In Dire Straits
Sure Smells like Gasoline and Stagflation
— The US is in three Dire Straits, not just the Strait of Hormuz.
This post is something spontaneous coming out of composing my weekly Update #3 coming next Sunday. This was point one on my “many list of possible updates”. What a time we live in!
While I was going down the “Straits” rabbit hole and in light of the plight of the Cuban people running out of gas, literally, I found that I came to pages of content on what was originally supposed to be an opening line paragraph, at best. That won’t work for a “weekly update”.
Blame it on my drive to get to a coherent answer instead of just dropping one-liners. Let’s take it as it is and if you want, you can hereby follow me down my rabbit hole journey through the Dire Straits.
We’re now 79 days in the “Iran Conflict” that is not a war - there are very important legal and “practical” differences, you see.
Let’s leave this question for later and for constitutional lawyers to solve potentially - and let’s first acknowledge:
The clock’s ticking, relentlessly ever since that fateful February 28. It seems POTUS doesn’t have a “Tick Tock Man” adversary as John Wick did in Parabellum… reminding him that time is running out.
Time fleeting is not the only Dire Strait. The US is in exactly three Dire Straits, if you don’t count Venezuela as a fourth since it seems “solved” (for now).
There’s Taiwan as exemplified by somewhat of a “nothing burger” after the first US-China-Visit ever since Obama graced the office of POTUS. Then there’s Hormuz. But aren’t we missing something? What about Cuba and the almost-silent Naval Blockade? That’s Strait number three - the Florida Straits are the trade route here and Cuba has been a pain in US’s behind ever since JFK defused that Missile Crisis. It seems the Don wants to also solve this “socialist regime” all at once.
But Hormuz and Taiwan are real global issues that affect more than just “U.S. backyard” locations.
Where did all this break apart?
Let’s skip February 28’s grand announcement of “ending Iran’s nuclear capability” by the US President on Truth Social and go right to April 21, which was almost 60 days after the war that is not a war - more on that later - got started.
Mar 21st:
Mar 26:
… and then, Apr 21:
an “infinite” (?) deadline, per the best interpretation.
But, then, May 17th:
So, there is a tick-tock man after all, but it seems Donald J. Trump wants to play the role?
But can they decide on pinning down a deadline? And will they? And whoever are “they”? No one knows outside the chosen few in the inner circle. I think DJT got maneuvered into what was in his mind a “short thing like Venezuela, with some bombing added” and now we’re here, 79 days later. Tick-Tock!
Us mere mortals are stuck with the consequences of energy insecurity in Europe and parts of Asia and it’s us who need to make sense of what possibly can’t be made full sense of.
To begin with, I’m not sure how you’d set expectations with arbitrary deadline movement. How many proposals were sent, and from whom in Iran? My guess is the IRGC still has the say, and there’s a secondary “civic government” that sends mixed messages – that much can be decoded from these arbitrary postings and happenings.
To what truly is going on I’m not sure that there is one answer. My best guess is it’ll continue to be a “a game of chicken”, because the US is quickly running out of time and options on what to do next.
What are the viable options at this point, even? Let’s hypothesize.
Option 1: Start a “Real War”
In the realest sense, “war” usually means some sort of boots on the ground in military speak.
War usually involves a ground invasion of sorts, as cynical as that might sound (and is). Someone comes to take your stuff, asks for satisfaction, you didn’t pay the last energy bill and they asked nicely three times… wars were started for the stupidest reasons.
But when facing Iran the question comes:
What to invade? A totally desolate, bombed Iran with the goal of having Teheran taken, similar to Iraq?
Just go to Kharg Island, on where you’d be a sitting duck, but there’s the coveted “energy infrastructure”? I wouldn’t be able to tell you, since I did not graduate West Point.
While I’d not say it’s “never” going to happen, as this would be denying a small probability – of which there always is one for everything as Nassim Taleb teaches. But I’d personally wager that move would be the most strategically unwise thing ever since phantom WMDs were fantasized about in Iraq as a reason to invade with the end goal of occupying Baghdad.
On top of a materially and probably at this point mentally stretched US military and waning trust and denied airspace in by EU forward base operations allies and US troop pullbacks. There’s also that 90-day deadline fast approaching, at which a conflict that was not a war potentially needs to be ended before voting in the US Congress.
Congress Wakes Up 20 Years After Iraq
Or wait! I guess most didn’t see it, but did the US Congress just take 20 years in order to acknowledge and repeal an authorization for a war-that-isn’t-a-real-war?
Source: Roll Call article (and sourced from the repeal in Congress)
Later, they were almost ecstatic this would make it harder to attack Iran…
https://rollcall.com/2020/01/30/house-votes-to-curb-trumps-power-to-attack-iran/
It can be almost seen as a move of defiance that February 28 happened after this grand “clawback of Congressional war power”.
It’s not without irony, because if you check the table presented on the US Congress website for such official declarations made based on US constitutional law and the amount of “conflicts” started or at least with US military involvement just in this century, you’ll find a stark mismatch. Some of it was “voted for” but never declared a “war”, even though operations were large-scale. Somehow, the tally for “voting in Congress” and “starting to send the troops” has gone off whack it seems?
Judging by past Iraq conflicts, I’d think another “ground engagement” would face more dissent, but would it be made a case of voting after the Ministry of War’s latest maneuvering. Really, it’s just a bit of a “targeted and limited operation”. It’s not a “real war”, see?
So February 28 reset the clock on all the above, bringing back into question what the declaration of war in the “most important democratic document of our time” is worth after all.
I speak of the US Constitution, if you’re still wondering, making CNN ask this little question:
Good question, CNN (March 3, 2026); with more musings in USA Today
Unless Congress finds a way to curb the current US incursions, what’s there to expect?
Maybe it’s …
Option 2: More and harder bombing
POTUS dangled the sword of “total annihilation” very casually – inferring use of WMD if any interpretation is allowed on a cynical, dehumanizing posting like this.
Iran has already proven somewhat resilient, to weeks of massive bombing with all the US arsenal has to offer, and then some from Israel. So, what would it take to bomb them “even more”? WMDs, also known conventionally as “nukes”? And yet, reportedly, it still has way more of its military capability than was announced it seems (CBS) and some say it has “thousands of missiles left to shoot into the region” (Business Insider based on U.S. Intelligence sources).
Inversely: does US still have enough fighting stock at this point? And not just by strongman statements?
-- Source: time.com about Hegseth’s Congressional Hearing (Apr 29), with an ongoing feud about “national secrets leaked” as a sideline (Fox news and others).
And do we need to talk about costs?
Pentagon officials also told lawmakers that the cost of the Iran war has risen to about $29 billion, the vast bulk of which — roughly $24 billion — is related to replacing munitions and repairing equipment but also includes operational costs to keep forces deployed.
(Source: AP News, May 13, 2026)
And wasn’t that the reason why US went there in the first place, to prevent usage of WMDs unto others?
Needless to say, that route would be even more dangerous because in my books, all bets are off by then. This is more than dangerous, this is a “red button” issue for other nuke-bearing nations and I’d regret not having joined the preppers very likely if that happens.
Chances are next to zero, but not zero.
Option 3: Dodge, Duck, Cover, Delay -> the current status of infinite cat & mouse
We are here, currently. I don’t see things changing unless someone forces their hand.
The “do nothing and play the Truth Social posting game” for longer and further out would probably make everyone lose interest outside Iran getting more and more economically “squeezed” while deployment costs keep racking up in the order of more Billions for US tax payers.
How long until no one’s listening anymore or takes the posturing even a smidge of serious, even though the topic is, in fact, deadly serious?
I have no idea, but with the amount of “Trump Truths” already in the dozens ever since the conflict was broken off the fence by US forces, I’d not give that more than two weeks out from here until “something breaks” with that game.
The 60-day deadline is almost over, at which point it’s – yet again, as so often with the DJT administration – made a likely “legal matter” of who interprets the pretty clear “declaration of war” statute in what exact way. End of May will see this matter on the forefront, with a 30-day extension of “pullback operations” usually allowed if anyone still follows anything legally, that is until end of June even that “extended deadline” which was meant of pure “ending of operations” is reached.
What happens at that point is anyone’s guess – my personal take would be Hormuz is bare of large US ships by end of June, and the US might need to end things “unfinished” per their own declarations. Meaning: there’ll be some sort of Trump Truth that declares “victory & mission accomplished” – who knows, maybe they’ll pull another GW Bush filmed on a carrier moment?
That would be epically ironic in light of this truly FUBAR situation.
It’s the US and Israel who started this whole conflict “out of the blue” in February, 2026 based on the “Iran was close to getting nukes” threat carrot dangled in front of the mighty USA.
A “mission accomplished” ending would be poetic maybe, and it would be leaving everyone off worse outside the U.S. – I’d then interpret this whole Hormuz affair as a last poisoned gift, one of many in the midst of a burning and sweltering mess of singed international relations ever since Trump II started his strife of the “Donroe Doctrine”, in which the US goes back to isolationism and a “don’t mess with us” attitude and only takes what it wants or needs, meritocracy be damned.
Is there an Option 4? I don’t think there is, realistically.
If you know someone who still thinks we’re not out of options, forward them this!
Where will this lead? Stagflation, very likely.
Going forward securing oil, gas and related raw materials inputs will be a costly issue for Europe and parts of Asia – Sulfur, Naphtha, Phosphate and Fertilizers – this is a gigantic inflationary mess, akin to 1973 on steroids, despite what AI pundits would wish for in their infinite naivete.
The UAE, one of the main providers of Gulf oil, are already repositioning, abandoning seaways through Hormuz via pipeline plans. And there’ll be more scrambling to avoid the Strait if you can– making everyone poorer in that vicinity and also outside by having to pay more for basic inputs.
At this point it’s unclear what economic damage will follow in Iran itself, besides the damage wrought already on a pure infrastructure destruction level – so in a sense, their economy might well and utterly be “destroyed” per DJT’s postings. If push came to shove and there’s a “no deal” scenario my best guess is US won’t care. They just leave worst case and that’s it. No reparations for Iran who needs to take care of itself - the worst possible scenario in light of only bad ones.
For the world, any scenario this has wide implications:
This has all the makings of getting the world its 2nd “great repricing” of energy and raw inputs, all while we at the same time might be about to enter a recession, as central bankers kicked the can down the road the last two times (GFC and Covid with their “zero rate” monetary regimes that inflated asset prices to where they are today.
A recession might actually already ravage Europe’s number one economy Germany. But obviously no one wants to acknowledge “not growing” and still get elected or be empowered by enacting a “growth agenda”. So even Germany’s whimsical government’s economic advisors somehow seem to think there’s still growth left in the old spent lady, despite featuring the most devastating and self-defeating energy policy within Europe, if not the globe.
As long as your remaining pithy of anemic growth is “positive” on paper, you don’t need to declare an official recession and curb spending. So let’s try to inch lower to 0.04-0.01% “growth” first before admitting defeat three years after the fact. And in case you’re wondering, the new and potentially suicidal to future generations’ wealth debt package is enabling the “big state spending”. All this based on the highest debt package enacted since WW II. At least part of the spending based on this debt on a fiscal level would then be “fed into GDP”. Sketchy measures beget sketchy statistics.
Maybe it even makes for a great case study on “How to Manufacture Growth”, should future economists want to comb their own ilk’s outputs and look for any long-term effects.
The Dire Straits and Final Thoughts
All that said, until the case of not only the Hormuz Strait, but also the case of Taiwan Strait are only part of the energy equation right now in geopolitics.
Theres also the sad case of Cuba and the Straits of Florida as the newest piece of the geopolitical puzzle that makes for the “Donroe Doctrine” as enacted on the global stage.
Unless all these “Dire Straits” get solved – and ideally all at once and soon, and all of this energy and trade nightmare magically disappears, we’ll still be seeing the biggest reshuffling of international energy in decades ever since the petrodollar system was installed.
All of the current directional movement does not bode well for stock markets not really looking any further than the next earnings release from Nvidia - this week on Wednesday.
I’d say the energy trade as reflected in mid-term energy prices has some serious legs - that no one currently seems to see for all the AI fog blowing around in markets.
“We ain’t seen nothing yet” is my personal motto for 2026, underlined by this iconic soundtrack:
Dire Straits – Heavy Fuel
Regarding Iran-TACO.