Oil prices fall as Trump postpones Iran strike, easing supply disruption fears

My weekend Deeper Dive laid out for paying subscribers what I think is a strong case for blistering inflation, the likes of which we’ve never seen. The case is made based on facts currently on the ground that are already storming your way. It even makes a case for one highly possible scenario under which inflation may take off in a single month like a rocket. That single event is entirely in Iran’s hands, and it is looking more likely.

If you missed that Deeper Dive, you likely have no concept of the scale and speed of the monster coming your way. Most people only vaguely sense it. The particulars will make it clear; but I’ll leave it to paying subscribers to report here, if they like, whether such a case was adequately made. Let readers be the judge.

Today, Trump decided to push Iran harder toward that possibility. He claims he was planning a massive attack on Iran to re-engage the war but only held off on the behest of allies in the Middle East. Who knows if there is a word of truth in that since it sounds a lot like Trump TACOing before he even issues the threat.

In a Truth Social post, after his apparently fruitless China trip, Trump told Iran its only option is total surrender. Oil immediately cleared $111/bb for Brent. The jump came because of the combination of Trump’s warning and Iran’s response. Trump’s post sounds to me like the usual TACO threat, and obviously oil paid no attention to the big hopes that were included about a big deal being on the table, or it wouldn’t have risen:

It contains all the usual bravado that has never gone anywhere, wherein Trump states (AGAIN), that if they don’t accept this deal in a timely way, all hell will rain down on Iran. Oil speculators are apparently becoming a little slower to take the bait because oil rose from about $109/bbl when I finished the Deeper Dive to hanging out at $112 most of today, launching off of Trump’s failure to launch a deal with China to end Iran’s seizure of the Strait of Hormuz. Of course, Trump also claimed that the US controls the strait now. In that case, open it yourself, Mr. Trump.

While there had been some optimism that Trump’s visit to China last week might result in President Xi using his influence with Iran to reopen the Strait, the lack of a breakthrough has reignited concerns of major shortages. Over the weekend, Trump was once again threatening Iran to negotiate or face the consequences.

First, he put out more of the now predictable vain bravado:

Other claims today by Trump contained all of his now standard empty rhetoric:

He is “not open” to any concessions for Tehran after receiving the latest disappointing Iranian response on peace deal talks…. Asked about his Friday remark that he’d be willing to accept a 20-year moratorium on Iranian uranium enrichment, Trump interjected: “I’m not open to anything right now…. I can’t really talk to you about it. Too many things are happening…. I can tell you they want to make a deal more than ever, because they know we’re—what’s going to be happening soon….”

Then he TACOed, seemingly before Iran even came back with a “No dice” response:

Tasnim has newly cited Iranian government sources who seek to make clear that “Iran under no circumstances” will engage in new nuclear negotiations for an end to the war.

Later, Iran held out the same list of demands that it has been holding out for over a month, which the president has repeatedly rejected as non-starters. Iran concluded,

“The Americans are far from Iran’s demands…. The Americans are still trying to tie the negotiations to end the war to the nuclear issue … and Iran will not agree to it. The Americans must understand that Iran will in no way agree to an end to the war in return for nuclear commitments.”

So, that’s pretty clear, and they have not wavered from that statement for years.

The global economic situation, meanwhile, is getting dire.

As physical oil markets continue to tighten, nearly 80 countries have now introduced emergency measures to protect their economies from the looming energy crisis. According to the Financial Times, economists at Aberdeen are now examining a scenario where Brent crude surges to $180 per barrel if traffic through the Strait of Hormuz remains constrained for an extended period.

The rocket ride to inflation like you’ve never seen before could begin quickly for the reasons I laid out. In fact, today’s words from both Trump and Iran and stock and bond markets’ reactions actions make it look like that is the path we are on.

For paying subscribers, just look at the major headlines I put in boldface below, which reinforce what I wrote over the weekend as the path we are on to inflation that will rip your face off. There are quite a number of them, already reinforcing my points, yet I tried to avoid too much repetition, so I did not include all that I came across.