion won market stabilization programme should be expanded if needed, and called on the government and the central bank to prepare additional measures to respond to the volatility of the financial and foreign exchange markets.
South Korean shares slumped 8% on Monday to activate circuit breakers for a second time this month on the escalating Middle East conflict, while the won dropped more than 1% to trade near a key psychological barrier of 1,500 per dollar. The Kospi plunged 12% last Wednesday before surging by 12% on Thursday.
Sure enough, shortly after Korea’s announcement, the Commercial Times reported that Taiwan would set a weekly cap on oil-price increases as it seeks to cushion the economy from the impact of the Middle East war.
The Taipei-based newspaper reported the limit on Monday, citing Premier Cho Jung-tai and unidentified officials. Cho had previously told reporters on Sunday that the government had activated a price-stabilization mechanism to absorb oil price increases. That came after the Ministry of Economic Affairs said the day before that domestic fuel prices would only rise about 5% this week.
On liquefied natural gas, Taiwan’s Economy Minister Kung Ming-hsin told reporters the island only needs to find two more cargoes for March and April. “We won’t have a power shortage, and no additional coal-fired generation will be needed in March and April,” he said on Monday. “We can proceed as planned and safely navigate the period.”
Taiwan’s unleaded gasoline prices rose by as much as 5.5% after the government activated stabilization measures, the ministry said in the statement. Under the floating oil-price adjustment mechanism, prices should have climbed by as much as 19.7% this week, it said, with the government absorbing costs to reduce the impact on households and businesses and maintain domestic price stability.
How long can Taiwan keep prices artificially low, thus ensuring that the snapback will be especially brutal? According to officials cited in the Commercial Times repor, there are currently no concerns that Taiwan will run out of crude oil or natural gas, which simply means that nobody has done the math. The government plans to increase oil and gas purchases from outside the Middle East, and coordinate with Asian countries such as Japan and South Korea to swap LNG cargoes to ensure stable supply, the newspaper reported.
While one can debate the prudence of such price controls until one is blue in the face, the reality is that unless oil stabilizes and reverses, expect similar price caps all across the world coupled with strategic petroleum reserve releases, because a 25% one-day surge in the price of oil – if sustained – not only guarantees a global recession, but it also ensures social unrest, as well as a comprehensive sacking of every incumbent politician.
In his recent comments justifying a preventive war against Iran, President Donald Trump declared, “In 1983, Iran’s proxies carried out the Marine barracks bombing in Beirut that killed 241 American military personnel.” Secretary of War Pete Hegseth has invoked that attack numerous times. The 1983 Beirut barracks attack is one of the most cited and least understood pretexts for the new war with Iran.
That bombing was one of President Ronald Reagan’s biggest foreign debacles. Lebanon had been wracked by a brutal civil war for seven years when, in June 1982, Israel invaded in order to crush the Palestinian Liberation Organization (PLO). US troops were briefly deployed in August 1982 in Beirut to help secure a ceasefire to facilitate the withdrawal of the PLO forces to Tunisia.
US troops exited Beirut after the PLO withdrawal was largely completed. However, in mid-September 1982, the massacre of more than seven hundred Palestinian refugees threatened to plunge Lebanon into total chaos. Lebanese Christian Phalangist militia butchered residents of the Sabra and Shatila refugee camps. The militia was armed, aided, and fed by the Israeli Defense Force, which surrounded and blockaded the camps.
The Lebanese government appealed to President Reagan to send American troops back to Beirut as a stabilizing factor, and Reagan quickly obliged. As fighting escalated between Christians, Muslims, Syrians, and Israelis in Lebanon, the original US peacekeeping mission became a farce. The US forces were training and equipping the Lebanese army, which was increasingly perceived as a pro-Christian, anti-Muslim force. (Most Lebanese were Muslim, though possibly a thin majority at that point.)
On April 18, 1983 a delivery van pulled up to the front door of the US embassy in Beirut and detonated, collapsing the building and killing forty-six people (including sixteen Americans) and wounding over a hundred others. The US embassy was a sitting duck for the terrorist assault: unlike many other U.S. embassies in hostile environments, it had no sturdy outer wall. Newsweek noted, “Delivery vehicles are supposed to go to the rear of the building. Why Lebanese police guarding the embassy driveway would have made an exception in the case of the black van remained a mystery.” The attack lacked novelty value, since the Iraqi and French embassies had been wrecked by similar car bomb attacks in the preceding eighteen months.
Five days later, on April 23, 1983, Reagan announced to the press:
“The tragic and brutal attack on our embassy in Beirut has shocked us all and filled us with grief. Yet, because of this latest crime we are more resolved than ever to help achieve the urgent and total withdrawal of all American forces from Lebanon, or I should say, all foreign forces. I’m sorry. Mistake.”
But the actual mistake was a US policy that would cost hundreds of Americans their lives.
By late summer 1983, the Marines were being targeted by Muslim snipers. Reagan administration officials seemed surprised at rising attacks on American soldiers. The Reagan administration responded to sniper potshots and scattered mortar attacks on US troops with a massive escalation. On September 13, Reagan authorized Marine commanders in Lebanon to call in air strikes and other attacks against the Muslims to help the Christian Lebanese army. Defense Secretary Caspar Weinberger vigorously opposed the new policy, fearing it would make American troops far more vulnerable. Navy ships repeatedly bombarded the Muslims over the next few weeks.
At 6:20 A.M. on Sunday morning, October 23, 1983, a lone, grinning Muslim drove a Mercedes truck through a parking lot, past two Marine guard posts, through an open gate, and into the lobby of the Marine headquarters building in Beirut, where he detonated the equivalent of six tons of explosives. The explosion left a thirty-foot-deep crater and killed 243 marines. A second truck bomb moments later killed 58 French soldiers.
Colin Powell, who was then a major general, commented in his autobiography, “Since [the Muslims] could not reach the battleship, they found a more vulnerable target, the exposed Marines at the airport.” A surprise attack on a troop concentration in a combat zone does not fit most definitions of terrorism. However, Reagan perennially portrayed the attack as a terrorist incident and the American media and political establishment accepted that label.
Reagan administration officials scrambled to assert that the administration was blameless. White House press spokesman Larry Speakes declared on the day of the attack that the bombing “definitely was a difficult situation for us” since “people come out of nowhere and perform these acts.” Vice President George H.W. Bush rationalized, “It’s awfully hard to guard against that kind of terrorism.” Defense Secretary Weinberger announced that “nothing can work against a suicide attack like that, any more than you can do anything against a kamikaze flight.” Actually, during World War II, the U.S. Navy quickly responded by placing rows of antiaircraft guns on the sides of its big ships.
In the aftermath of the Marine barracks bombing, Reagan made a mockery of the truth. In a televised speech four days after the bombing, the president portrayed the attack as unstoppable, declaring that the truck “crashed through a series of barriers, including a chain-link fence and barbed-wire entanglements. The guards opened fire, but it was too late.” Reagan claimed the attack proved the U.S. mission was succeeding: “Would the terrorists have launched their suicide attacks against the multinational force if it were not doing its job?…It is accomplishing its mission.” He warned that an American withdrawal could result in the Middle East being “incorporated into the Soviet bloc.” Reagan also declared that the United States was involved in the Middle East in part to secure a “solution to the Palestinian problem.”
Reagan sent Marine Corps commander Paul X. Kelley to Beirut. Kelley quickly announced that he was “totally satisfied” with the security around the barracks at the time of the bombing. Upon returning to Washington, Kelley was summoned to Capitol Hill and bragged to Congress that “In a 13-month period, no marine billeted in the building [destroyed by the truck bomb] was killed or injured” from incoming fire. Kelley inaccurately testified that the Marine guards had loaded weapons and that two of them had been killed in the attack. When congressmen persisted questioning, Kelley became enraged and shouted, “We’re talking about clips in weapons, but we’re not talking about the people who did it. I want to find the perpetrators. I want to bring them to justice! You have to allow me this one moment of anger.”
Even though there had already been numerous major car bombings in Beirut that year and scores of other suicide attacks, Kelley told the committee that the truck bombing “represents a new and unique terrorist threat, one that could not have been anticipated by any commander.” Kelley denied the Marines received any warning of an impending attack. However, on the morning of Kelley’s second day of testimony, The New York Times reported that the CIA specifically warned the Marines three days ahead of time that an Iranian-linked group was planning an attack against them.
Other military officials involved in Lebanon also denied any culpability. Vice Admiral Edward Martin, the commander of the Sixth Fleet, declared, “The only person I can see who was responsible was the driver of that truck.” Martin stressed in an interview, “You have to remember that prior to Oct. 23, there hadn’t been any real terrorism threat.” A New York Times investigation concluded:
“Marine officers in Beirut and the admirals and generals in the chain of command above them did not consider terrorism to be a primary threat even after the embassy bombing, and even though Beirut had been full of terrorists for years.”
Shortly after the bombing, Reagan appointed a Pentagon commission headed by retired Admiral Robert Long to investigate. The commission report, finished in mid-December 1983, concluded that military commanders in Lebanon and all the way back to Washington failed to take obvious steps to protect the soldiers. The commission suggested that many fatalities might have been prevented if guards had carried loaded weapons. The report stated that the only barrier the truck overcame was some barbed wire that it easily drove over. The commission also noted that the “prevalent view” among U.S. commanders was that there was a direct link between the Navy shelling of the Muslims and the truck bomb attack.
When the White House saw the final version of the commission’s report, they issued a stop order. The Washington Post reported that the White House “delayed release of the report for several days, allowing Reagan to respond to its criticism before it became public, and then attempted to play down its impact by vetoing a Pentagon news conference on the document.” On December 27, 1983 Reagan revealed that “we have never before faced a situation in which others routinely sponsor and facilitate acts of violence against us.” Reagan sought to make the report “old news”:
“Nearly all the measures that were identified by the distinguished members of the Commission have already been implemented and those that have not will be very quickly.”
Reagan announced that the Marine commanders in Beirut “have already suffered enough” and should not “be punished for not fully comprehending the nature of today’s terrorist threat.” Reagan then effectively declared that no one would be held accountable. “If there is to be blame, it properly rests here in this office and with this president,” he announced, just before leaving Washington for a vacation in Palm Springs, California.
The Reagan administration blamed its anti-terrorist failures on the Carter administration. White House press spokesman Larry Speakes announced:
“We don’t quarrel with the fact that the CIA and other intelligence-gathering agencies have been crippled by decisions of the previous administration, and we are in the process of rebuilding capabilities. But it takes time…to re-establish our intelligence-gathering methods.”
The following September, shortly after a suicide bomber again obliterated much of the poorly-defended U.S. embassy in Beirut, Reagan blamed the debacle on Carter administration CIA cutbacks. “We’re feeling the effects today of the near destruction of our intelligence capability in recent years before we came here,” Reagan said, falsely asserting that the Carter administration had “to a large extent” gotten “rid of our intelligence agents.”
Reagan quietly withdrew U.S. combat troops from Beirut in early 1984. During the 1984 presidential election, the Reagan administration also responded to its Beirut debacles by attacking the patriotism of Democrats. In the vice presidential candidates debate, George H. W. Bush denounced Democratic candidate Walter Mondale and his vice presidential pick, Geraldine Ferraro. “For somebody to suggest, as our opponents have, that these men died in shame, they had better not tell the parents of those young marines,” he said. Neither Mondale nor Ferraro had said that the Marines “died in shame.” Bush denounced Mondale for running a “mean-spirited campaign,” saying “We’ve seen Walter Mondale take a human tragedy in the Middle East and try to turn it to personal political advantage.” But Mondale’s criticisms of the Reagan administration’s failures in Lebanon were less strident than Reagan’s criticisms of Jimmy Carter for the Iran hostage crisis during the 1980 presidential campaign.
Muslims also responded to U.S. troops by seizing American hostages. Reagan sent military equipment to Iran as a means to entice the Iranians to exert pressure to get hostages released. After the “arms for hostages” deal became public (along with the illegal funneling of the proceeds to the Nicaraguan Contras), Reagan’s credibility was devastated. Reagan went into such a tailspin after the crisis broke that his new chief of staff, Howard Baker, briefly examined invoking the Twenty-Fifth Amendment to remove Reagan from office because of medical unfitness. The Tower Commission report on the debacle concluded, “The arms-for-hostages trades rewarded a regime that clearly supported terrorism and hostage-taking.”
The 1982-84 deployment of U.S. troops in Beirut achieved nothing. The Israelis were far more aggressive against perceived opponents in Lebanon than were the American troops. But even the Israelis were effectively driven out of Lebanon over a decade and a half later, after failing to suppress Hezbollah and losing more than twice as many soldiers there as it lost during the 1967 Six-Day War.
The United States got dragged into a Mideast conflict and then recklessly failed to defend it own troops or American national interest. The 1983 Beirut barracks bombing does not prove that Iran has always been a deadly enemy. Instead, it shows how folly and deception pervaded even a presidency much less imprudent than subsequent administrations.
US Aims To Exhume And Identify 88 USS Arizona Crew Members Buried As Unknowns After Pearl Harbor
The U.S. military plans to exhume the remains of 88 sailors and Marines killed aboard the USS Arizona during the Japanese attack on Pearl Harbor in 1941, part of a renewed effort to identify servicemen who were buried as unknowns in the aftermath of the assault.
The remains, currently interred at the National Memorial Cemetery of the Pacific, will be disinterred beginning in November or December, according to the Defense POW/MIA Accounting Agency, which is overseeing the project. Advances in DNA technology and a growing database of genetic samples from family members have made it increasingly possible to assign names to remains that could not be identified more than eight decades ago, AP reports.
Officials said the process will unfold gradually. About eight sets of remains will be removed every two to three weeks and analyzed.The DNA extracted from the remains will be compared with samples provided by relatives of the missing, many of whom have spent years searching for answers about family members lost in the attack.
The bombing of Pearl Harbor on Dec. 7, 1941 – known historically as the Attack on Pearl Harbor – destroyed or damaged dozens of ships and killed more than 2,400 Americans. The Arizona was struck by bombs that ignited its forward ammunition magazines, causing the battleship to sink in roughly nine minutes. Of the 1,177 sailors and Marines killed aboard the vessel, more than 900 remain entombed within the wreck, which still rests at the harbor floor and serves as a memorial.
Those remains will not be disturbed. The planned exhumations will apply only to individuals buried as unidentified at the Honolulu cemetery.
The identification effort builds on earlier work that used DNA to identify hundreds of Pearl Harbor casualties from other ships, including the USS Oklahoma and the USS West Virginia. Officials say the new project reflects both technological progress and the growing participation of families willing to provide genetic samples.
Among those following the effort closely is Kevin Kline, a real estate agent in northern Virginia whose great-uncle, Robert Edwin Kline, served as a gunner’s mate second class aboard the Arizona. He was 22 when he died in the attack. For much of his life, Mr. Kline said, his family believed his great-uncle’s remains were still aboard the ship. Only in recent years did he learn that some crew members had been buried as unidentified remains on land.
Kline told the Associated Press that he does not assume his relative will be among those identified, but believes the effort could bring a measure of peace to families whose losses have reverberated across generations.
For years, the Defense Department had resisted calls to exhume the remains, arguing that identification would be difficult because the military possessed dental records or DNA samples for only a small fraction of the victims’ families. As recently as 2021, officials estimated that samples existed for about 1 percent of the families.
Kline helped found an advocacy effort known as Operation 85, which has spent the past three years locating relatives of the missing and encouraging them to submit DNA samples. He says that family members connected to 626 sailors and Marines – just under 60 percent of those still missing – have now provided samples. Only a small number of people contacted declined to participate.
The remains will be transported to the agency’s laboratory at Joint Base Pearl Harbor-Hickam in Hawaii for initial analysis. DNA samples will then be sent to the Armed Forces DNA Identification Laboratory at Dover Air Force Base for further testing and comparison.
