The oil conundrum gets worse

It's been a busy few days for anyone who likes their oil cheap and their chokepoints unmolested, so shall we get you up to speed? Let's kick off in...

• 🇮🇷 Iran

After nearly two weeks, those nightly US airstrikes suddenly stopped Friday. This president typically likes to hit harder — not pause — after markets close for the weekend.

So what — and we cannot stress this enough — is going on?

The main theory is Trump took the advice of his top generals: one (Caine) reportedly warned of munitions scarcity, Iranian retaliations, humanitarian costs, and the spectre of a regional war. Another (Cooper) cautioned the entire bombing campaign has reached the limits of its effectiveness, with few targets even left to hit.

Throw in 10-year Treasuries hitting an 18-month high, and Trump hit pause.

But why'd Iran then follow suit? The official line is it's just reciprocal while diplomacy resumes — regime outlets are also crowing about US strategic fatigue, while Trump 2.0 argues it’s actually the hits that’ve pushed the Iranians back to talks.

Either way, Brent crude is now down ~10% from Thursday's $101 peak.

That's a sigh of relief, but really only partial because...

• 🇸🇦 Saudi Arabia

Yemen's Iran-aligned Houthis spent the same weekend launching ballistic missiles and drones at Saudi oil assets for the first time in four years. Why?

Full credit to the group’s marketing director for a motto that leaves little to the imagination: “Allah is great, death to the US, death to Israel, curse the Jews, and victory for Islam” — they frame this latest blockade as retaliation for the decade-long Saudi blockade, which in turn aims to halt Houthi arms supplies from Iran.

Anyway, while a Greek Patriot battery swatted some Houthi attacks away, others hit a Saudi tanker and refinery (Jizan) along the Red Sea. And while Riyadh’s more critical Yanbu hub is another ~900km / 550mi up the coast, the message is still clear: in solidarity with their Iranian patrons, the Houthis are now targeting the exact Hormuz bypass the Saudis have used to keep ~5% of global oil online.

It's a similar strategy to what we're now seeing up in...

• 🇷🇺 Russia

Putin's largest Black Sea oil terminal has now stopped loading tankers as Ukrainian drones keep targeting his war machine. That's a fifth of his seaborne crude exports — almost another 1% of global supply — now offline.

Meanwhile, the nearby Caspian Pipeline Consortium terminal has also hit pause, ending another ~1.5% of global supply. The Kazakhs rely on that CPC for ~80% of their oil exports, which might explain the remarkable scene we just saw over the weekend: on stage with Putin himself, Kazakhstan's Tokayev decried the carnage and urged his ostensible treaty ally to "bring all this to a stop".

Putin seemed vacant in response, perhaps busy wondering how Ukraine’s drones also managed to hit his Caspian arm-parts shipment for Iran, which is now in turn busy vowing retaliation, as if four years of supplying Putin's war machine weren't already enough.

Anyway, with all the above chokepoints choking, it's any wonder we're now seeing...

• 🇮🇶 Iraq

With Hormuz now squeezing another ~4% of global supply from Iraq, Baghdad just announced — with US backing — it'll now sign a deal with neighbouring Syria to revive and expand Mediterranean-bound pipelines that've been dead for decades. The idea is for multinationals like ConocoPhillips to do the repairs in return for lucrative nearby exploration and drilling rights.

But don't chug your Hummer over to the pump just yet: this entire project is still well within the reach of Iranian Shaheds, and is still realistically at least five years — not to mention $8B and a few pro-Iran militias — from completion.

So to recap? The good news is everyone's now hustling for alternatives. The bad news is many of those alternatives still run through someone else's war.