To catch up with the situation in the Gulf, I will draw, first of all, on news items covered in Drop Site News (Drop Site), with some commentary of my own, and then return to the issue of the discrepancy between the severity the oil crisis, on the one hand, the price of Gulf oil on oil markets, and the actual price that is paid for such oil, where I will connect you with a very interesting investigation of this growing mystery by Ron Unz (Unz).
Cover: via https://thecradle.co/articles/us-missile-stocks-significantly-depleted-since-start-of-war-on-iran-report
Oliver Boyd-Barrett || Over the weekend the US launched several waves of strikes on Iran over the weekend; one attack hit a nuclear power plant.
On Saturday, after its eighth consecutive night of strikes, CENTCOM said that it had successfully targeted “Iranian military coastal surveillance and air defense facilities, maritime capabilities, and missile and drone storage sites.” The announcement also claimed successful hits on IRGC forces, though no casualty figures were given. US strikes overnight into Saturday knocked 116 telecommunications towers offline, authorities from Iran’s Hormozgan province reported, disrupting landline, internet, and mobile service in the region.
The US struck Iran’s Darkhovin nuclear power plant on Sunday, according to the country’s Atomic Energy Agency, apparently at a very early stage of its construction and, when last visited by the IAEA, “contained no nuclear material.” Being a neocon-captured agency of the UN which also failed to condemn the US attack on Iranian nuclear energy facilities a year ago, the IAEA has equally failed to condemn this attack, thus violating its own constitutional obligations
Other US attacks on Sunday hit several areas within Iran including, the city of Abadan, in the southwestern Khuzestan province, the city of Shadegan in the same province, Qeshm Island, and the southern cities of Sirik and Hajiabad in the Hormozgan province
CENTCOM reported on Sunday that its blockade of Iran had redirected six commercial vessels and “disabled” one.
US strikes have killed at least 50 and wounded 517 since they restarted strikes on July 6, Iran’s Health Ministry reported on Sunday, with 12 of these deaths occurring from Friday to Saturday. Yet the US claims that its latest rounds of attacks on Iran are part retaliation for the deaths of what is officially reported to be three US servicemen.
On this logic, therefore, one wonders how Iran should retaliate for two unprovoked wars declared on it by the US and Israel in the past year. At least 3,400 to 3,600 Iranians have been killed by US and Israeli forces since the beginning of the conflict. Not to mention the many thousands who died in riots in December and January that were instigated by Mossad and the CIA to take advantage of a crisis of the currency, the rial, that had been deliberately orchestrated, on his own admission, as a component part of a regime change operation by US Treasury Secretary Scott Bessant. Official data reported by Iran’s Ministry of Health counts at least 3,468 Iranian deaths, consisting of roughly 1,460 civilians and 2,008 military personnel. Similarly, the US-based HRANA places the casualty count at 3,636 dead, which includes over 300 children. One should recall how a US airstrike on the Shajareh Tayyebeh Elementary School in Minab, Iran, killed approximately 160 schoolgirls and their teachers on February 28, 2026.
On Monday morning, U.S. strikes were reported across Iran, from the northern city of Tabriz to the western city of Khorramabad to the southeastern city of Kerman. Additional strikes were reported in the frequently targeted cities of Bushehr and Jask. Recent US airstrikes have directly targeted several locations within Iran’s southwestern Bushehr province, causing heavy explosions and infrastructure disruptions. While Iranian state media reports American projectiles hit multiple areas – including Dashti County and Choghadak – the US military maintains that it strikes exclusively. Despite unverified local reports claiming the Bushehr Nuclear Power Plant complex itself sustained damage, the US has not identified the country’s sole civilian nuclear facility among its designated military targets.
Iran Strikes the US and the Gulf
Iranian forces launched retaliatory attacks on US partner nations in the Gulf over the weekend, hitting a number of critical targets. Iran’s Revolutionary Guard reported several successful strikes on U.S. military infrastructure in Kuwait, Bahrain, and Jordan early on Saturday, including strikes on a ground forces support center, a radar installation, a fuel support pier, sites used to support US fighter jets and other aircraft, and signal communications infrastructure. Sirens also sounded at Yanbu, one of Saudi Arabia’s principal Red Sea ports and one that has grown more vital during disruptions to traffic through Hormuz. Note that the Houthis have today announced a maritime blockade against Saudi Arabia in retaliation for Saudi support for Yemen’s recent attack to prevent an Iranian airplance landing in Houthi-controlled Sana airport.
Iran hit a “vital” oil-sector facility, the Kuwait Petroleum Corporation reported on Saturday, adding that the site was evacuated and that the attack caused “significant material losses.” The Iranian army reported two more attacks on US bases in Kuwait on Saturday evening, including on an ammunition depot at Camp Arifjan and the Ali Al Salem airbase.
A separate Iranian attack on Sunday struck a Kuwaiti power generation and water desalination plant, the third consecutive attack confirmed by the country’s authorities, though they did not name the facility involved. The attack knocked a “large number” of generating units out of operation, according to Kuwait’s Electricity, Water and Renewable Energy Ministry, which condemned the attack as “heinous Iranian aggression.” This was clearly in retaliation for the US strike a few days ago on a water desalination plant in the coastal village of Bunji (Hormozgan province) which completely disrupted drinking water supplies for approximately 20 villages, leaving roughly 10,000 residents without access to water. The attack targeted key desalination pumps and the main power transformer. Iranian officials condemned the strike as a war crime, as it forced a severe water shortage crisis upon the area. Iranian sources say the plant has since been repaired.
Iran reported on Sunday that it struck two ships that attempted to subvert its authority over the Strip, noting four total incidents in which ships attempted to use a U.S.-designated southern route to transit the Strait and ignored warnings from the Iranian navy, two of which involved the use of military force. Iranian state media also released high-resolution satellite images of its weekend attacks on U.S. bases in Bahrain, Jordan, Iraq, Kuwait, and Qatar on Sunday. The New York Times has reported that U.S. installations in Jordan have come under four waves of attacks in five days, and that these attacks have wounded dozens and inflicted serious damage on American helicopters, with the true casualty count and damage underreported by CENTCOM.
Iranian Deputy Foreign Minister Kazem Gharibabadi told reporters on Saturday that the country would be suspending its obligations under the Islamabad memorandum of understanding, citing Washington’s initial violations of the deal. Gharibabadi accused the United States of having “violated and suspended all its commitments” which the deal obliged it to follow, and said that Iran would move on from the deal and remain “focused on defending the country.” Supreme Leader Mojtaba Khamenei issued a subsequent statement excoriating the US for its “repeated breaches of its commitments” as part of the MOU and saying these proved “how worthless and unreliable the signature of the US president is,” and how “bullying, domination, and savagery are inseparable components of the American way and doctrine.”
Yet, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said on Monday that diplomatic efforts were continuing alongside the military response to US attacks. The which, in my humble opinion, make no sense whatsoever. The US-Israeli threat to world peace and their agreement-incapability is now so egregious that it makes best sense to focus on the next steps in the transition from unipolarity to multipolarity. Which explains why Baghaei also said Iran’s diplomatic apparatus was working in coordination with the armed forces and would “spare no effort to stop the American crimes. Interior Minister Eskandar Momeni, meanwhile, is expected to visit Islamabad on Monday evening to deliver a message from President Masoud Pezeshkian to Pakistan’s leadership, according to a Pakistani source cited by Al Jazeera.
In the meantime, it is obvious that Iranian defensive/offensive measures have had considerable impacts, probably far greater than anybody in Washington or Tel Aviv imagined at the beginning of the year. To the extent that some analysts have been predicting that the US will have to abandon its bases in the Gulf and move them back, if not to Jordan (which no longer seems safe) but to Israel. Such a measure, while it might provide some additional muscle to those trying to push through a bill in Congress that would twin US and Israeli militaries, would require the furnishing of entire new generations of air defense that the US probably does not have at the present time, and endanger the Israeli civilian population, which is beginning to realize that its undying friendship with the US is no longer granting it deterrence, at a time of increasing political instability in Israel itself, mounting hostility to Israel around the region and the world and, some would argue, an increasing threat to the very existential right of the apartheid state to continue to exist.
Iraq and the Workarounds
Explosions were reported in the Iraqi city of Erbil, in the country’s Kurdistan region, with drones seen flying over the city, according to Al Mayadeen. The outlet reported that American air defenses were activated in response. Jordan reported that it shot down three Iranian missiles on Sunday, with a fourth landing in an open area and causing no damage. Some reports suggested damage at or near King Hussein International Airport, where thick black smoke could be seen.
The U.S. energy firm HKN Energy announced on Sunday that it would halt all operations in Iraqi Kurdistan as a result of escalating hostilities in the area, according to the Kurdish outlet Rudaw. HKN recently signed a deal with Iraq to develop the Hamrin field in Salahaddin province, north-central Iraq, targeting output of 140,000 barrels of oil per day and 40 million cubic feet of gas.
Iraq plans to develop two new routes to export its oil, Oil Minister Basem Mohammed Khadir said on Saturday, following major constraints on its export industry due to disruptions in the Strait of Hormuz. One will involve Turkey’s Ceyhan port, and the other will involve Syria’s Banyas port. In addition, as I have reported in a recent post, Iraq, second-largest oil producer in OPEC, has received U.S. backing in its effort to rebuild a crude pipeline from Kirkuk through Syria to the Mediterranean, with U.S. companies expected to help construct the pipeline, according to CNBC. The announcement follows a larger trend, reported on by CNBC on Saturday, of Middle Eastern states, including Iraq and the UAE, seeking to build overland pipelines to bypass disruptions to the Strait of Hormuz. At least 7 of these pipelines are under construction or planned, according to the outlet.
Which brings us back to a topic that I have explored in recent posts, which is that of workarounds. The Iraqi examples described above are two among a dozen or so plausible long-term responses that in the future will inevitably reduce but not remove Iranian leverage of the Strait of Hormuz. It is too early to say that Iranian leverage must disappear completely because we cannot yet calculate whether passage through the Strait of Hormuz, with or without fees, will still continue to have some kind of price advantage over newer workarounds (which, among other things, will incur some hefty development costs that need to be paid for). But Iranian leverage will surely diminish.
And that consideration, in turn, brings us back to the question of the extent to which workarounds have been in play during the course of this conflict since February. Again, I have addressed this question in many recent posts. Even today, when the crisis appears to be escalating, the price of Brent crude is around $83 a barrel, far below its peak at an earlier phase of the conflict (before the fated MOU) and far below historical peaks.
And yet we are told by a variety of sources that global oil reserves have fallen to dangerous levels even as the US and Europe together are looking for ways of continuing to suppress Russian oil production through their support of Ukraine’s drone warfare on Russisan oil assets, curbs on Russia’s so-called shadow tanker fleet, the pathetic oil price cap, and further sanctions bills. As I write, the EU’s attempt to introduce a 21st package of anti-Russian sanctions – itself a laughable demonstration of the poverty of sanctions as a weapon of war – is meeting considerable resistance from impacted European companies, and the much heralded “bone-crushing” sanctions bill of the now deceased former US Senator Lyndsey Graham for South Carolina seems to be meeting some opposition from Trump).
Sluggish Oil Prices
What can account for the sluggishness in oil prices? We have identified various factors. Increasing supplies from South America (e.g. Venezuela, Brazil, Guyana) are frequently cited. Other countries that have significantly increased oil production following the 2026 Gulf crisis include the United Arab Emirates (which hit a record 4.1 million barrels per day, Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—pushed to raise output quotas to offset earlier wartime supply constraints. The US led an initiative to run down global oil reserves which, at least until they began to look as though they might run dry, helped to moderate prices at the pump. Additionally, higher pump prices have probably led consumers to be more cautious in their consumption which, in turn, will have moderated demand. Demand was also reduced by China which had accumulated reserves in excess of the rest of the world combined and which could afford simply to drastically reduce or cut off its demand from international sources altogether.
And, as we have already discussed – the workarounds – overall output recoveries accelerated as producers successfully diverted supply through pipelines and non-Gulf export routes. Meanwhile, non-OPEC+ contributors like Brazil capitalized on deepwater pre-salt fields to reach historic production milestones, becoming a key global swing supplier.
Another consideration has to do with the ways in which oil markets operate which today depend considerably on AI, whose algorithms give what turns out to be excessive weight to official statements, including a series of untrue or exaggerated claims by President Trump that the crises was about to be resolved. Even traders who did not use AI found that the collective market judgment as determined by AI made it unprofitable for them to try to establish a counter trend. Thus, quoted prices fell out of synch with the empirical reality and the prices that people actually paid.
Market Manipulation
In as much as it is exceedingly long and insufficiently leavened with signposts and summary conclusions there is a characteristic but helpful discussion on this today by Ron Unz, who directs his attention to the likelihood of foul play in the sense of market manipulation. Unz cites many good sources to the effect that actual prices have far exceeded paper prices, including a top energy expert who had held a senior role in the Biden Administration, interviewed on Bloomberg TV had declared that physical barrels of oil were actually selling at $150 or $170. Before beginning to give numerous examples from the domains of other commodities, Unz opines:
“The notion that oil markets might be subject to manipulation and their prices totally divorced from reality may be deeply disturbing to many individuals. What might be called “market fundamentalism” is a powerful tenet of our overwhelmingly financialized economic system…But whether or not this applies to recent oil prices, it seemed undeniable that it has sometimes been the case in the past.
Unz then goes on to look at some potential sources or illustrations of market manipulation:
“Another means of manipulating the markets was to place huge short positions on oil at the very beginning of a week because these were accorded a great deal of weight by the AI trading algorithms. These oil shorts often made no logical sense given economic and geopolitical considerations, but they moved the financial markets in the intended direction.
“Pilkington also discussed the implications of something called the “crack spread,” the industry term for the difference between the price of crude oil and that of the refined petroleum products extracted from it. He provided a chart showing that the official value of the crack spread was currently at absolutely unprecedented levels.
“One possibility was that refineries worldwide were currently enjoying profit margins far greater than they had ever previously achieved. But Pilkington believed it was much more likely that the price they were actually paying for barrels of crude was considerably higher than the figure widely quoted in the public markets, perhaps around $110 a barrel rather than $75 or $80. This would confirm the statements made earlier by the Saudi Finance Minister and others.
“A seemingly knowledgeable commodities expert named Chris Martenson made very similar arguments regarding obvious market manipulation about a week later when he was interviewed by Lt. Col. Daniel Davis.
“Although oil inventories were as low as they had ever been, we were simultaneously seeing the largest volume of oil short contracts in history. Such a combination made absolutely no logical sense, and strongly suggested a massive attempt at market manipulation.
“A few weeks after the Iran War began, there had naturally been a very high ratio of long positions on oil to short ones since there were widespread expectations that the price would rise as the Strait remained closed. But by late June, this had completely reversed, and the ratio of short to long positions on Brent oil was the absolute highest that it had ever been during the last fifteen years. Perhaps everyone had suddenly become absolutely certain that oil prices would fall, but more likely this represented market manipulation.
“Martenson also devoted considerable coverage to the complexities of our Strategic Petroleum Reserve, and the difficulties of our current drawdowns. He noted that some of our older storage sites probably could not be refilled for geological reasons and that using their oil merely to keep global prices low would be remarkably irresponsible.
“One interesting aspect of these SPR releases was that in the past we had always simply auctioned off that petroleum, but this time we were essentially loaning it out, requiring the buyer to return 120% of the same amount within the next couple of years or so. But since oil future prices were apparently so much lower than current values, these buyers could lock in large arbitrage profits by buying futures contracts, taking delivery, and then returning that oil to the SPR. However, if these oil futures were being manipulated and actual supplies might be much tighter than expected at that point, there could be a horrendous short squeeze with the sellers of the futures contracts desperately trying to locate physical oil barrels that weren’t easily found.”
Declining US Stockpiles
I noted in a recent post that the US and Iran appeared to each be trying to exhaust the other and that Iran had a reasonable chance of winning this tug-of-war, not least because its own weapons stockpiles have to cover so many fronts, including those of Ukraine and Taiwan in the existential US-European battles to destroy Russian and Chinese civilization.
On Sonar21, Larry Johnson writes today on the rapid depletion of US battlefield missiles
Drawing on data supplied from CSIS, the Payne Institute, and major media outlets (as of mid-2026), he finds that the situation for the US is not encouraging. As an example, he looks at the Tomahawk missile:
“Let’s take the case of the Tomahawk missile. Let’s assume there are 3,000 left (I believe that is a generous over estimate) and the remaining number are divided evenly among CENTCOM, EUCOM and PACOM… That means each command gets 1,000. Does anyone want to argue that in the event of a hot war with Russia or China that EUCOM and PACOM respectively would be able to sustain combat operations for more than four weeks? Hell, CENTCOM fired 850 of them during the first four weeks of EPIC FURY.
Here’s another major problem: All eight missile systems rely on rare earth elements — there are no exceptions among modern US precision-guided weapons. The dependence is nearly universal because rare earth permanent magnets are irreplaceable for the high-performance actuators, guidance motors, and seeker gimbals that make these weapons accurate. And who controls the supply chain of these rare earth minerals? China!
Does any of this mean that the US is fated to lose in the Gulf? No, I don’t think so. We simply don’t know the size of Iran’s arsenal, and what we do not know of Russian and Chinese support for Iran far outweighs the little we think we do know. There is room to be nervous about machinations likely ongoing in Armenia and Azerbaijan, possibly in conjunction with Israel, about Israel’s scope for mischief in its ongoing war with Hezbollah in Lebanon.
