A Weekend In Geopolitics Is A Long Time

Iran, Hungary, Ukraine, Ireland and more

That “two week” ceasefire turned out to be extremely shortlived and predictably it seems the Mullahs misread the room and maybe the coverage from the MSM and decided they could make demands of VP Vance and team that would allow them to keep their nuclear ambitions and the like.

I think they must have got some “How to handle Trump” lessons from the Somali owners of the “Quality Learing Center” because they sure Leared Gud about how President Trump handles uppity foreigners making demands.I do wonder whether President Trump uses the MSM’s hatred and disdain for him as an additional leverage point to get his way as his enemies are lulled into believing that he’s an impetuous idiot. As I saw someone say somewhere recently, with Trump it’s not so much that theres a method to his madness so much as the madness is the method. Trump’s enemies believe what the MSM says about him and thus misunderstimate him to their loss.

Remember the “You don’t have the cards” statement to President Zelensky? - apparently that was not in the Learing Center plan that the Mullahs studied. That was their loss as they now have allowed the US to look like the reasonable good guys while they come across as the fanatical nutters.

Ukraine

It must be noted that Zelensky certainly took note of his schooling at the hands of Trump, and has done a sterling job afterwards of negotiating a hostile Washington while not losing to Russia. In fact thanks to new investments by gulf arab nations into Ukrainian drones and drone defenses, Ukraine is probably financially secure that it no longer absolutely needs US support, though it certainly benefits from that support, and as “A Muse” points out, US support of Ukraine under President Trump is greater than both European support of Ukraine and European payments to Russia for oil and gas

Trump Is Quietly Sending Ukraine Billions While Europe Continues to Send Putin $2 Billion a Month

Yes the Europeans are paying both sides of the Russia/Ukraine war roughly equal sums, and probably in total have paid Russia more. Oddly enough people like Phillips P. OBrien don’t mention that when they bitch about how Trump is handing Putin everything he wants. Bizarrely, as AMuse points out, it seems to be in the interest of all sides to ignore the fact that the US is transferring $2B a month of military stuff to Ukraine.

Talking of PPOB… he mentions¹ a fascinating series of Xeets by President Zelensky that should make uncomfortable reading for many. Note that I don’t think Zelensky is wrong in anything he writes either, though I’m quite sure he’s being an advocate for Ukraine and thus a neutral party might quibble or mention things that Zelensky skips.

Anyway as PPOB mentions in his weekend Ukraine update, Russia seems to be benefiting from the war in Iran because of the US temporarily suspending sanctions on Russian oil and gas. He does the sums and reckons that, with Ukrainian attacks included, Russia is still ahead

I think that sum is fine as it goes. But… there are a few things it ignores. One quick thing is forgets is that Russia’s navy is now -2 large expensive ships (the Admiral Essen in Novorossiysk and the ice breaker in Vyborg), which are at this point effectively irreplaceable. Russia’s Black Sea fleet is now down to one major surface vessel and even that is basically locked in port awaiting its own rendezvous with a Ukrainian drone.

But there are two larger trends as well.

Firstly Russia will no longer get any drones or other weapons from Iran. The Iranian factories have been destroyed and many of their leading scientists and engineers appeared to have been droned, along with the ports on the Caspian sea that could transfer them. It is not clear to me how many of Russia’s more recent drone attacks used Iranian built drones, as opposed to ones built in Russia under license, but given that Ukraine has also struck heavily at Russia’s drone factories the fact that it can’t get resupply from Iran certainly hurts the war effort. In particular, if there are specific jigs or machine tools needed to build these drones that come from Iran and that have been damaged by Ukrainian attacks, then those items are not going to be replaced directly. Instead Russia will have to get someone else (probably China) to supply something similar and then rejigger the process to use the Chinese kit that is not quite the same as the Iranian kit. That makes repair slower and more problematic.

Secondly, the same applies, only more so, to repairs to its oil and gas infrastructure. Both Iran and Russia need to repair war damage. As do the gulf nations hit by Iran. There are not a huge number of suppliers of new distillation columns, pumping station parts and so on. For certain things (e.g. LNG processing facilities) there are no more than about three suppliers of key components and all of them are either German or Japanese (or maybe Swiss/other European); for others there are more but still the number is limited and again is mostly Japanese or European. All these manufacturers now have priority orders being placed by the gulf nations that they will happily put to the front of the queue because the gulf nations will pay them in advance in the currency of their choice and without any of the required export license jiggery pokery that Russian orders have. That means that Russia is now reliant on Chinese manufacturers (and even then it has to fight other customers, such as Iranian ones) and it is a dirty little oil and gas industry secret that the Chinese products are markedly inferior to the German/Japanese ones. There may be some Indian subcontinent manufacturers too, but their quality is no better than the Chinese ones.

In other words, Russia is not benefiting much from the Iran war. In fact in the medium term it gets worse. The Ukrainian supplying of drone defenses to the gulf means, as I said above, that the Ukrainian defense industry is getting a large investment from the gulf states. That in turn means that the Ukrainians can build more and better drones and missiles and can therefore continue their campaign to take out anything they want west of the Urals that isn’t in the ring of Moscow’s air defenses. In fact, while the war over Iran has taken all the headlines, the war in Ukraine is not going Russia’s way at all. Since the start of the year it seems that Russia has actually lost territory and the recent spring offensive has been a bloody disaster (literally) with Russia now committing reserve forces from other parts of Russia because it lacks enough conscript drone fodder. Russia is not yet out, but I will not be shocked if there is a sudden collapse somewhere in the Russian lines that allows Ukraine to regain yet more territory.

Elsewhere in Europe

Two other events this weekend.

In Hungary, Victor Orban lost his re-election battle. Which shows that all the rot about him being a would be dictator was false. It should be noted that the cheers of the Orban haters in the EU and so on may be a little premature. His successor was a member of Orban’s Fidesz party until a couple of years ago and he has campaigned in part on reassuring Hungarians that (lack of) immigration was still a priority. Orban’s fall from power hurts Putin and perhaps embarrasses President Trump, but it is almost certainly not the victory for the globalists that they seem to think it is. Rod Dreher (who live in Budapest) has a lot of useful information and thoughts.

Orban Going, But Orbanism Coming To Europe

At the other end of the continent, in Ireland, it looks like the government has mostly capitulated to the anti-fuel price protests. It is notable that green inspired tax rises are being postponed, and I suspect, now they have been postponed it won’t take too much for them to be quietly abolished over the summer.

I also expect that protestors in other countries will have noted the Irish protests and their success. I predict that France, at least, will see something similar. Germany may too because the price of energy is really hurting the German economy. In fact on that note, it is worth pointing out that Germany

is about to flood one of the largest energy reserves in Europe. The country’s largest open-pit mine, Hambach, sits on more than one billion tonnes of extractable lignite. Originally permitted to produce coal until 2045, the mine will shut down early under the Act to Reduce and End Coal-Fired Power Generation, passed in 2020. Its owner, RWE, received €2.6 billion in compensation for the financial burdens imposed by the law. This sum covers the early closure of coal-fired plants in North Rhine-Westphalia as well as the closure of Hambach and other mines.

RWE is now obliged to flood the pit fifteen years earlier than originally planned. Starting in 2030, Rhine water will create Germany’s second deepest lake over the course of four decades. The project is not uncontested on environmental grounds. Critics cite excessive strain on the region’s water reserves and long-term chemical risks to the groundwater, among other issues.

Drowning a billion tonnes of coal under a recreational lake—making future access economically impossible—is not unlike dynamiting functioning nuclear cooling towers. Both amount to the irreversible destruction of a strategic reserve, executed by politicians who seem to price energy security at zero.

Rocks to Barrels

I wrote previously about Green Treason, this combined with the current ban on fracking in Germany and most of Europe makes the continet vulnerable to events like the Iran war (and the Ukraine one for that matter) that they wouldn’t be if their politicians had enough braincells that they could see the stupidity of their NetZero Greenidiocy.

The Blockade

Back to the Persian Gulf. The immediate outcome of the failed talks is that the US has announced it will blockade Iran. Meanwhile, the US Navy is also passing its own ships through the strait and apparently planning minesweeping operations

source

That means that the Chinese social media post and map above is now wrong for most countries. It looks like the Iranians are going to struggle to impose their toll regime. while US will impose its one just fine. That is going to really hurt Iran as this long Xitter thread explains:

The U.S. naval blockade of the Strait of Hormuz would cost Iran approximately $276M/day in lost exports and disrupt $159M/day in imports, a combined economic damage of ~$435M/day, or $13B/month.

Over 90% of Iran's $109.7B in annual trade transits the Persian Gulf. Oil/gas accounts for 80% of government export earnings and 23.7% of GDP. Kharg Island alone generates ~$53B/year, or as I noted to @TIME, "$78 billion a year in energy revenue

…

ALTERNATIVES? Iran's options outside the Strait are negligible. Jask, the much-touted bypass, operates at a fraction of its 1M bbl/day design capacity. Only 10 of 20 storage tanks were built. Effective throughput: ~70K bbl/day. Chabahar handles just 8.5M tons/year. The five Caspian ports combined handle 11M tons, versus 220M+ through the Gulf.

…

Extremely important topic is the storage clock: Iran has ~50-55M barrels of total onshore oil storage, roughly 60% full. Spare capacity: ~20M barrels. With 1.5M bbl/day of surplus production that normally exports, storage fills in ~13 DAYS. After that, Iran must shut in wells.

Why is this very important: when mature oil wells shut down, bottom water rushes in, a process called water coning. Oil droplets get permanently trapped in rock pores. This oil can never be recovered. Iran's fields already decline 5-8% annually. Forced shut-ins could permanently destroy 300,000-500,000 bbl/day of production capacity, that's $9-15B/year in revenue, gone forever.

…

BOTTOM LINE: A naval blockade imposes ~$435M/day in combined economic damage. Storage fills in 13 days, forcing well shut-ins that cause permanent reservoir damage. The rial enters terminal collapse. Iran's alternatives outside the Strait can replace less than 10% of Gulf throughput. The blockade makes continued resistance economically impossible.

This is actually a game changer, not only does the economy collapse even more but also Iran has roughly 13 days to get with the program or it starts losing oil production that cannot be restarted. Or at least, not easily. My belief after a couple of searches on the internet² is that some fracking techniques can be used to fix the water coning to some degree, but there’s only one country that has the technology to do that. You are invited to guess which one that is.

If Iran does not capitulate in 13 days then it will lose oil production of 300,000-500,000 bbl/day (out of some 1.5M bbl/day, so ~25% or more) that can only be recovered if American experts are allowed to work the fields. That expertise is not going to get there without agreements similar to the ones with Venezuela where US oil firms get a share of the output. The blockade also stops Chinese weapons resupply vessels and means that the US can now simply seize shadow fleet vessels and their contents and resell both. So not only does Iran not get the money or resupply, the shadow fleet shrinks and the shadow fleet customers have to pay market rate in US$ to get the oil.

I’ve seen some people wonder whether this will cause our Chicom friends to get frisky. The problem they have is this - (most of) the shadow fleet tankers are not flagged to China or indeed any major shipping nation. It is possible that a Chinese flagged tanker will try to dock at Kharg Island, but if it does I very much doubt it will leave. In fact a truly wicked thing the US could do is threaten to mine the entrance to the Kharg Island oil terminal and dare tanker owners to discover the hard way whether it has done so or not.

Finally the US has promised to seize vessels that seek to pay off the IRGC. Amuse pointed out last week that it is quite possible no vessel has done so despite the news reports. Combine that with the minesweeping and it looks like the potential funding from protection money that the IRGC hoped for simply won’t emerge.

The Slow Oil Shock and West Taiwan

As I and others noted repeatedly, the US has been in no hurry to ensure the Strait of Hormuz remains navigable. That, it seems to us, is a deliberate strategy aimed at people other than the Mullahs. The prime target is almost certainly the Chicoms, who are being hurt a lot by the lack of oil and other trade through the strait. The NY Times had a bit of Chicom copium last week that claimed with little concrete evidence that the PRC was less vulnerable to lack of gulf oil than other nations. However that same article also stated that

Chinese companies have come to dominate much of the world’s chemical supplies. Three-quarters of the world’s polyester and nylon, for example, are made in China.

Now it is quite true that the PRC has done a lot of adaptation to use coal rather than oil as a feed stock for its chemical industry and it’s fertlizer industry. But despite that, and despite the coal powered EVs, the country remains heavily dependent on oil and much of that oil came from the gulf region.

I have seen posts on Xitter that suggest that the lack of oil is causing a lot of pain to China’s plastics industry. Here in Japan I have seen a few news reports about shortages of naphtha and some plastic wrapping/packing and I strongly suspect that there are a lot of similar shortages in West Taiwan. The most important thing this does is add an additional challenge to the PRC’s economy which is not in great health to begin with. That, combined with the destruction of Iran’s PRC supplied air defenses and the failures of its PRC supplied missiles delays any attempt to take Taiwan by months if not years. If it is delayed long enough it becomes impossible because Taiwan will have its defenses improved as will Japan.

Finally, because nothing says that the President can kill two birds with one stone. The lack of oil traffic in the Persion Gulf means oil tankers are headed in record numbers to the Gulf of America to fill up with American oil.

All in all it’s been an interesting weekend, with about as many events as usually fit in to a couple of months. But that’s 2026 for you: about a years worth of events every month

1. But fails to actually link to them, probably because he’s still got his knickers in a twist about Musk buying X and removing all the censorship he liked. So I’m returning the favor and not linking his posts

2. It is possible I am wrong and no one can recover the oil. I am not a fracking expert and make no claims to be one.