Elon Musk’s Grok ‘used in Iran strikes’ sparks alarm over AI-powered warfare claims, US says

TEHRAN, August 18. /TASS/. The Strait of Hormuz will remain closed until the United States fulfills the terms of the Iran-US memorandum, the speaker of Iran’s parliament, Mohammad Bagher Ghalibaf, said. "The Strait of Hormuz will not open until the blockade against Iran is lifted, frozen Iranian assets are unfrozen, the oil embargo is removed, threats and military operations on all fronts cease, and other conditions of the memorandum are fulfilled," Iran's Mehr news agency quoted him as saying.

The United States and Israel launched a war against Iran on February 28. In June, Washington and Tehran, mediated by Islamabad, signed a memorandum of understanding providing for an immediate halt to hostilities on all fronts, including in Lebanon. However, the United States resumed large-scale strikes on Iran overnight into July 8, accusing it of violating the agreement's terms regarding the Strait of Hormuz.

US Navy Destroyer Suffered 4-Day Power Outage In Sweltering South China Sea

Large US naval battleships continue to suffer problems at sea. While there have been many headlines of late detailing the problems of the USS Abraham Lincoln carrier connected to its extended deployment amid the Iran war, a separate warship is having serious problems in Pacific waters, quite apart from the crisis in the Persian Gulf.

"A US Navy guided-missile destroyer spent four days last month without working toilets, galley services and air conditioning in the blistering heat of the South China Sea after the warship lost power," CNN reports. Arleigh Burke-class guided-missile destroyer Benfold. US Navy/AP

The military has since confirmed an engineering failure which caused the significant outage, which basically shut down all the ship's systems, including the ability to maneuver on its own.

A US 7th Fleet statement identified that the USS Benfold, an Arleigh Burke-class guided-missile destroyer, was on routine operations in the Indo-Pacific on when an "engineering casualty involving its generators" occurred.

It happened on July 24, and has now set back additional operations. It was supposed to be part of the USS George Washington strike group which is at the moment headed to the Middle East in order to relieve the Lincoln carrier.

However, the Benfold is still stuck in Asian waters. "There were no injuries to the crew, who demonstrated resilience, grit, professionalism, and unwavering steadiness in their response," the US Navy statement said.

The four-day crisis impacted the ship's galley services, toilets, air conditioning and potable water, the 7th Fleet also confirmed. The heat would have been sweltering.

No explanations have been given as to how the crew managed the waste problem. USNI, which first reported the crisis, describes of the repair process:

The George Washington Carrier Strike Group supported the destroyer, according to 7th Fleet. USS Robert Smalls (CG-62), the cruiser attached to the George Washington Carrier Strike Group, helped provide meals for the crew, Comer said.

Contractor tugboats towed Benfold to Subic Bay where it was met by personnel from the Ship Repair Facility – Japan Regional Maintenance Center on July 28, with crew receiving contracted lodging off the ship the next day. Power was restored on July 30, Comer said.

All repairs were completed by Aug. 7 when the ship completed a berth shift for fuel. The destroyer left Subic Bay on Aug. 8.

Benfold, which had been sailing with the George Washington Carrier Strike Group, pulled into Yokosuka, Japan, on Thursday, according to ship spotters. It did not transit the Malacca Strait with the other ships of the GW CSG, which are likely heading toward the Middle East.

The timing of this engineering failure incident is very bad for the navy, given already there's much scrutiny being placed on long deployments at sea connected to the Iran conflict.

US Navy destroyer left without working toilets, food service or AC for FOUR DAYS after losing power in sweltering South China Sea USS Benfold suffered generator failure on July 24, leaving its crew without basic amenities amid blistering heat — 7th Fleet spox confirms to CNN pic.twitter.com/CJBm5r7jv1 — Michael Ashura (@MichaelAshura) August 17, 2026 Congressional leaders are currently focused on the beleaguered USS Abraham Lincoln, amid reports of problems in supplying the ship and mental health problems following a record-deployment.

The Hill reports Monday that "A group of 15 senators said Defense Secretary Pete Hegseth owes Americans answers about the ongoing deployment of the USS Abraham Lincoln aircraft carrier strike group after reports of low morale and a mental health crisis among service members aboard."

Tyler Durden Mon, 08/17/2026 - 22:10

Iran war pushes Middle Eastern airlines towards $4.3bn loss in 2026 As the US and Israel launched air strikes on Iran on 28 February 2026, Iran struck back near US military installations in the Gulf, including in Qatar and the UAE. Several international airports were hit by Iranian strikes, including Dubai, the world's busiest for international passengers, as well as Abu Dhabi, Kuwait and Bahrain.

The UAE, Qatar, Bahrain and Kuwait closed their airspaces due to safety concerns, gradually reopening them a week later as hostilities lessened. The war has had long-lasting consequences for regional aviation: falling passenger and cargo demand, fewer private jet flights, and global repercussions from high jet fuel prices.

The International Air Transport Association's (IATA) June outlook estimated that airlines operating from the Middle East will see a $7.2bn net profit in 2025 become a $4.3bn net loss in 2026. New MEE newsletter: Jerusalem Dispatch Sign up to get the latest insights and analysis on Israel-Palestine, alongside Turkey Unpacked and other MEE newsletters Most major regional carriers have resumed operations, including Emirates, Etihad and Qatar Airways, but not at full capacity.

Emirates CEO Tim Clark told the Financial Times in June his planes were flying at three-quarters capacity. Conversely, most European and Asian airlines' flights in the region remain suspended. Air France expects to resume in late August and Lufthansa in September, while British Airways, Cathay Pacific and Singapore Airlines are all targeting late October.

Air Canada is not planning to resume before mid-January 2027, and many others have not announced a restart date at all. Regional airspaces have reopened, but are still facing intermittent closures and disruptions. The EU Aviation Safety Agency’s most recent bulletin advises operators to “avoid the airspace of Bahrain, Kuwait, Qatar, the UAE and part of the Gulf of Oman until 31 August 2026”.

The result is limited choice for travellers. For a one-week round trip between the UAE and London in September, the only options are Emirates to Dubai, Etihad to Abu Dhabi, or Air Arabia to Sharjah, while to fly between Doha and Tokyo on those same dates, only Qatar Airways is available.

Business under threat Gulf airlines organise their activity around a hub-and-spoke model concentrating traffic at a central base and operating flights worldwide from there. Passengers connect onward from the main hub, offering connections that are otherwise unavailable or sometimes cheaper fares than direct flights.

This model has long relied on the Gulf’s strategic position between Europe and Asia, forming what analysts describe as a “bridge” between the two continents. But the war has put this model at risk. '[Gulf airlines are] connecting carriers whose economics depend on moving large volumes of passengers' -Naveed Kapadia, aviation lecturer Naveed Kapadia, an aviation lecturer at Buckinghamshire New University, told Middle East Eye that while competition for airlines such as Qatar Airways and Emirates is “greatly reduced”, allowing them to “capture market share and maintain stronger fares”, they remain “connecting carriers whose economics depend on moving large volumes of passengers efficiently through Dubai and Doha”.

Kapadia said IATA’s June data showed Middle Eastern passenger demand fell 13.9 percent year-on-year, while direct traffic between Europe and Asia rose 11 percent, already revealing a strain on the Gulf carrier’s model. This leads to cost increases across the board.

“Where flights must use longer or less efficient routings, airlines face higher fuel burn, longer crew duty periods and reduced aircraft utilisation,” Kapadia said. The extra fuel many now carry in case of disruption also directly limits “passenger or cargo payload that can be carried”.

The hub-and-spoke model leaves airlines susceptible to disruption, as aircraft and crews can be stranded far away, causing cascading delays and cancellations across the entire schedule. Emirates innovates Emirates has been innovating to win back the customers it had before the war, as many are hesitant to book flights connecting through Dubai in case hostilities resume.

One measure is an unprecedented travel insurance policy, offering comprehensive coverage even in case of conflict-related cancellation. Until now, most travel insurance voided cover in the event of war-related disruption, leaving passengers to absorb the costs themselves.

The policy aims to prevent passengers from being stranded, with Emirates offering to fly them home on other airlines if needed. CEO Tim Clark told the Financial Times the aim was to guarantee “we would get you back irrespective [of whether it's] on Emirates or not”.

Dubai has also been trying to reboost tourism more broadly, offering complimentary packages for visitors invited by Emirati nationals and free hotel stays for long connecting flights. Cargo demand lags Cargo carriers have also been impacted by regional disruptions.

Kapadia said Middle East cargo demand grew roughly a third slower than the rest of the industry’s, at 5.6 percent year on year, behind the global rate of 8.5 percent. Citing IATA figures, Kapadia said traffic between Europe and the Middle East remained 41.

1 percent below the previous year, while Asia-Middle East traffic was down 4.1 percent. He added that while “disruption to maritime traffic through the Strait of Hormuz is creating demand for faster alternatives, particularly for urgent, high-value and time-sensitive shipments”, this was not a "straightforward windfall" for Gulf-based cargo airlines.

Middle Eastern carriers such as Qatar Airways Cargo and Emirates SkyCargo account for around 13 percent of global air cargo traffic. “The more important question,” he said, “is whether they can convert short-term urgency into sustained and profitable cargo flows.

” Private jets staying Similar disruptions have also been observed in the private jet sector. Nick Koscinski, an aviation analyst at WINGX, told Middle East Eye that as of 10 August, overall private jet traffic originating in Gulf countries was down 46.

5 percent since the war began. 'The vast majority of flights stayed within the Middle East region' -Nick Koscinski, aviation analyst “The vast majority of flights stayed within the Middle East region,” he said, though volumes there are “still down considerably”.

Europe remains the second most common destination from Gulf origins, but Gulf-to-Europe flights are down 41.0 percent. Koscinski said Qatar Executive, one of the top Gulf-based private jet operators, had been more resilient than UAE or Saudi Arabia-based competitors.

Total flights are down 6.7 percent since the war began, against 28.7 percent for a comparable UAE-based operator and 39.0 percent for a Saudi one. Koscinski said operators “likely have some ability to pass increased operating costs, like fuel spikes, through to the consumer via surcharges”, but lags in repricing and “softer demand overall” mean they will still take a financial hit.

Fuel costs squeeze margins Jet fuel prices fell 20 percent in June as Gulf oil flows temporarily improved, Kapadia said, but remained “45.8% higher than a year earlier”. IATA forecasts the 2026 jet fuel price average will run 70 percent above 2025 levels.

Kapadia expects “Gulf airfares to remain elevated and volatile rather than rise uniformly” because “airlines will try to recover higher fuel and disruption costs through fares to some extent, but they cannot pass on every additional cost without weakening demand, particularly among price-sensitive leisure travellers.

” Low-cost carriers around the world have been particularly vulnerable to the jump in fuel cost: US-based Spirit Airlines ceased operations on 2 May 2026, while Air Baltic and Wizz Air face growing bankruptcy risk and are forced to restructure operations.

A McKinsey report found that around 70 percent of jet fuel surcharges are passed directly to consumers, with airline margins recovering only briefly when fuel prices fall. It said the economic pressure will force airlines to retire older aircraft, cut less-booked routes, and further trim overhead costs.

Not every carrier is equally impacted. Israel’s national airline, El Al, has recently reported record profits, more than double the previous year. Many passengers have criticised the “outrageous” fares, as the continued flight suspension by international carriers leaves the airline in a near-monopoly.

Harsha Jaison, an aviation consultant at ICF, told Middle East Eye the conflict has set a precedent that will probably outlast it. “Airport investment deals, geopolitical risk is increasingly being reflected in downside scenarios, valuation assumptions and risk premiums,” she said.

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AI Pledge Allegiance To The Flag

By Bas van Geffen, senior macro strategist at Rabobank

As Bloomberg recounts that “the ceasefire is set to expire today,” there is little left of that truce to begin with. Negotiations have broken down. And over the weekend, Israel conducted new strikes in Lebanon, a bulk carrier that tried to leave the Strait of Hormuz was hit by a projectile, and Yemen’s port suspended operations after Houthi missile attacks.

Both sides are evaluating their options in the current stalemate. Iran’s hardline leadership is reportedly planning to widen the war, as they seek to raise the costs for the US and regional leaders. It may be their counterstrategy to the “unprecedented” economic sanctions that the US is threatening to impose on Iran.

Those sanctions could already be costly for the US. Bloomberg explored what this “economic isolation” of the country could look like, given that Iran is already the subject of a plethora of sanctions and a naval blockade. And most of them have some repercussions for the US too. The US’ strongest move might be to sanction Chinese banks that finance the trade in Iranian oil, but this will surely worsen US-China relations ahead of a scheduled Trump-Xi meeting.

And just by the conflict dragging on, the cost for the US increases. The Financial Times reports that US voters disapprove of most of Trump’s economic issues. The US president scores particularly bad on the cost of living, as most voters feel worse off due to higher inflation.

Washington has been trying to manage these costs through its strategic petroleum reserve, but that hasn’t stopped prices from going up. And, crucially, these reserves are finite. The SPR has fallen below 300 million barrels for the first time since it was filled in the 1980s. This adds to concerns about the integrity of the caverns – as experts are divided over the amount of oil that needs to remain to prevent structural damage to the storage sites.

Perhaps feeling that pressure, President Trump maintains that the war will be over soon, and that Iran will be “badly defeated.” Traders are not convinced: markets are dragging their feet at the open. This weekend, Trump added that he would declare the Strait of Hormuz United States territory “pretty soon.” Because “essentially, that’s what it is. We have the blockade. No ships get through unless we want them to.” The Guardian concludes that the “seriousness of [the] remark made in New York on Friday, and whether it signaled a new policy position, [is] not clear.”

That may be the case with many of his off-the-cuff comments, but their consequences can be severe. President Trump has previously threatened to withdraw military support for countries that do not invest in their own defense, or that do not align with the US on geopolitical or geoeconomic matters like trade.

As a case in point, President Trump expressed his discontent with South Korea’s lack of help in the Iran war. And on that basis, Trump ordered the Pentagon to “substantially reduce” the joint military drills with South Korea. He even indicated that he would have cancelled the exercise entirely if it hadn’t been too late for that – despite repeated warnings from US military intelligence that North Korea is gaining valuable experience by aiding Russia in its war against Ukraine.

Washington is preparing a similar carrot-and-stick approach in the field of artificial intelligence. The US wants to force countries to pick a side in the AI-race with China. Any country that signs a deal with Beijing could be cut off from the US’ AI coalition. The draft policy is an extension of the Pax Silica agreement, which was designed to improve the US’ access to critical resources and to strengthen supply lines for semiconductors.

Various countries have already joined the US agreement, which is not binding. China has since launched a rival alliance, causing Kazakhstan to effectively be a signatory to both frameworks. That’s a concern for the US, primarily because the country has a cache of critical minerals. But Washington also wants to prevent that its rivals get access to its frontier AI models and research.

So, the Trump administration may soon send out letters telling its allies to pledge allegiance to the flag – or be cut off from US technologies. It’s a reminder that gross domestic compute is becoming an increasingly important element of strategic autonomy and the power a country can project on the global stage.

The EU, positioned right on the US-China fault line, is still trying to navigate the increasing rupture between the two blocs. Last year, Brussels reluctantly signed a trade deal with the US, to prevent worse. Part of that deal includes a pledge to increase investments in American production facilities. However, whether that materialises is up to private companies, The German economic institute IW calculated that companies cut their US-bound FDI by two thirds in the first half of 2026, to the lowest level since 2023. This reluctance to invest may be entirely due to the uncertainty about US-EU trade relations and the overall economic outlook. Yet, it may put Europe in Trump’s crosshairs again.

Tyler Durden Mon, 08/17/2026 - 09:50