Roundup: It's Monday, So The New Negotiations With Iran Are Starting, Right?

Of course not. That was all Trumpian BS—outrageous lying. The Iranians never agreed to anything. In fact, they rejected Trump’s offer to butt out of Hormuz:

The Hormuz Letter @HormuzLetter

4h

BREAKING: The US has made a concession to Iran regarding the closure of the southern shipping route in the Strait of Hormuz, agreeing on keeping the southern route fully closed, per Al Mayadeen citing an Iranian source.

Iran however still rejected the latest US Hormuz proposal, insisting the Strait of Hormuz will not fully reopen until the war ends.

Which makes complete sense. In effect, Trump offered a partial return to the MOU—without returning Iran’s money. Why would Iran agree to that, trusting Trump? They’ve made it clear that they want revenge and that they know that time is on their side. Further, they won’t assist Trump’s market manipulation op before the midterms—and China’s on their side. Iran needs to keep this thing going, attriting the living shit out of Trump and the US military while applying economic pain. They may even decide to escalate. Don’t believe that the midterms and escalation—whether economic or military or both—are in Iran’s calculus?

The Hormuz Letter @HormuzLetter

1h

BREAKING: Iran believes Trump will ultimately be forced to make major concessions including a $300B Iran reconstruction package, letting Iran control Hormuz, and accept all of Iran’s core demands as the US falls into a “strategic stranglehold,” senior Iranian officials tell Reuters.

Iran is pursuing a strategy of calibrated escalation, increasing the economic and political costs for the US and its allies until Trump becomes more willing to compromise, particularly over the Strait of Hormuz. Iranian officials say sustained pressure will leave Trump with no choice but to negotiate on Iran’s terms, especially looking ahead to the November midterms.

Iran’s big advantage is that it “can hurt the regional states and the global economy,” with Iran believing it can tolerate economic pressure longer than a US-led coalition can tolerate recurring disruption to global commerce and energy markets.

And it gets even worse. We’re starting to see regime cohesion falling apart. Anyone who has ever worked in a government bureaucracy will realize that the people in charge NEVER ask the little people for advice and NEVER admit that they’ve lost control of the situation. That’s how bad this is, and it confirms to me that driving force behind Trump’s latest TACO was almost certainly military pushback:

The Hormuz Letter @HormuzLetter

2h

BREAKING: US CENTCOM sent an email to a broad group of military analysts last week saying “we are looking for new creative and unconventional ways to pressure and punish Iran” because “we need ideas,” per CNN.

A source close to CENTCOM says “CENTCOM is looking at everything, acknowledging it needs to reevaluate the strategy.” The crowdsourcing-style query, which military officials said was unusual over email, is one sign of the limited and potentially unpalatable options available to Trump to force Iran into a deal on his terms.

This comes a week after a US official said Trump is “exasperated” and there was “not a real strategy for how long or what they should do.”

IOW, Trump’s “frustration” is just Trump, as usual, blaming everyone else for his own screwup. Again, the short version: Trump doesn’t dare cut and run because he went into this without consulation and against advice, but he now knows beyond a doubt that there will be crackup before the midterms.

BTW, you’ll find a much longer writeup on that aspect at MoA. It’s very good:

War On Iran: – Another TACO – Iran’s Need To Escalate

In the meantime, Iran has resumed attacks on ships in Hormuz that don’t follow instructions and, according to Doug Macgregor, has shot down another expensive MQ-9 drone. As for negotiating?

The Hormuz Letter @HormuzLetter

1h

BREAKING: Trump’s own US officials directly reject Trump’s claim from last night that Iran negotiations are set to begin on Monday afternoon, saying there are no “new” or novel negotiations planned or ongoing, per CBS News.

In fact, Iran’s FM Araghchi isn’t even in Iran—he’s on a pilgrimage, currently in Najaf, Iraq. And for a rundown of reasons why Iran believes a deal with Trump is impossible:

Iran’s Leaders Now Doubt a Peace Deal Is Possible

And when it comes to diplomacy with the United States, Iranian analysts are often counting. They are counting the times the Trump administration has violated agreements, or interrupted negotiations with military attacks. They are counting the reasons a comprehensive agreement seems impossible to reach with this White House.

First, at a technical level, the Trump administration was unable to execute even the most basic confidence-building measures of the MOU. After it was signed, no Iranian assets were released; while a waiver was initially issued to permit Iranian oil exports, it was never fully implemented and ended up being rescinded. Iranian leaders are also looking to other contexts. In Venezuela, where the administration has used its complete political control to make a full-court press for economic engagement with the U.S., reports indicate that American oil companies are struggling to make headway, even as Trump touts his big investment targets.

Second, in the domain of politics, Iranian policy experts discern a growing rift between the Rubio and Vance camps and are concluding that the administration is inherently dysfunctional. ...

Finally, at an individual level, there is a growing sense that Trump is too erratic to stick by his own deals.

Not to mention Witkoff and Kushner—which I just did.

Now here’s some polling results that have to scare Trump as he heads toward the midterms. The country is deeply divided, the numbers are sliding in the wrong direction—from Trump’s POV—and economic pain will surely make matters worse:

I’ll wind up with a brief transcript—brief when you understand that the original video is about two hours long. This is two economists talking to each other—Chris Martenson and Philip Pilkington—so you have to allow for that, but I think you’ll find it intelligible and helpful. This is basically PP explaining his ideas on what’s behind the oil price manipulation. No surprise—it’s about the midterms. But there’s more, much of it working together with much of the above. The intra-regime dynamics of the war, Trump’s trip to China, China - Iran coordination, Trump’s double crosses, etc. I think you’ll like it:

Fake Markets, Real Consequences

I think I’ve kind of figured it out. Basically--this is reading the tea leaves--what happened is, the war kicks off. We won’t go into the origins of that, but you can see that it’s not backed by the Deep State in the US, the Pentagon is scrambling to put together war plans. The big tell for me was there was no concerted propaganda effort like we saw after the beginning of the Ukraine war. The Deep State never intended attacking Iran because the whole idea was bonkers. The Ukraine war was bonkers, too, but at least you could put together a plan--in a sense. Sort of. The Ukraine war had a margin of safety--as the United States you could step away from it. The Iran war? You’re all in, because there are no proxies as cutouts--it’s just you going to war with Iran.

So there was a big scramble going on, and then we began to see the shock effects--rising price of oil, and so on. I think the softer manipulation kicked in immediately because it was already there from the Red Sea (Houthi) period. Assuming the mechanisms were there for manipulation, the bots were in place--the organization was in place to do that. But that couldn’t get it done. The price of oil was already pinging around above $120 - $150--today IMO it’s probably north of $200. So they were bringing pressure to bear to bring the price down to a tolerable $110 -$120, but they weren’t doing what’s been done recently, in terms of “hard” manipulation. Crazy stuff, like $70/barrel in the middle of a Strait of Hormuz closure--lunatic stuff. They weren’t going that far yet.

So what I think happened then was, basically, the Treasury responded formally and had a working group and said, ‘OK, we don’t know what to make of this war, but we need to get through to the midterms (elections). We can’t have an inflation crisis before the midterms.’ And, really, what an inflation crisis will come out as is a bond crisis, because the suppression of the oil price releases bond price control--you can see the correlation between the two if you run it. That’s what the Treasury is actually targeting, IMO. So basically they said, ‘How do we get from here to there?’ And they put together a plan. I think the plan was relatively coherent on a short term, kicking the can down the road, basis. It was also irresponsible, because they were just playing politics, but at least it’s coherent.

Basically, the plan involved getting the Chinese to buy a lot less oil. So they go over to Beijing and they do whatever the Chinese want. You remember the optics of that trip--Trump almost put on a Mao suit. I was, like, ‘Whoa--you guys are really going for it!’ But clearly they wanted something, and I think what they wanted was for the Chinese to ease up on the oil demand. And it looks like the Chinese agreed to it. But I think the agreement the Chinese struck was: ‘OK, you do this MOU’--I bet this was discussed in Beijing, point by point--’it’s 60 days. This gives you 60 days to resolve the crisis that you created and we will give you respite for those 60 days.’ And then the Treasury guys can go back and say, ‘OK, do the numbers on that--between the SPR, private inventories, a 60 day ceasefire during which we’ll be able to get a little bit of oil through, and the Chinese halving their demand and tapping into their enormous reserves, we’ll get past the midterms.’

And then what happens? Trump wakes up on the wrong side of the bed and tears the whole thing up. And now if you run the numbers I don’t think there’s any chance that they can get to the midterms. I think they’re flying blind, applying all the tools of the manipulation as hard as they can--in the past two days I think we’ve seen a particularly aggressive push, which seems to me to now include not having proper financial reporting on what’s happening in Hormuz. Not a blackout, but not sufficient attention being paid to it. But I think, since Tucker highlighted it [PP’s theory] people have become aware of it.

I think they’ve got themselves stuck. They’re in a boat without a paddle. There’s no chance now. I just ran the numbers. Even without the Bab el Mandab thing, but including China back to their normal 12M/barrels/day, you don’t get to the midterms. Your SPR runs out before the midterms. And now I recently saw that an Energy official is trying to say that the operational level isn’t 150M, it’s 70M!

CM: No, no, no! They blow out the ESR caverns! That’s 130M barrels we’ll never be able to use for storage if they do that!

PP: Well, that’s the signaling, and you’ve seen how this administration has behaved on multiple issues. Could you see them NOT doing something like that?

CM: [Laughs] What, sacrificing all sorts of strategic long term benefits for short term gain? This administration?

[General yuck it up]

Tracy Shuchart (𝒞𝒽𝒾 ) @chigrl

Jul 30

Cushing crude at 18.599M barrels.

Prior lows: 11.810M (June 2004) and 14.449M (Sept 2008).

Shell capacity was ~27M in 2004 and ~41M in 2008. Today: ~91M capacity.

Working capacity (utilization) is much lower than shell capacity.

2004: 44% of shell, 51% of working. Comfortable.

2008: 35% of shell, 41% of working. Comfortable.

Today: 20% of shell, 24% of working. Uncharted territory.

Renegade Resources estimates operational floor: ~16M barrels. Strip out 2.5M pipeline linefill from today’s print and accessible tank inventory is already there.