{"id":635040,"date":"2026-07-14T02:00:15","date_gmt":"2026-07-14T02:00:15","guid":{"rendered":"https:\/\/buglecall.org\/?p=635040"},"modified":"2026-07-14T02:00:15","modified_gmt":"2026-07-14T02:00:15","slug":"comfortably-bomb","status":"publish","type":"post","link":"https:\/\/buglecall.org\/?p=635040","title":{"rendered":"Comfortably Bomb"},"content":{"rendered":"<p><span class=\"field field--name-title field--type-string field--label-hidden\">Comfortably Bomb<\/span><\/p>\n<div class=\"clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item\">\n<p><em>By Michael Every of Rabobank<\/em><\/p>\n<h2>Hormuz update: Comfortably Bomb<\/h2>\n<p><em><strong>Summary <\/strong><\/em><\/p>\n<ul>\n<li><em>The US-Iran MoU appears to have collapsed sooner than we had thought. <\/em><\/li>\n<li><em>With both sides striking the other, US efforts will turn to ensuring energy can flow through Hormuz \u2018the hard way\u2019 via escorting ships through it. <\/em><\/li>\n<li><em>For now, markets are saying the US can \u2018comfortably bomb\u2019 and \u2018there is no pain\u2019 even if the \u2018MoU are receding\u2019, mostly due to finite SPR drains and low Chinese oil imports. <\/em><\/li>\n<li><em>That gives the US a window for action: if it can keep enough oil flowing through Hormuz, which is our base case, it underlines military action can move markets in a desired direction; if it fails, we face a far larger energy crisis with far less in the tank as mitigants &#8211; or a geostrategic reckoning. <\/em><\/li>\n<\/ul>\n<p>We argued the June 17 US-Iran memorandum of understanding temporarily suited both sides but would last, at best, until the US midterm elections and would ultimately collapse due to its inherent contradictions over tolls, sanctions, Lebanon, and uranium. <strong>At time of writing on 13 July, the US and Iran have separately declared the \u201cceasefire\u201d and \u201cdiplomacy\u201d as over<\/strong>. Both were striking the other, albeit not yet all-out as at the start of the war. Typically, the IRGC has declared that the Strait of Hormuz is now closed &#8211; and the US that it is still very much open for business.<\/p>\n<h3>There is no pain<\/h3>\n<p><strong>Regardless, the market response has been constrained<\/strong>. At Asian market open on Monday, Brent was only up around 4% to $79, for example (Figure 1). In short, markets continue to treat a new active conflict around the Strait of Hormuz as containable.<\/p>\n<p><a data-image-external-href=\"\" data-image-href=\"\/s3\/files\/inline-images\/what%20mid%20east%20war_0.jpg?itok=VO-ItdEc\" data-link-option=\"0\" href=\"https:\/\/cms.zerohedge.com\/s3\/files\/inline-images\/what%20mid%20east%20war_0.jpg?itok=VO-ItdEc\"><img fetchpriority=\"high\" decoding=\"async\" data-entity-type=\"file\" data-entity-uuid=\"9d2b50e1-be87-493a-b5d4-4e36ef67881d\" data-responsive-image-style=\"inline_images\" height=\"446\" width=\"500\" class=\"inline-images image-style-inline-images\" src=\"https:\/\/assets.zerohedge.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/what%20mid%20east%20war_0.jpg?itok=VO-ItdEc\" alt=\"\" \/><\/a><\/p>\n<p>That\u2019s the case for several reasons. First, inventory draws have eased immediate pressure. Second, China is keeping its oil imports subdued. Third, some energy workarounds have emerged. Lastly, there has been some demand destruction.<\/p>\n<p><strong>This is not a sustainable long-term dynamic, but for a few weeks, or months at most, the market may continue to say \u201cthere is no pain\u201d<\/strong> in spot oil prices even if wide crack spreads were already telling another story on refined products before this latest fighting started.<\/p>\n<p><strong>The key question is if this is a temporary or a longer-term geopolitical issue: arguably it\u2019s both. <\/strong>However, the US may be gambling it can resolve the Hormuz situation to the energy market\u2019s satisfaction before things become critical.<\/p>\n<h3>MoU are receding<\/h3>\n<p>The Hormuz disagreement stems from the MoU\u2019s Article 5, which stated:<\/p>\n<blockquote>\n<p><em>\u201cUpon the signing of this MoU, Iran will make arrangements using its best efforts for the safe passage of commercial vessels, with no charge for 60 days only, from the Persian Gulf to the Sea of Oman, and vice versa. The traffic of commercial vessels will immediately start, and considering the need for removing the technical and military obstacles, and de-mining by Iran, will be instated within 30 days. Iran will conduct dialogue with the Sultanate of Oman, to define the future administration and maritime services in the Strait of Hormuz, in discussions with other Persian Gulf Littoral States, in line with applicable international law and the sovereign rights of coastal states of the Strait of Hormuz.\u201d <\/em><\/p>\n<\/blockquote>\n<p><strong>Iran took this to mean it controlled all of Hormuz<\/strong>, including outside its own territorial waters, and could toll maritime traffic there.<\/p>\n<p><strong>The US took it to mean that Iran couldn\u2019t and set up an alternative toll-free route <\/strong>via Omani waters. Iran has since attacked ships using this alternative route. That was the proximate trigger for the latest rounds of US strikes on Iranian facilities on islands within Hormuz and along its coastline aimed at degrading Tehran\u2019s ability to project control over the waterway; and of Iranian counterstrikes.<\/p>\n<p><strong>The MoU therefore collapsed over the easiest of its contradictions to resolve, <\/strong>tolls, which could have been relabelled as \u2018fees\u2019. That presents a daunting challenge for market optimism as it implies US-Iran tensions are here to stay on multiple fronts.<\/p>\n<p><strong>However, <em>it also focuses the immediate problem \u2013and US and Iranian attention\u2013 on physical control of Hormuz.<\/em><\/strong><\/p>\n<h3>A distant ship smoke on the horizon\u00a0<\/h3>\n<p><strong>The message from US CENTCOM is clear: <\/strong>\u201c<em>The Strait of Hormuz is open to all vessels seeking to lawfully transit the international waterway. US forces are positioned and prepared to ensure that freedom of navigation remains available despite unwarranted Iranian aggression, harassment, threats, and arbitrary declarations. Iran does not control the strait. <strong>Traffic is flowing<\/strong>.<\/em>\u201d In pledging this, the US aims to ensure that Hormuz doesn\u2019t bother markets the way that it did earlier in the war. That implies:\u00a0<\/p>\n<p>1. Taking out Iranian facilities in and along Hormuz so the threat to the southern Omani channel is diminished.\u00a0<\/p>\n<p>2. Providing defensive cover for ships passing through from drones, missiles, small boats, and mines, etc.\u00a0\u00a0<\/p>\n<p>3. Shielding GCC allies, particularly their energy and critical infrastructure, but where stocks of missile interceptors are reportedly low. Very notably, Iran has so far not struck at these key GCC facilities again in recent attacks. That could suggest Tehran realises there are limits to what it can do to its neighbours if it also wants to offer alternative regional leadership ahead.\u00a0\u00a0<\/p>\n<p><strong>These US tasks, mirroring the late-80\u2019s Operation Earnest Will in the Iran-Iraq War&#8217;s Tanker\u00a0phase, may require help from the GCC and NATO. <\/strong>While US allies have been reticent to (publicly) act in this regard until now \u2013and the Saudis blocked Operation Project Freedom with the same goal\u2013 that dynamic may change with the recent narrow avoidance of an energy crisis and the narrative that Iran alone is now blocking Hormuz.\u00a0\u00a0<\/p>\n<p>Moreover, it has been revealed that the US continued with a covert version of Project Freedom\u00a0anyway without Saudi assistance.\u00a0<\/p>\n<h3>You are only coming through in waves\u00a0<\/h3>\n<p><strong>It\u2019s credible to assume US (and GCC\/coalition) naval escorts with air cover could move substantial energy volumes through Hormuz via Omani waters even under duress. <\/strong>Recent operational data suggest the US military directly escorted tankers carrying significant amounts of oil successfully through the Strait. The US claims this was as high as 7 million barrels per day. Sustained throughput of meaningful amounts of oil and products via these military escorts appears theoretically feasible, albeit at higher costs from insurance premia and longer transit\u00a0times. That turns a serious supply shock into a manageable disruption.\u00a0<\/p>\n<p><strong>At the same time, it\u2019s realistic to expect that on top of a cancelled Iranian oil sanctions waiver, the US could reimpose its blockade on Iranian oil to increase economic pressure on it.\u00a0\u00a0<\/strong><\/p>\n<p><strong>We can also expect more efforts to build alternative supply chains and pipelines that avoid Hormuz as possible around it. <\/strong>None of them are a short-term palliative to match the Saudi East\u00a0West pipeline to Yanbu, but in the longer run they will reduce Iran\u2019s leverage even further.\u00a0\u00a0<\/p>\n<h3>Your lips move but I can\u2019t hear what you\u2019re saying\u00a0<\/h3>\n<p>President Trump has called the Iranians \u201cliars\u201d and \u201cscum\u201d and Iran has stated it wants \u201crevenge\u201d and to kill him. Both sides have made their red lines explicit and have shown they are prepared to enforce them kinetically. The most positive near-term path is continued tit-for-tat pressure, punctuated by attempts at limited talks that produce little beyond contradictory statements.\u00a0\u00a0<\/p>\n<p>Markets pricing for a resolution of this crisis from a diplomatic perspective or a \u2018TACO\u2019 are\u00a0likely wrong. <strong>However, US hard power could also achieve the same benign outcome.\u00a0\u00a0<\/strong><\/p>\n<h3>I can\u2019t explain, you would not understand\u00a0<\/h3>\n<p>Markets and analysts are rightly confused by all the contradictory signals being seen around this crisis: declining inventories, wide crack spreads, the renewed cut-off of Iranian oil, intensifying military action and perhaps more later \u2013 yet energy prices have not blown out. It perhaps helps to\u00a0underline who has been winning and losing and who could emerge as the final victor and how.\u00a0<\/p>\n<h3>This is not how I(ran) am<\/h3>\n<p>Iran was heavily beaten militarily while exposing key US defensive weaknesses; then it was handed a win in peace negotiations due to energy market pressure on Trump; now, with oil prices contained, it has overplayed its weak hand and is under a new phase of US pressure:\u00a0<\/p>\n<ul>\n<li><strong>Iran could potentially lose effective control of Hormuz.\u00a0<\/strong><\/li>\n<li>Iran gets no sanctions relief as well as no oil sales if the US blockades it.\u00a0<\/li>\n<li>Iran gets no assets unfrozen nor a $300bn in FDI for an economy shattered by the recent war.\u00a0<\/li>\n<li>In Lebanon, peace progress has been on Israeli and Lebanese not Iranian\/Hezbollah terms;\u00a0<\/li>\n<li>Iran\u2019s proxy in Syria has been lost and is working on a pipeline to help Iraq avoid Hormuz; Iraq\u2019s pro-Iranian militias are being constrained by the government; the Houthis remain quiet; and Hamas has agreed to cede power in Gaza, if not disarm.\u00a0<\/li>\n<li><strong>Iran\u2019s highly enriched uranium will clearly not be discussed<\/strong>, with reports Tehran is trying to rebuild its nuclear facilities. The US will have to address this too, but that perhaps via the air rather than boots on the ground, as in 2025.\u00a0<\/li>\n<li><u><strong>None of that means the US is aiming at regime change <\/strong><\/u>even if Israel says it is. Yet, Tehran could find itself regionally shrunken, economically \u2018caged\u2019, and geopolitically ignored.\u00a0<\/li>\n<\/ul>\n<p><strong>But that\u2019s only if the US wins the Battle of Hormuz. <\/strong>As repeatedly stressed, a US defeat or retreat would flip the script. That\u2019s why we have continuously argued the US will use kinetic force (and, if\u00a0absolutely necessary, radical economic statecraft in the energy sector, i.e., NAFTA &gt; NAPHTHA)\u00a0<\/p>\n<h3>I have become Comfortably Bomb<\/h3>\n<p>Markets can therefore enjoy a form of geopolitical anaesthesia: \u201c<strong>geopolitical risk equals higher energy prices<\/strong>\u201d is not firing fully because so much oil has been injected into our global system.<\/p>\n<p><strong>The US SPR cushion could last a few more months at current rates of depletion; so could Japan\u2019s SPR; and China has kept its oil import volumes subdued and has vast reserves. <\/strong>Indeed, there\u2019s little logic &#8211;beyond a statecraft escalation vs the US&#8211; for China to restart buying oil aggressively while the US undertakes military action to try to free up Hormuz which, ordinarily, would suit China. (The only caveat being that Iran has promised a \u2018friends and family\u2019 discount to Chinese ships on its proposed tolls.)<\/p>\n<p><strong>As such, the market seems to be telling the US to \u2018comfortably bomb\u2019 \u2013 but only on the unspoken assumption that its attempts to keep Hormuz open work. <\/strong>That is our geopolitical base case given the historical track record and the overall stakes.<\/p>\n<p>However, if it fails, and\/or if Iran steps up its attacks against GCC energy and infrastructure regardless of the regional bridges (and refineries and desalination plants, etc) that it burns, then we would face a serious global energy crisis, and with much less left in the tank as potential mitigants.<\/p>\n<p>At the least, the US &#8211;with midterms looming&#8211; would again have to pause until after them; and at the most, we could see the return of narratives heard a few months ago and still echoing in places &#8211; that the US is unable to use its military power to achieve its strategic goals, with enormous geopolitical and geoeconomic consequences.<\/p>\n<p>The full implications of that thought should be enough to leave any strategist comfortably numb.<\/p>\n<\/div>\n<p>      <span class=\"field field--name-uid field--type-entity-reference field--label-hidden\"><a title=\"View user profile.\" href=\"https:\/\/cms.zerohedge.com\/users\/tyler-durden\" lang=\"\" class=\"username\" xml:lang=\"\">Tyler Durden<\/a><\/span><br \/>\n<span class=\"field field--name-created field--type-created field--label-hidden\">Mon, 07\/13\/2026 &#8211; 22:00<\/span><img decoding=\"async\" src=\"https:\/\/assets.zerohedge.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/what%20mid%20east%20war_0.jpg?itok=VO-ItdEc\" title=\"Comfortably Bomb\" \/><\/p>","protected":false},"excerpt":{"rendered":"<p>Comfortably Bomb By Michael Every of Rabobank Hormuz update: Comfortably Bomb Summary The US-Iran MoU appears to have collapsed sooner than we had thought. With both sides striking the other, US efforts will turn to ensuring energy can flow through Hormuz \u2018the hard way\u2019 via escorting ships through it. For now, markets are saying the&hellip; <a class=\"more-link\" href=\"https:\/\/buglecall.org\/?p=635040\">Continue reading <span class=\"screen-reader-text\">Comfortably Bomb<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":635041,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[18,19,10,21,12,11,9],"tags":[],"class_list":["post-635040","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cancel-culture","category-censorship","category-civil-liberties","category-election-integrity","category-equal-justice","category-free-speech","category-religious-freedom","entry"],"_links":{"self":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/posts\/635040","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=635040"}],"version-history":[{"count":0,"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/posts\/635040\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/media\/635041"}],"wp:attachment":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=635040"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=635040"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=635040"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}