There's a particular kind of dread that sets in when you're watching an official tweet get deleted in real time.
On Tuesday, the Energy Secretary posted that the U.S. Navy had successfully escorted an oil tanker through the Strait of Hormuz.
Markets moved on it...
Brent crude swung 17 percent in a single session, briefly crashing below $80.
The White House press secretary then clarified: no armed escort had actually taken place. The tweet disappeared. Brent recovered toward $90. And somewhere, a few hundred traders made a lot of money on that gap.
This is where we are on Day 12 of Operation Epic Fury.
The war that started February 28 with the assassination of Supreme Leader Khamenei and a series of precision strikes the administration described as a "decisive blow" to Iran's command structure is, twelve days later, still producing: daily waves of Iranian missiles aimed at nine countries, a global oil shock that briefly hit $120 a barrel, and a White House that cannot decide what the goal of the war actually is.
Let me try to explain what this means for your wallet. And I'm warning you upfront: it's a lot.
The Math That Doesn't Care About Press Briefings
The Strait of Hormuz is 21 nautical miles wide at its narrowest point. That is roughly the distance from Midtown Manhattan to JFK Airport.
Through that gap flows more than 20 million barrels of oil per day, one-fifth of global petroleum consumption, one-quarter of all oil traded by sea. It also carries a meaningful share of global LNG and a third of the world's seaborne fertilizer exports.
In other words, it isn't just an oil route. It's the circulatory system of the global food and energy economy.
Before February 28, roughly 138 vessels transited the Strait on an average day. Right now, that number is approximately two.
Not because Iran built a wall across it. Because it didn't need to.
War-risk insurers pulled coverage. Without insurance, no shipowner sends a vessel through. It's not the missiles that closed the Strait. It's the actuarial tables.
The result: 150 tankers sitting at anchor in open Gulf waters, 147 container ships trapped inside the Persian Gulf with nowhere to exit, and every major container line, Maersk, CMA CGM, Hapag-Lloyd, MSC, suspending operations entirely.
Goldman Sachs estimates tanker traffic has fallen roughly 90%, temporarily removing about 18 percent of global oil supply from the market.
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The bypass options that get thrown around in briefings sound good until you look at the numbers.
Saudi Aramco's East-West pipeline and the UAE's Fujairah pipeline together offer alternative capacity of about 4.7 million barrels per day. But of the 7.2 million barrels Saudi Arabia exported in February, 6.38 million relied on the Strait.
Gavekal Research estimates Gulf exporters could reroute at most an additional 3.5 million barrels per day to terminals outside the strait. Which means the world is still staring at a net shortfall of around 15 million barrels a day with nowhere to go.
To put that in context: the entire daily oil output of Russia is about 10 million barrels. We have a missing-Russia-sized hole in global supply.
Qatar's LNG production halt, combined with the effective Hormuz closure, has removed roughly 20 percent of global LNG supply from the market. Asia is getting hit first given its dependence on Qatari LNG, but Europe is feeling the secondary shock as Asian buyers outbid Europeans for every available spot cargo.
The JKM-TTF spread, which measures the Asian premium over European gas prices, just hit multi-year highs. LNG freight rates recorded their largest single-day jump ever. And as analysts at Wood Mackenzie noted, U.S. LNG export infrastructure is already running at capacity, meaning there is no American cavalry coming to fill that 20 percent gap.
The IMF has a formula for what oil price shocks do to economies: every 10 percent rise in oil prices equals a 0.4 percent increase in inflation and a 0.15 percent reduction in economic growth.
Oil is still about 17 percent above pre-war levels, after briefly touching 50 percent higher. That means we've already imported roughly 0.68 additional points of inflation into the system... and that's a floor, not a ceiling, if the disruption continues.
WTI posted its biggest weekly gain in the entire recorded history of oil futures trading, dating back to 1983. Diesel jumped 17 percent in a single session. The national average price of gasoline has already surged to $3.262 per gallon, the highest recorded under either of Trump's terms in office, with the number of states averaging above $3 jumping from 8 to 33 in less than a week.
Grocery prices follow energy prices with a lag of roughly six to eight weeks.
The fertilizer that grows the food, the diesel that moves it, the plastic that packages it, the refrigeration that preserves it... all of it is downstream of this.
Fears of stagflation are not fringe analysis anymore. Every significant oil shock since 1973 has been followed, in some form, by a global recession.
Plugging a Dam With Scotch Tape
Here's the thing about the solutions being offered. They are not solutions. They are buying time with money we don't have.
The Strategic Petroleum Reserve currently holds 415.4 million barrels, about 20 days of normal American consumption, and roughly 310 million barrels below maximum capacity.
The IEA dropped a bombshell earlier today, releasing 400 million barrels from its 1.24 billion barrels in public emergency stocks.
That is the largest reserve release in history. And it didn’t really push prices down, because the Strait of Hormuz is still contested. The war doesn't end because we opened a valve in Louisiana.
The Russia sanctions relief idea is its own kind of theater.
Trump has floated easing sanctions on Russian oil exports to flood the market. Russia produces about 10 million barrels a day, some of it still constrained by Western pressure. Unlocking even a fraction would move prices.
But consider: Russia is the single country benefiting most directly from skyrocketing fossil fuel prices right now. Russia's state budget breaks even at around $70-80 per barrel. Prices are sitting well above that.
We started a war that is actively enriching the country we've been sanctioning for four years, and now we're considering giving them a sanctions pass to help clean up the mess.
The tanker escort program? Analysts were quick to note that escorting a single tanker doesn't materially change the supply equation when well over a hundred vessels typically move through the strait on a normal day.
And even that framing is now outdated: Iran has begun actively laying naval mines in the Strait, a development intelligence officials say could extend the effective blockade for weeks beyond any ceasefire. Tehran still possesses 80 to 90 percent of its mine-laying craft. It can deploy hundreds more. A destroyer escort means very little when the floor of the channel could be a minefield.
Meanwhile, OPEC+ agreed to raise output by a modest 206,000 barrels per day in April, a number analysts dismissed as largely symbolic given the scale of the Hormuz disruption.
Traders said prices would depend less on quota decisions and more on whether oil can physically move through the Gulf. It cannot.
A War Still Looking for Its Own Reason
Conservative estimates from congressional sources put the cost of this war at roughly $1 billion a day. That's on top of a federal budget already structurally stressed.
Seven American service members have been killed, approximately 140 have been wounded, per the Pentagon.
Iran says U.S. and Israeli forces have bombed nearly 10,000 civilian sites and killed more than 1,300 Iranian civilians.
More than 43,000 American citizens have been evacuated from the Middle East on commercial and State Department-chartered flights.
All of that is the cost column. The benefit column is genuinely hard to identify... because the goals keep changing.
Trump started the war by calling for regime change, urging the Iranian people to seize power. Within days, Pete Hegseth said this was "not about regime change." The White House press secretary didn't mention regime change when listing the war's aims. Then Trump said the goal was "unconditional surrender." Then he hinted at being open to negotiations with Tehran's current leadership. Then he said the war was "very complete, pretty much." Then he said attacks would continue "until the enemy is totally and decisively defeated."
All of that happened in less than two weeks.
Here's the structural problem underneath all the messaging chaos… Iran's foreign minister has said publicly that Tehran sees no reason to negotiate with the U.S., pointing out that two previous negotiations were used as cover for attacks. So Iran's definition of winning is narrow and achievable: the regime survives. America and Israel's definition of winning is unconditional surrender.
Those two definitions are not compatible with a short war.
Every time the stated objective shifts in Washington, the market has to reprice the timeline for resolution. Resolution is when the Strait reopens. Resolution is when tankers move. Resolution is when insurance premiums fall back down and the fertilizer ships and the grocery bill stops climbing. Every contradictory statement from the administration is a small tax on that timeline. Every deleted tweet is a few more hours of uncertainty baked into futures contracts.
The Partner Who Controls the War
Here's the thing about having one partner in a coalition. You don't control the war. Your partner controls the war.
U.S. officials have essentially acknowledged this.
As the Economist has reported, American and Israeli war aims are already diverging, and the American position in that divergence is the weaker one. Netanyahu came into this conflict with regional ambitions that extend well beyond Iran's nuclear program. He sees a generational opportunity to reshape the Middle East's power structure.
That's a much longer war than the one Trump is describing.
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The U.S. reportedly informed Israel that it was "not happy" with Israeli strikes on Iranian energy infrastructure and asked them to stop without Washington's approval. That request arrived after the Ruwais refinery in Abu Dhabi, one of the world's largest, had already been forced to halt operations following a drone attack on the facility.
Iran's Revolutionary Guard has now launched 37 waves of attacks since the war began, including strikes on U.S. bases in Erbil, Manama, and Bahrain, while the UAE intercepted 26 drones in a single day, nine of which fell inside its territory.
Iran's strategy is not to win militarily. It can’t. The strategy is to widen the conflict until the political costs become intolerable for everyone who isn't Iran.
Strike the Gulf. Shut the airports. Burn the hotels. Make Dubai feel unsafe. Make Kuwait nervous. Make Saudi Arabia choose, visibly, between Washington and domestic stability.
Iran earned somewhere between $46 and $65 billion in oil revenues in 2024-2025... but even a crippled Iran with a contested strait has shown it can inflict global economic costs that vastly exceed its own.
The comparison that keeps surfacing is Vietnam. By 1967, the U.S. had dropped three times the bomb tonnage used in all of World War II on North Vietnam. They had total air superiority.
Then Tet happened anyway, coordinated attacks on more than 100 cities, a breach of the U.S. embassy compound in Saigon, weeks of fighting in Hue. The United States never lost a single battle in Vietnam. It lost the war.
The decisive arena was never the battlefield. It was the politics of an expanding conflict that had no clear endpoint.
Twelve days in, the U.S. has struck more than 5,000 targets in Iran per the White House. Iran is on its 37th wave of retaliatory strikes. There are friendly-fire incidents under review. And the administration is still workshopping the rationale for why the war started in the first place.
What This Means, Specifically, For Your Life
The war is costing America $1 billion a day. Oil hit $119 a barrel during the peak of the disruption. Gas is at its highest price of Trump's entire presidency. Diesel, the fuel that moves food across America, jumped 17 percent in a single session.
The IMF formula puts us at 0.68 additional points of inflation already locked in at current prices... and again, that's a floor, not a ceiling, if the disruption continues.
The 1973 oil shock produced a recession that lasted 16 months and permanently restructured the American relationship with energy. The 1978-79 shock contributed to double-digit inflation and the Volcker rate hikes that crushed the economy to kill it. We got out of that by raising rates to 20 percent. The Fed funds rate right now is nowhere near equipped for that kind of fight. And that was before we had $38 trillion in federal debt on the balance sheet.
Trump was reelected in 2024 largely because people were angry about inflation. He promised to bring prices down. He promised to avoid forever wars. He promised cheap energy.
The Strait of Hormuz is mined.
The war's goals change daily.
The Energy Secretary is deleting tweets.
And somewhere, a trader is watching the gap between what we're being told and what the tanker data actually shows... and making a lot of money on the difference. The market, at least, has no illusions. The rest of us are still catching up.
By Michael Kern for Oilprice.com
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