Iran War Energy Squeeze Intensifies
Saudi Arabia has cancelled or delayed European crude shipments into November after Houthi (Ansar Allah) attacks damaged its East-West pipeline, which previously moved 4-5 million barrels daily. Transits through the Strait of Hormuz have partially recovered to around 60% of pre-war levels, with Saudi volumes shifting back to the Gulf, yet diesel remains critically tight. US diesel prices hit records above $6 per gallon, crack spreads reached $115 per barrel, and Senate Majority Leader John Thune signaled openness to export restrictions as inventories stay low and global refined product flows from Russia and the Middle East have halved.
The conflict, ongoing more than six months since late February 2026, began with US-Israeli aims of regime change, missile dismantlement, nuclear rollback, and proxy cutoff. Sanctions and kinetic strikes have not delivered these, while Iran ties Hormuz access to broader US restraint on Israel in Lebanon, Gaza, Yemen, and Iraq. Houthi advances, including control of Mokha port and Red Sea islands, compound Saudi vulnerabilities; oil exports form nearly half of Saudi GDP. China holds the main spare refining capacity that could ease diesel tightness if Beijing loosens independent refiner limits.
Key tensions include whether a full US diesel export ban would crash global markets while only temporarily flooding domestic inventories before forcing US refinery cutbacks, versus a partial cap. Pipeline repairs face repeated attack risks, and further Iranian or proxy escalation could reverse Hormuz gains. Global South economies face acute fuel, fertilizer, and food pressures ahead of a potential strong El Niño, with limited fiscal buffers.
Sources: Naked Capitalism, Responsible Statecraft.
US Strategy Drift Toward Forever War
US officials now discuss “mowing the lawn” via periodic strikes with troop deployments extended into 2027, or declaring victory and withdrawing, as primary objectives remain unmet. Reports detail plans for large transfers of 2,000-pound bombs to Israel and Saudi Arabia amid dwindling US stockpiles after months of high expenditure. Official assessments describe billions spent and severe missile depletion.
Background shows repeated cycles of sanctions (long ineffective for political change) and strikes failing to reopen Hormuz or alter Iranian behavior. Iran has expanded ceasefire demands beyond earlier limited terms. Domestic political pressure mounts from energy prices near midterms, while military readiness strains.
Uncertainties center on whether withdrawal without addressing Iranian conditions on Israel would restore navigation, the risk of wider regional spillover, and sustainability of arms flows when inventories are already stressed. Analysts note a Ukraine-style stalemate emerging for Gulf shipping and energy markets.
Sources: Responsible Statecraft, Naked Capitalism.
BRICS Manages Divisions at New Delhi Summit
The BRICS summit produced a joint declaration despite sharp internal rifts, including between Iran and the UAE amid the Middle East war. Host India secured consensus with watered-down language expressing “deep concern” over escalation and calling for restraint, dropping stronger prior condemnations and all Ukraine references. The text criticized unilateral sanctions and maintained positions on Gaza and Lebanon while adding concern over the Cuba blockade.
Expansion has brought growing pains just as multiple wars test cohesion. Leaders including Xi, Putin, and Iran’s Pezeshkian attended. The outcome prioritizes institutional survival over bold positioning.
Tensions persist between members on opposite sides of the Iran conflict and over how far to challenge the dollar/sanctions system. The declaration’s caution reflects limits on collective action while energy shocks and de-dollarization discussions continue in parallel economic forums.
Sources: Responsible Statecraft, Naked Capitalism.