President Donald Trump is betting new sanctions, a naval blockade and ramped-up economic pressure against Iran’s trading partners can accomplish what thousands of bombs and missiles could not: force Tehran to accept a deal to end the war on US terms. But like other US efforts to force Iran into capitulation, there’s one main problem: Iran’s Islamic Revolutionary Guard Corps, which has claimed control of the vital Strait of Hormuz and sent volleys of attack drones across the Persian Gulf, may be impervious to such pressure — and has plenty of ways to retaliate. A key part of the US effort will come on Monday, when Treasury Secretary Scott Bessent has promised to unveil details of a plan designed to shift the conflict from tit-for-tat strikes across the Middle East to full-blown economic isolation — a campaign that could touch nations ranging from China and India to Turkey and the United Arab Emirates. Yet significant new economic pressure is likely to prompt Iran to retaliate with military strikes across the Gulf — including against energy infrastructure — in an attempt to push up oil prices and raise the cost of the US effort, forcing Trump to shift his approach once again. “If this is actually effective, at some point, Iran will lash out again — they just will have no alternative,” said Nate Swanson, a senior fellow at the Atlantic Council who worked on Iran issues at the State Department and White House National Security Council until last year. “Trump may see this as a different phase of the war, but I don’t think Iran does.” Since the US and Israel first attacked Iran on Feb. 28, Iran has repeatedly shown the ability to endure airstrikes on thousands of targets, layers of sanctions and a US Navy blockade — yet still retain the ability to hit back. Tehran has used Shahed attack drones and ballistic missiles to hit both US bases and civilian sites across the Gulf, including water and power infrastructure. That has kept Hormuz largely shut, raised global energy prices and forced wealthy Gulf nations to lobby the US into finding a diplomatic offramp to the unpopular conflict. Iran’s grip on Hormuz also gives it immense leverage in any potential talks with the US. Bessent suggested this week that the shift to an economic campaign “means that likely there will not be a large-scale kinetic restart.” But analysts aren’t so sure that Iran will refrain from a return to open hostilities, even if the US does. “If this new economic pressure campaign works — and that’s a big if — it’s more likely that we would see military action coming out of Iran than that we would see capitulation, at least as a first step,” said Chris Kennedy, the economic statecraft lead at Bloomberg Economics. “Just because the US has decided to pause its full-blown military operation doesn’t mean Iran will follow suit.” It’s not clear exactly how the US could meaningfully ramp up economic pressure on Iran, other than going after China — the main buyer of Iranian oil — and risking blowback. Going after smaller entities in countries such as Iraq, Turkey or the UAE would be unlikely to break Tehran’s will. Still, the US economic pressure campaign is having an impact. It now risks triggering one of Iran’s worst ever economic crises, despite the country weathering years of broad isolation. Even before the war, a slump in the Iranian rial triggered nationwide protests, with the government killing thousands. Since the war began, the nation’s citizens have seen their purchasing power evaporate under inflation that’s now above 80% and with a currency that’s lost almost 30% of its value this year alone.This week, Iran’s central bank governor said the nation’s oil exports had “virtually stopped” under the US blockade, ending the government’s main source of revenue. The International Monetary Fund said in April it expected Iran’s economy to shrink 6.1% this year, the worst contraction in decades. On Friday, Iranian President Masoud Pezeshkian urged an end to the war with the US. But his responsibilities are mostly limited to domestic economic policy, while hardline Iranian officials, including some in the nation’s powerful military leadership, have argued that Iran is winning and should continue the fight. It’s possible the new measures Bessent will announce on Monday and the ongoing naval blockade will eventually spur Iran to return to the interim diplomatic deal it reached with the US in June, said David Schenker, a US diplomat for the Middle East during Trump’s first term. But it could take six months for any measures to have a significant impact, testing the patience of the Trump administration, he said, noting the Iranian regime has shown it can endure major economic pain while largely ignoring the suffering of the nation’s people. “It could drag on for some time,” said Schenker, now a fellow at the Washington Institute for Near East Policy. “The Iranian regime still sees itself as having leverage and being in a good position.”
US sends another ship, aircraft carrier to Arabian Sea
The United States Central Command (CENTCOM) said on Thursday the USS Boxer was deployed to the Arabian Sea, where the vessel is taking part in the ongoing naval blockade of Iran. Earlier today, the command announced the arrival of the USS George Washington aircraft carrier to the Arabian Sea as tensions with Iran remained elevated. In a post on X, CENTCOM added that 67 commercial vessels have been directed by US forces as part of the blockade, with 3 disabled and 2 boarded to “ensure compliance.” Washington has refrained from resuming military action against Tehran so far, resorting to additional economic pressure against the Middle Eastern country.
NN: What good does it do? We all know Trump will TACO out… again. And worse yet, the great American Armada can’t do squat against an army burred deep underground. And America is unwilling to mount a invasion with boots on the ground!
Trump may strike Iran if economic pressure fails
United States President Donald Trump could instruct the military to launch intensive strikes on Iran if his economic measures and pressure fail to yield results, Al Arabiya reported on Thursday, citing unnamed sources. According to the report, Trump told his negotiating team that he considers the chances of reaching a near-term agreement with Iran to be very slim and ordered the suspension of talks for several weeks. Additionally, the sources said that the US administration was briefed on intelligence of Iran’s plans to resume attacks on ships and to extend operations beyond targeting vessels, as well as on reports that Yemen-based Houthis could escalate strikes in the Bab al-Mandeb Strait.
Bessent Deploys Debt Buybacks in Sign of Concern Over Yield Rise
US Treasury Secretary Scott Bessent made a fresh attempt to rein-in long-term borrowing costs from multi-year highs, sending Treasury yields and the dollar down. Just two weeks after releasing its planned schedule for buybacks this quarter, the Treasury Department on Wednesday said it’s “increasing, by at least double, the size of liquidity support buyback operations” for securities dated from the 10-year to the 30-year sector. The new plan drove the US dollar to the weakest in three months. It also pushed yields on the 30-year bond lower by as much as 10 basis points to 5.18%, moving it away from its highest level since 2007. Twenty-year yields also dropped, leaving investors with tepid demand for a $16 billion auction of the securities. Elevated yield levels have kept US mortgage and other borrowing costs high, posing a headwind for economic growth and a potential problem for President Donald Trump and his fellow Republicans ahead of the November midterm elections. They’ve also driven up the Treasury’s own borrowing costs, worsening what was already a steep trajectory for government debt. “This administration needs a win, and maybe that comes in the form of artificially trying to keep long Treasury rates contained,” said Jack McIntyre, a portfolio manager at Brandywine Global Investment Management. “They have to try something. Sentiment around the long-end globally is about as bearish as I have seen in a very long time.” How long lasting the impact will prove remains to be seen. “What really gets long rates lower is a slowing economy or resolution on the Iran conflict, and I’m not sure we’re there yet,” McIntyre said. Bessent last year invoked the buyback program as part of the department’s “big toolkit we can roll out” if needed to address dislocation in the Treasuries market. He’s also repeatedly said, since taking office, that his key financial-market benchmark is 10-year yields. Last November, he said, “my job is to be the nation’s top bond salesman — and Treasury yields are a strong barometer for measuring success in this endeavor.” Officials made the announcement as long-dated government bond yields around the globe rose to significant levels this week — with the US 30-year trading at its highest since 2007.
A 10-year auction last week drew the highest financing cost at that tenor since 2007, while a 30-year sale a day later was at the greatest yield since 2001.
What Bloomberg Strategists Say…
“The buyback is a clear signal the Treasury is watching markets and is concerned about long-end yields. That sort of increase in flow cannot in and of itself turn the tide of long-end selling, though the signal may be sufficient to prompt further short-covering.”
—Cameron Crise, macro strategist. For more analysis, see MLIV.
“If yields go too far, Treasury will try and fight it — and now we know where some pain points are,” said John Briggs, head of US rates strategy at Natixis North America. The ramped-up buybacks will begin Sept. 9, the Treasury said. Two weeks ago, the department said it anticipated purchases of up to $38 billion of older securities, known as off-the-runs, for “liquidity support.” It’s tentative calendar for Sept. 9 through Nov. 4 indicated up to $14 billion total buybacks of 10-year to 30-year Treasuries. At least doubling that total would suggest an extra $14 billion or more. The US Treasury says it will be buying back more longer-dated debt, a move designed to stop the surge in long-end yields. Former St. Louis Fed President James Bullard says this seems like an important tactical move, but it won’t change the fundamentals. He speaks on “Bloomberg Surveillance.”
It also comes just days after the Treasury paid out about $85 billion in interest to bondholders, the largest sum in records tracked by Bloomberg.
NN: Our upcoming Zero Trade is a guaranteed money maker. Get your ducks in a row!.. NOW!!
Oil Edges Up as Middle East Tensions Flare Up With UAE-Iran Spat
Oil rose to the highest in almost three weeks, as US refiners ramped up crude consumption and a spat between the United Arab Emirates and Iran heightened regional tensions. Brent futures traded near $92 a barrel after the UAE said it was cutting all economic ties with Tehran after accusing Iran of firing ballistic missiles at its territory. The latest escalation came after US President Donald Trump insisted there were no talks ongoing with Iran to end the war that has upended energy markets. “A combination of the escalation between the UAE and Iran, coupled with a market increasingly pricing a ‘closed for longer scenario,’ keeps oil and refined products supported,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management. Fresh US government data, meanwhile, indicated that refinery runs rose to their highest since September 2019, led by the Gulf Coast. That may explain why prices edged higher on the report, even as domestic crude stockpiles rose 4.4 million barrels last week. Trump Takes Hard Line as Hormuz Tensions Mark New Normal President Donald Trump insisted there were no talks ongoing with Iran, leaving control of the Strait of Hormuz in limbo. Bloomberg’s Jeff Mason shares his perspective. Further offering a floor to prices, distillate inventories fell 1.5 million barrels to the lowest in more than a month, according to the US Energy Information Administration report. Fuel prices, especially diesel, have rallied much harder than oil, as the war between Russia and Ukraine has also contributed to tighter energy markets following attacks on refineries. That’s heaping cost pressure onto drivers, truckers and farmers.
The margin for making diesel from crude oil in the US has topped $100 a barrel, setting all-time highs. In Europe, gasoil futures have more than doubled this year.
Elsewhere, three supertankers linked to China U-turned in the Strait of Hormuz, highlighting how risks remained elevated in the critical chokepoint. On Tuesday, the UK said a vessel leaving the strait was hit by a projectile, causing one casualty. Still, Persian Gulf producers have continued to covertly shuttle oil through Hormuz to reach global users, helping to contain prices that are far from the high levels many feared at the onset of the war if the turmoil dragged on into the summer. As a 60-day ceasefire between the US and Iran expired, some traders unwound long bets to avoid getting wrong-footed by a sudden de-escalation, also helping to subdue prices.
NN: Show me the freeging oil!! Show me the distillates!!!! Show me the by products!! Ill tell you what i do see. That is the biggest premium on the crack spread for diesel fuel ever!!!. That can only happen when traders realize the demand will outstrip supply.
Ukrainian drone attack hits Russia’s Ufa oil refinery
A Ukrainian drone strike targeted an oil refinery in Ufa, the capital of the Republic of Bashkortostan in Russia, Governor Radiy Khabirov reported on Wednesday. Bashkortostan is located between the Volga River and the Ural Mountains in eastern Europe. “We have significantly strengthened our oil refining hub,” Khabirov said in his address. “The attack was small: six drones. One apparently went off course and hit a house in Zaton,” he said to reporters, adding that it injured an Indian medical student. His injuries are said to be minor, and he is receiving medical care. According to Khabirov, a unit undergoing repairs caught fire at the refinery following the attack. Firefighters are working to contain the blaze. Khabirov stated that a total of six drones were involved, with four shot down by air defenses.
NN: Long range Drones have become so effective that war dynamics are changing. Their has been so much damage to Russian oil infrastructure that Russia who use to export diesel fuel and gasoline is now importing from India,
Will Oil Prices Keep Rising? Of course they will!
Zaye Capital Markets, asked in a market analysis released on Tuesday. Will oil prices keep rising as Iran tensions threaten global crude supply? This was the question Naeem Aslam, CIO at Answering the question, Aslam noted that the wider oil ecosystem remains conflicted because supply risk is colliding with softer global demand expectations. “International supply estimates point to a meaningful reduction in available crude as Gulf production remains disrupted, while producer-group projections continue to show relatively modest demand growth,” he said in the analysis. “That is why oil is rising sharply on geopolitical headlines but not moving in a straight line,” he added. “Any improvement in Hormuz shipping, diplomatic progress or production recovery can quickly remove part of the geopolitical premium, while renewed disruption can push prices higher again,” he continued. Aslam went on to state in the analysis that, from Zaye Capital Markets’ perspective, “the key issue is whether the physical loss of supply remains large enough to overwhelm weaker consumption trends”. “If Gulf exports stay restricted, the market can continue supporting Brent above $90; if flows normalize, attention will quickly return to demand growth, inventories and the strength of the global economy,” he said. Aslam stated that oil can remain supported if Hormuz supply risk persists while economic data stays resilient, but highlighted that a combination of weaker labor data, softer demand, and improving Gulf shipping conditions would make the current geopolitical premium more vulnerable to reversal. In the analysis, Aslam pointed out that Brent crude was trading around $91.49 per barrel on Tuesday, adding that this was up about 0.7 percent. He also highlighted that Brent rose 2.7 percent on Monday to settle at $90.87 per barrel. “The immediate driver is not stronger global consumption but a renewed geopolitical supply premium,” Aslam said, commenting on Tuesday’s price rise.
“Progress toward reopening the Strait of Hormuz has stalled, tanker movements remain constrained, and uncertainty around U.S.-Iran relations has increased the probability investors assign to prolonged disruption of Gulf exports,” he added.
“President Trump’s warning that Oman should not interfere with U.S. policy surrounding Iranian shipping, combined with his insistence that Iran cannot obtain a nuclear weapon and his claim of U.S. control over the Strait, is reinforcing the market’s focus on physical supply risk,” he continued.
Skandinaviska Enskilda Banken AB (SEB) In a report sent on Tuesday, Bjarne Schieldrop, Chief Commodities Analyst outlined that Brent crude was trading 0.9 percent higher at $91.7 per barrel, which he pointed out was “the highest level since 31 July”. Schieldrop projected in the report that Brent was heading towards $100 per barrel again “as it looks now”. He noted, however, that “a pattern we have seen on repeat this year is that whenever the Brent crude oil price hits $100 per barrel or so, it doesn’t take much time before [U.S. President Donald] Trump is out heralding that some good negotiations are ongoing and that there will soon be a new MoU, a ceasefire, and normalized flows of oil out of the SoH [Strait of Hormuz]”.
HSBC analysts, including Kim Fustier, the company’s senior global oil and gas analyst, noted that “more than five months into the Middle East conflict”, oil prices remained “dominated by geopolitics and the day to day reality of transit risk through the Strait of Hormuz”. “After touching tripled digits in the second half of July, Brent briefly dipped below $80 per barrel on rising prospects of an Iran-Oman agreement, before rebounding to around $90 per barrel as a deal has proved more elusive than hoped,” the HSBC analysts stated. The analysts outlined in the research note that, in the Strait of Hormuz, traffic remained “volatile” and had “settled around 10 crossings per day, down from 30-40 per day before the re-escalation”.
“Liquids flows have averaged around four million barrels per day, well below public estimates of nine million barrels per day,” the analysts said.
“Following Houthi threats around the Bab el‑Mandeb Strait, crossings have halved and flows are being redirected via the Suez/SUMED system in Egypt, increasing freight costs (estimated at $4-5 per barrel to Asia via Egypt and around the Cape of Good Hope),” they said.
Looking at demand and balances, the analysts said China remains the biggest swing factor.
“July imports rose slightly from June lows, reflecting the lagged arrival of cargoes bought during the ceasefire; China’s crude inventories remain high at c1.20 billion barrels, only c50 million barrels below the early May peak,” they noted. “Elsewhere, Asia ex‑China and Europe have returned to pre‑crisis import levels, while U.S. inventories have risen in recent weeks on lower net exports. Tightness is more visible in products than crude,” they added.
The analysts went on to state that global inventories had fallen by more than 400 million barrels since March, “implying an average rate of drawdowns of c2.8 million barrels per day”.
“This is much smaller than initially feared, thanks to pipeline rerouting, some continuation of Gulf flows, significant demand destruction and the pre-conflict surplus from growing non-OPEC supply,” they said. “At c7.9 billion barrels, global stocks are below year-ago levels but still above 2022-24 levels, suggesting that ‘tank bottoms’ are not imminent,” they concluded.
NN: This is the temporary reprieve. Demand for oil is the lowest this time of the year. Summer driving season is over Refineries shut down for badly need maintenance and to switch over to heating oil production. Crunch time comes in Early November. Oil by products are the next crises like fertilizer and high distillates. It will be ugly.
Iran said to weigh strikes on US targets in Europe
Iran is considering expanding its military targets to Europe if Washington escalates the current conflict, the Financial Times reported, citing people close to the authorities. Military planners have reportedly evaluated options that include striking United States assets in southeastern European countries like Bulgaria and Cyprus, and also considered cutting subsea fiber-optic cables in the Strait of Hormuz. These heightened threats emerged as diplomatic negotiations remain at a standstill. US President Donald Trump previously instructed his negotiating team not to engage in any further discussions with Tehran until Iranian officials are ready to conclude a final deal.
NN: Iran is not so stupid as to drag Europe into the fray. So this is nothing more than Hyper blow. The Key takeaway is the fact oil is not flowing through the straights!
Trump says no talks planned with Iran, Tehran says Strait of Hormuz still shut
DUBAI/WASHINGTON, Aug 18 (Reuters) – U.S. President Donald Trump said on Tuesday no talks were taking place with Iran and none were scheduled, and he insisted that the Strait of Hormuz was open, contradicting an earlier Iranian assertion that the critical waterway remained shut to shipping.
The receding prospects of a deal to end the nearly six-month conflict drove up oil prices again on Tuesday, while stock markets sagged and borrowing costs for major economies including the U.S. hit multi-decade highs, amid concerns about the long-term inflationary and fiscal impact of the crisis.
A temporary ceasefire agreement expired on Monday and a senior Iranian official told Reuters that his country was moving to a “fully offensive” military posture due to the diplomatic stalemate, though there were no reports of fresh strikes by either side on Tuesday.
“There are no talks or conversations going on, or scheduled, with the Islamic Republic of Iran,” Trump said in a post on Truth Social on Tuesday. “The Naval Blockade remains in full force and effect. The Hormuz Strait is open and operating. All water mines have been removed or detonated,” he added.
Despite Trump’s typically ebullient remarks about the situation in the Gulf, preliminary shipping data on Tuesday showed ship crossings via the Strait of Hormuz were still in single digits on Monday. The United Kingdom Maritime Trade Operations said it received a report on Tuesday that a vessel was struck by an unknown projectile while transiting outbound in the Strait of Hormuz, causing engine room damage and a crew casualty. The remaining crew were being assisted by the Omani Coast Guard, according to the report.
Top Iranian negotiator Mohammad Baqer Qalibaf said in comments published by state media that the strait would remain shut until the U.S. met the conditions of an interim deal signed with Iran in June. These conditions include the U.S. lifting its blockade of Iranian ports, lifting oil sanctions, releasing Tehran’s frozen assets, and ending threats and military operations on all fronts, Qalibaf told parliament.
A memorandum of understanding signed on June 17 had set a 60-day time frame for a broader deal on Iran’s nuclear programme and U.S. sanctions. That period elapsed on Monday and Trump said he had no plans to extend it.
The agreement, which declared the “immediate and permanent termination of military operations on all fronts,” had quickly unravelled over a dispute about control of the Strait of Hormuz, the narrow waterway through which a fifth of global oil and liquefied natural gas flowed before the war.
NN: The straights are closed. And not opening soon enought to avoid a energy crises of epic proportions
30-year US Treasury yield highest since 2007….. And we are getting ready to pounce
The yields on United States Treasuries with a remaining maturity of 10 and 30 years were on the rise on Monday, as continued tensions in the Middle East weighed on demand for government bonds. The ceasefire agreement between the United States and Iran is set to expire today, with no official confirmation yet that it will be extended. In addition, uncertainty surrounding the agreement continued to push crude oil prices higher, raising concerns that elevated energy costs could prolong inflationary pressures in the United States and keep inflation above the Federal Reserve’s target, potentially limiting the central bank’s room to cut interest rates and driving yields on government bonds higher. The yield on the 30-year bond rose 1.4 basis points to 5.280%, reaching its highest level since 2007. The return on the 10-year Treasury note climbed 1.0 basis point to 4.706%.