Price:

POLITICS

Oil blockade strains US alliances as markets ignore supply shock

Thursday, May 7, 2026 · from 7 podcasts, 10 episodes
The EconomistBreaking PointsJack Mallers ShowThe DailyBTC SessionsBanklessMacro Voices
  • Iran's strikes cripple alternate routes, proving the US cannot secure Middle East energy flows.
  • A $120 oil price signals a permanent inflation reset that equities and politics ignore.
  • Germany and Japan publicly criticize US strategy, eroding NATO's core deterrence credibility.

The US strategy for the Strait of Hormuz is failing on three fronts: militarily, economically, and diplomatically. Iran’s ballistic missile strike on the UAE’s Fujairah terminal - built specifically to bypass the strait - proved there is no safe corridor. On Breaking Points, Robert Pape argued the US is in an 'escalation trap,' putting pawns on the board and daring Iran to take them. Iran is taking them, with reports of 52 ships breaching the naval blockade.

"The US Navy kept 3,000 km from Iranian shores to avoid missile strikes."

- Trita Parsi, Breaking Points

The economic shock is being systematically underpriced. The closure has created a 13 million barrel per day supply hole, four times larger than the Ukraine war shock. Analyst Rory Johnston told Breaking Points oil could hit $180-$200 by June if the strait stays closed. Yet, as The Intelligence notes, algorithmic traders react to optimistic tweets while ignoring the three-month physical lag to restart flows.

Diplomatic cohesion is fracturing. German Chancellor Friedrich Merz told schoolchildren the US was being 'humiliated,' prompting Donald Trump to order 5,000 troops withdrawn from Germany. The Intelligence's Tom Noddle argues the core damage is to NATO's credibility, as deterrence relies on dependability, not just troop counts. Japan now slaps a $350 surcharge on airline tickets, a direct pass-through of the crisis to US allies.

"The market is in denial about the inevitable global energy crunch."

- Erik Townsend, Macro Voices

Internally, Iran’s regime has shifted from a clerical theocracy to a military dictatorship, with Revolutionary Guard generals now making key decisions. According to Farnaz Fassihi on The Daily, these pragmatic generals, motivated by power and money, are openly proposing to let U.S. oil companies invest in Iran for reconstruction - a once-unthinkable reversal. Their plan is to monetize the strait as a toll road, calculating it could generate more revenue than oil exports.

The consensus across podcasts is that the US faces a strategic defeat. The security umbrella Gulf states relied on is now seen as unreliable, and the primary tool of dollar sanctions is eroding. As Daniel Lacalle noted on Macro Voices, only the US and China have the energy insulation to endure a long stalemate; Europe faces margin-crushing cost inflation. The blockade isn't a knockout blow - it's a slow-motion failure that is restructuring global alliances and guaranteeing a new wave of inflation.

#War#Energy#Diplomacy
Trita ParsiNATOStrikeUAEChinaGermanyIranJapanStrait of Hormuz

Source Intelligence

- Deep dive into what was said in the episodes

The Intelligence from The Economist
The Intelligence from The Economist

On the off chancellor: Friedrich Merz, one year in • May 6

  • Germany's projected economic growth rate for this year was halved by the government, partly due to the Iran war and the Strait of Hormuz closure impacting energy prices.
  • Merz told schoolchildren the US has no strategy in Iran and is being humiliated; Donald Trump responded by threatening to withdraw 5,000 US troops from Germany.
  • Tom Noddle explains the Pentagon cancelled a 2024 US-German missile launcher deployment deal, a key piece of European deterrence now lost.
  • Noddle argues the core damage from the spat is to NATO's credibility, as dependability and consistency are the foundation of deterrence, not just troops or missiles.
  • Catherine Nixey argues modern US war rhetoric, exemplified by a White House video splicing Gladiator and Transformers with actual strikes, lacks the moral elevation and cultural allusion of past oratory.
  • Nixey contends great wartime oratory, like Lincoln's Gettysburg Address or Churchill's speeches, borrowed cultural allusions to elevate tone and frame conflict as a defense of peace and a way of life.
Also from this episode: (7)

Politics (3)

  • German Chancellor Friedrich Merz took office one year ago as the oldest new chancellor in 75 years, leading a coalition with the Social Democrats.
  • Tom Noddle reports Merz's approval ratings are poor, the government is embroiled in internal squabbles, and the hard-right AfD now leads in opinion polls.
  • A brewing reform of Germany's public pension system, which consumes about a quarter of the federal budget annually, threatens further coalition conflict.

AI & Tech (3)

  • Tom Wainwright says OpenAI, Google, Microsoft, and Amazon are inserting ads into chatbots due to high operational costs, with OpenAI expecting to burn through $25 billion this year.
  • Wainwright notes ChatGPT shows nearly a third of its ads after the 10th turn in a conversation, focusing on brand-building rather than direct-response clicks.
  • SimilarWeb analysis found users shown ads on ChatGPT had conversations lasting about 20 turns, no different from users not shown ads, suggesting limited initial repellence.

Big Tech (1)

  • OpenAI reportedly targets $2.5 billion in ad revenue this year and $100 billion by 2030, aiming to become a major ad seller but facing challenges in data and targeting sophistication.
#Diplomacy#Middle East#Models#Macro#Media

Drill pickle: oil prices still misjudge shock • Apr 30

  • The current oil supply shock is the largest in history, with a 13 million barrel per day deficit from the Strait of Hormuz closure, far exceeding the 3 million barrel per day disruption feared from the Russia-Ukraine war.
  • Oil prices around $125 per barrel are misleadingly low because buffers absorbed the initial shock. These included a pre-war market surplus, increased Gulf exports before conflict, and the release of rich countries' strategic petroleum reserves.
  • Hidden demand destruction in developing nations is masking the true deficit. Cooking oil and petrochemical feedstock shortages in Asia and Africa have already rationed consumption outside major tracked markets.
  • Mathieu Favas argues oil prices must rise further to ration consumption in rich countries as buffers deplete, forcing a contraction in demand for gasoline, diesel, and jet fuel.
  • Reopening the Strait of Hormuz would not provide immediate relief. Restarting production, repositioning tankers, and refining crude would take three to four months before markets normalize.
  • The UAE's departure from OPEC matters for the future. It could export more post-crisis and may encourage other members to leave, potentially leaving Saudi Arabia alone to manage production cuts.
Also from this episode: (8)

Markets (1)

  • Financial markets react asymmetrically to oil news. Prices fell $10 on a false reopening announcement but rose only $5 when it was retracted, partly due to algorithmic traders reacting to headlines over fundamentals.

Politics (3)

  • Polls indicate the French populist right, the National Rally, is the only certainty for the 2027 presidential runoff, with Marine Le Pen or Jordan Bardella as its candidate.
  • Sophie Pedder says the French centre and left are fragmented with no clear frontrunner to oppose the National Rally, risking a final choice between political extremes.
  • Succession for Macron's centre hinges on a rivalry between former prime ministers Édouard Philippe, currently leading in polls, and Gabriel Attal, who leads Macron's Renaissance party.

Elections (2)

  • A July 7th court appeal ruling will determine if Marine Le Pen can run for president; if banned, Jordan Bardella will lead the National Rally ticket.
  • Sophie Pedder notes French presidential polls 12 months out are historically unreliable, with half of the last six elections failing to predict the final runoff candidates.

Sports (2)

  • Brazil's football team qualified fifth in South America for the expanded 48-team World Cup, winning only eight of its 18 qualification matches.
  • Brazil holds the best men's World Cup record with 76 victories in 114 matches and is the only country to have played in all 22 tournaments.
#Macro#Energy#Markets#Elections#Europe
Breaking Points with Krystal and Saagar
Breaking Points with Krystal and Saagar

5/5/26: Iran Hits Critical UAE Facility, Prof Pape On Iran Escalation, Trump Courts Fetterman, Voting Rights Act Debate • May 5

  • Iran attacked the UAE's Fujaira oil terminal with twelve ballistic missiles, three cruise missiles, and four drones, hitting a facility that bypasses the Strait of Hormuz.
  • Robert Pape says the U.S. strategy of Project Freedom is a high-risk gambit to break Iran's blockade of the Strait of Hormuz by daring Iran not to shoot back. He argues hitting one U.S. vessel would trigger a major escalation.
  • The Trump administration is downplaying the UAE attack, with General Kane stating Iran's nine attacks on commercial vessels and more than ten on U.S. forces are below the threshold for restarting major combat operations.
  • A trapped Indian ship captain stated his company prohibits transiting the Strait of Hormuz until officially declared safe, illustrating civilian reluctance to join Trump's military project.
  • Sagaar argues Iran views the UAE as an extension of Israel, citing Israeli-provided Iron Dome defenses and IDF soldiers stationed there, making it a closer, weaker target.
  • Robert Pape says pressures driving Trump include global disrespect from Iran and Germany, NATO's disintegration, and the humiliation of a pending meeting with President Xi, pushing him towards risky action.
  • Lindsey Graham advocated for a 'Second Amendment solution' in Iran, suggesting flooding the country with guns to enable an uprising, a model used in Libya and Syria.
Also from this episode: (6)

Politics (6)

  • Republicans are actively courting John Fetterman to switch parties, complicating Democratic Senate math. Fetterman reportedly spends time in the Republican cloakroom, not with Democrats.
  • Pennsylvania Governor Josh Shapiro allegedly pushed a firefighters union to endorse Republican Stacy Garrity for state treasurer after the Democratic candidate criticized him.
  • A Supreme Court decision curtails the Voting Rights Act provision protecting majority-minority districts. Analysts estimate this could shift roughly seven House seats to the GOP.
  • Krystal argues the decision is a setback for black representation in the South, rooted in ongoing racial discrimination. Sagaar counters that the 'dilution' principle violates equal protection and is a relic, citing recent Democratic gerrymandering in Virginia.
  • Barney Frank, in a CNN interview, argued progressives should prioritize more accepted issues over controversial ones like transgender athletes in women's sports, drawing criticism for his role in crafting Dodd-Frank and subsequent bank lobbying.
  • Project Freedom aims to guide trapped vessels. General Kane stated 1,550 commercial vessels with 22,500 mariners are currently trapped in the Arabian Gulf.
#War#Middle East#Elections#Diplomacy

5/4/26: Oil Spikes Amid Hormuz Chaos, US Bases Damaged By Iran, Spirit Airlines Goes Bankrupt • May 4

  • Iranian state media claims it struck a US warship near Jask Island, but US officials deny any Navy ship has been hit.
  • The US changed its rules of engagement to authorize strikes on immediate threats like IRGC fast boats or missile positions in the Strait of Hormuz.
  • An Abu Dhabi National Oil Company (ADNOC) tanker was reportedly struck while transiting the Strait of Hormuz.
  • Trita Parsi notes Iran's economy did not collapse as predicted by the Foundation for Defense of Democracies, revealing the blockade's failure.
  • Parsi argues the US Navy kept 3,000 km from Iranian shores to avoid missile strikes, a distance Trump's 'Project Freedom' rhetoric ignores.
  • Iranian proposals for ending the conflict demand US withdrawal from the region, lifted sanctions, asset release, reparations, and a full ceasefire.
  • Parsi says Iran's potential offer of a nuclear fuel 'needs basis' could mean zero enrichment for 5-7 years, aligning with a Trump term.
  • China declared it will no longer comply with US sanctions on Iranian oil, signaling a direct geopolitical challenge.
  • Trita Parsi argues the Iran conflict represents a US strategic defeat worse than Iraq, undermining global military primacy and accelerating multipolarity.
  • Kuwait has not exported a single barrel of oil for 30 days, a situation unseen in 30 years.
  • CNN reports Iran's acquisition of a Chinese satellite gave them high-resolution imagery, enabling strikes on US bases like Huttar's Ledded Air Base.
  • Trita Parsi predicts Gulf states will diversify security, reduce US bases, and force the US to pay for rebuilding damaged infrastructure.
  • Jet fuel price doubling killed Spirit Airlines, with a Boeing 777 fill costing up to $225,000 in Seattle as of May 2.
Also from this episode: (2)

Markets (2)

  • Sagaar notes major airlines targeted Spirit by discounting 20 seats on competing routes weeks before flights, pushing Spirit's profitable routes into the red.
  • Spirit's shutdown leaves 809,000 seats unfilled across 4,119 domestic flights in the first two weeks of May.
#War#Macro#China#Energy

4/30/26: Trump Orders Indefinite Blockade, US Tries To Collapse Iran Economy, Trump Delusional Oil Bet • Apr 30

  • Saagar claims the US lost 50% of its interceptor capacity in the 38-day war. Krystal says the world now sees a breakdown of the US global empire.
  • Saagar says Iran offered a five-year enrichment moratorium with IAEA inspections and downblending uranium to Russia, but the US rejected it because it resembled the JCPOA.
  • Krystal cites Treasury interventions to suppress oil prices but says they have a limited shelf life. She references Ryan reporting next week on the direct market manipulation.
  • Saagar says Japanese Airlines now charges a $350 surcharge per ticket for North America/Europe flights, more than double the pre-war rate, with South Korean airlines following suit.
  • Krystal and Saagar criticize Pete Hegseth for refusing to acknowledge war costs. Ro Khanna stated the blockade will cost the average household $5,000 extra for gas and food this year.
  • Guest Rory Johnson says the Strait of Hormuz closure has already caused a 600 million barrel supply hit, guaranteeing at least a 1 billion barrel shortfall for the year.
  • Rory Johnson notes US commercial petroleum inventories fell by a headline 17 million barrels plus a 7.1 million barrel SPR draw, a massive 24 million total draw versus a normal ±5 million range.
  • Rory Johnson argues Iran has 10-30 days of onshore and floating tanker storage before having to shut in wells, a timeline mismatched with the Gulf's two-month production shutdown.
  • Rory Johnson's fair value models show oil could reach $180-$200 per barrel by end of June if Hormuz remains closed, absent major policy actions like SPR releases.
Also from this episode: (6)

Politics (3)

  • Saagar argues the US faces three dire options in Iran: withdrawing and accepting a historic strategic defeat, continuing the indefinite blockade, or resuming limited strikes which would restart hot war and destroy Gulf oil assets.
  • Krystal cites Iranian claims that 52 ships breached the US blockade, highlighting its porous nature. She notes Iran can also move goods over land and has secured new deals with Pakistan.
  • Krystal points out Pete Hegseth's contradictory testimony: he justified the war to stop an imminent nuclear threat, then claimed Iran's nuclear facilities were already 'obliterated'.

Inflation (1)

  • Saagar cites a University of Michigan survey showing consumer sentiment at 49.8, the lowest in over 50 years, lower than when gas was $5/gallon under Biden.

Markets (2)

  • Saagar explains the S&P 500 is up because Amazon, Google, Meta, and Microsoft are spending $1.3 trillion on AI over two years - more than the Manhattan Project each month.
  • Krystal says the bond market is collapsing with the 10-year yield back above 4.4% and the 30-year at 5%, a level Trump has intervened at before, signaling rising US debt financing costs.
#War#Macro#Trade#Diplomacy
The Jack Mallers Show
The Jack Mallers Show

Jack Mallers

Hold Onto Your Butts (And Your Bitcoin) • May 5

  • Mallers argues the market is mispricing volatility, ignoring four persistent macro risks: the closed Strait of Hormuz, the Iran conflict, disrupted global supply chains, and unsustainable global debt. He sees no political solution to these problems.
  • The Strait of Hormuz handles 20% of global oil supply. Mallers states that everything in modern life is a derivative of energy, making oil shocks inflationary for all goods and services.
  • Brent crude oil futures indicate the market expects prices above $90 per barrel through December 2026, signaling deep supply disruption. An attack on the UAE pushed prices from $110 to $120.
  • US gas prices are up 33% year-to-date, nearing 2022 highs and exceeding 2008 crisis levels. Mallers warns $5 per gallon is imminent.
  • Mallers claims nominal US retail sales are booming only because spending is concentrated on energy. Gasoline stations account for 15.5% of retail sales, while furniture is only 2.2%.
  • Mallers sees a binary market outcome: a crash from the oil shock requiring massive money printing, or a continued rip higher fueled by existing stimulus. He watches Bitcoin's hold above $80,000 for clues.
Also from this episode: (9)

BTC Markets (2)

  • Jack Mallers says Bitcoin’s price signal precedes broader market shifts because it is the most free market in the world.
  • 55% of Americans say their financial situation is worsening, a record high exceeding the COVID and 2008 crisis levels. Mallers attributes this solely to fiat currency debasement.

Macro (3)

  • Real consumer spending, adjusted for inflation, is pulling back sharply from its post-pandemic trend. Mallers says this indicates declining purchasing power despite higher dollar spending.
  • The US bond market is weakening as yields rise, reflecting lower demand to lend to the government. Mallers links this to inflation fears and a dire fiscal situation with a $2 trillion annual deficit.
  • Three forms of stealth liquidity are propping up markets: Fed balance sheet expansion via a repurchase program, active efforts to weaken the US dollar, and shifting treasury issuance to the short end to avoid weak long-term demand.

Protocol (2)

  • Mallers argues bond volatility is rising due to the oil shock, recalling that similar volatility in 2025 triggered money printing and Bitcoin's run from $25,000 to $125,000.
  • Mallers critiques crypto exchanges for having high income but low Bitcoin conviction, noting Coinbase holds $11 billion in cash versus $1 billion in Bitcoin.

Markets (1)

  • Mallers condemns prediction markets as gambling dressed as financial innovation, citing a Wall Street Journal analysis that 67% of Polymarket profits go to 0.1% of users.

Custody (1)

  • Strike launched volatility-proof loans with no liquidation risk, segregated collateral addresses, and a new $2.1 billion credit facility from Tether. The service is now in over 40 US states.
#Macro#Energy#Fed#BTC Markets#Inflation
The Daily
The Daily

What Does Tucker Carlson Really Believe? I Went to Maine to Find Out. • May 2

  • The Revolutionary Guards rose to power by securing borders, managing proxy groups like Hezbollah and Hamas, and crushing domestic protests. The war created an opening for them to dominate.
  • Fassihi argues the Guard generals are pragmatic, motivated by power and money, not clerical ideology. Their self-preservation instinct makes them more open to a deal with the U.S. than the former clerical leadership.
  • Iran's primary goals in negotiations are sanctions relief and an end to hostilities. The war caused an estimated $300 billion to $1 trillion in economic losses.
  • Both Iran and the U.S. need a face-saving deal. Trump needs to claim victory, and Iran cannot look like it capitulated due to the war.
  • Israel remains a wild card for Iran. Leaders fear covert attacks and assassinations could continue even after a ceasefire with the U.S.
Also from this episode: (7)

Politics (7)

  • Farnaz Fassihi reports the Revolutionary Guard commanders, not the supreme leader, now make Iran's critical decisions. The shift from clerical rule to a military dictatorship occurred after the war.
  • Supreme Leader Mojtaba Khamenei is severely injured and in hiding. He lost his left leg, had three operations, and suffers severe facial burns affecting his speech.
  • Iranian decision-making now operates like a board of directors. Senior Revolutionary Guard generals propose actions, and Khamenei rubber-stamps them from his secret location.
  • Revolutionary Guard generals have proposed letting U.S. oil and shipping companies invest in Iran for reconstruction. This reverses the late Ayatollah Khamenei's ban on American business involvement.
  • Iran views controlling the Strait of Hormuz as a lucrative tool. They calculate tolling ships could generate more revenue than oil exports.
  • The gunman at the White House Correspondents' Dinner was identified as Cole Thomas Allen, a 31-year-old from California. He was armed with knives, a shotgun, and a handgun.
  • President Trump cited the shooting as a reason to build a larger, more secure ballroom in the White House East Wing, describing it as dome-proof and bulletproof.
#Diplomacy#War#Trade#Middle East
BTC Sessions
BTC Sessions

"Everything Changes in 5 Years" — Bitcoiners Must Prepare to Escape | Katie Ananina • May 1

  • Brandon argues Marco Rubio's public admission that dollar sanctions will be ineffective within five years is a 'quiet part out loud' moment signaling the inflection point for US monetary hegemony. This culminates a de-dollarization trend Bitcoiners predicted.
  • Nathan proposes Rubio's non-interventionist stance stems from his presidential ambition and an understanding that military force can no longer effectively protect monetary hegemony. He posits the US must either adapt or find a bloodless method to usurp rival systems.
  • Nathan cites Luke Groman's analysis that if the Strait of Hormuz remains closed until mid-April, global supply chains are mathematically certain to collapse. He warns of severe economic impacts and potential for renewed consumer panic.
Also from this episode: (9)

Business (2)

  • Ben notes Brazil and China's bilateral trade deal to bypass the dollar is occurring while US gasoline prices posted their biggest monthly jump since 1967. He connects record energy inflation to the petrodollar's decline.
  • The panel critiques CPI as a flawed metric designed to control entitlement payments, rendered useless by hedonic adjustments. They note the creation of 'super core' inflation as another layer of obfuscation.

Protocol (3)

  • Joey and Brandon dismiss the BRICS currency concept, citing mutual distrust and domestic incompetence among member states. They argue countries simply need a jurisdictionally-aligned medium, not a unified currency.
  • Nathan and Ben discuss developer Abhijit Roy's proposal for quantum-safe Bitcoin transactions without a soft fork. They view wallet-level solutions as the future for Bitcoin's evolution, minimizing the need for contentious consensus changes.
  • The panel advises against trying to time Bitcoin's price, citing the rule that missing the ten best trading days of the year wipes out annual gains. They advocate for consistent accumulation regardless of price.

Politics (3)

  • Joey observes Western nations like Germany and the US raising conscription ages while facing a crisis of national identity, arguing imported populations lack loyalty and domestic populations are demoralized.
  • Nathan and Joey analyze the Canadian political crisis, where MPs are crossing the floor to give the ruling party a majority against their constituents' will. They cite it as evidence democracy has failed and Canada is a 'failed state' and petri dish for globalist policies.
  • Brandon frames Canada as a proxy for the British Crown and a testing ground for policies before global rollout. He connects this to rising Alberta separatism and a massive brain drain of high-earning young professionals.

AI & Tech (1)

  • The hosts interpret the Federal Reserve and Treasury's emergency meeting on Anthropic's 'Mythos' AI model as potential theater. Joey believes it's a marketing campaign to restrict powerful AI, while Nathan suggests it creates a boogeyman to blame future systemic failures.
#Macro#Banking#Adoption#Models
Bankless
Bankless

ROLLUP: $120 Oil vs New Highs | AI Boom Masks War | IPO Top Signal | DeFi Bailout • May 1

  • President Trump directed the military to prepare for an indefinite naval blockade of the Strait of Hormuz, demanding Iran agree to a nuclear deal before lifting it.
  • Brent Crude oil prices breached $120 a barrel, reaching wartime highs due to the Hormuz blockade. Analyst Roy Johnson expects prices to exceed $150, citing a 13 million barrel per day supply shock.
  • U.S. national average gas prices hit $4.23 a gallon, the highest since August 2024. Rising oil prices are driving up costs for food, fertilizer, jet fuel, and diesel by double-digit percentages.
Also from this episode: (10)

Protocol (3)

  • SecDef Pete Hegseth affirmed Bitcoin is a national security tool, claiming the Defense Department has both classified efforts to enable and thwart its use by adversaries.
  • A U.S. Congressman claimed Iran demands Bitcoin for Strait of Hormuz transit, North Korea uses it in ransomware, and China is stockpiling it as a strategic reserve.
  • Eric Trump claimed the U.S. government holds 300,000 Bitcoin and will not sell it. Paul Tudor Jones called Bitcoin the unequivocal best inflation hedge, superior to gold due to its finite supply.

Politics (3)

  • Iran's currency is experiencing hyperinflation and its economy is devastated, threatening the regime's ability to pay IRGC salaries and maintain internal stability.
  • The U.S. Treasury's Economic Fury operation froze $344 million in USDT on the Tron network belonging to Iran, the largest such freeze in history.
  • A U.S. soldier was arrested for turning $34,000 into $410,000 on Polymarket using classified intel about a Venezuela invasion. The CFTC prosecuted the case, highlighting on-chain transparency.

Business (2)

  • The S&P 500 gained 13.5% in April, its best month since November 2020, driven by AI-driven earnings from companies like Google and Nvidia despite Middle East turmoil.
  • The Fed held rates at 3.5-3.75% but saw its most divided vote since 1992, with four dissenters. The FOMC changed its inflation description from 'somewhat elevated' to just 'elevated' as CPI ticked up to 3.2%.

AI & Tech (1)

  • Anthropic reached a $1 trillion valuation in three months, overtaking OpenAI's $24 billion revenue. Historic IPOs for SpaceX, OpenAI, and Anthropic could drain systemic liquidity and mark a market top.

Fed (1)

  • Outgoing Fed Chair Jerome Powell will remain as a governor while under investigation, a move seen as denying Trump a majority of appointees on the board.
#Macro#Energy#Markets#BTC Markets#Nation-State
Macro Voices
Macro Voices

MacroVoices #530 Daniel Lacalle: China and The Us Will Decide The Outcome of The Iran War • Apr 30

  • Europe faces severe energy security risks from the Strait of Hormuz closure, with only weeks of jet fuel left and potential for prices to quintuple. Consumer sentiment there is at its lowest since the pandemic.
  • Lacalle argues the US and China have superior staying power in the conflict. The US is a net exporter of 2.8 million barrels of oil per day, and China has massive commodity stockpiles plus a strategic supply agreement with Russia.
  • Iran’s economy was already in crisis before the war, with 60% inflation and protests in 2025. Lacalle notes 25% of its GDP and 60% of government revenue flow through the Strait of Hormuz.
  • European political sentiment is polarized regarding the conflict. A majority view holds it is a US-Israel issue, with support limited to logistical or diplomatic efforts, not active military participation.
  • Lacalle sees a consensus against price controls in Europe, but a greater risk of populist-driven windfall profit taxes on energy companies that could deter investment in supply security.
  • He believes oil prices have likely peaked but the geopolitical risk premium will keep a floor under them. The forward curve discounts oil prices remaining $15 above January levels by year-end.
  • Lacalle cites the US shift from largest oil importer to largest producer as turning it from a shock amplifier to a shock absorber in energy crises, a key structural change from 1973 and 2008.
  • Erik Townsend argues the market is in denial about the inevitable global energy crunch, drawing a parallel to the early COVID pandemic where economic reality took weeks to be priced in.
  • Townsend interprets the UAE’s exit from OPEC as a signal that spare capacity will be eliminated post-crisis, making markets more vulnerable to future price spikes despite a near-term production surge.
Also from this episode: (5)

Macro (1)

  • Daniel Lacalle attributes the stock market rally amid the Iran crisis to soaring global money supply growth, which inflates asset prices even as money velocity declines.

Inflation (1)

  • Lacalle argues for a regime of persistent inflation, driven by high government spending, soaring money supply, and policies aimed at sustaining aggregate demand. He notes food and shelter costs in the EU and UK have risen twice as much as official CPI over seven years.

Markets (1)

  • He explains gold’s recent inverse relationship to oil and geopolitics was driven by unwinding of leveraged long-gold/short-dollar trades and central bank selling to support local currencies.

Business (2)

  • Lacalle identifies fertilizer availability and price as a critical inflation vector, a bigger problem for Europe due to eroded farm margins, while the US faces only a price issue.
  • He warns of lagged economic damage in Europe, particularly margin erosion and credit deterioration in financials, aviation, automotive, and tourism, which equity markets have yet to price.
#Macro#Energy#Inflation#Fed

Related Stories