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strikeMay 13, 2026

Hormuz oil shock tilts shipping towards alternative fuels

Summary

Hormuz oil shock tilts shipping towards alternative fuels The current oil price shock is making alternative fuels more cost competitive in the shipping sector. LNG benefits the most, becoming even more attractive compared to conventional bunker fuels. Methanol is also becoming more viable, strengthening the case for methanol-ready vessels. Still, the emissions benefits remain limited Alternative fuels more attractive now as oil shoots higher The Middle East conflict and blockade of the Strait of Hormuz have disrupted oil supply and pushed shipping fuel prices, like marine gas oil (MGO), sharply higher. In this environment, fuel strategy is no longer just about cost, but also about securing supply and managing price risks. At the same time, higher prices and greater uncertainty are shifting the relative economics of alternative fuels, even as regulatory progress has slowed with the delayed introduction of a global carbon price under the IMO’s Net Zero Framework. Prices for Marine Gas Oil spiked due to the closure of the Strait of Hormuz MGO bunker prices in Rotterdam in $ per tonne; we’ll analyse two scenarios Our modelling shows how the costs and economics of renewable fuels of non-biological origin (RFNBOs) – also called synthetic or e-fuels – change in a high oil price scenario, from a Northwest European perspective. The Middle East war has squeezed the supply of oil and oil products. LNG is similarly affected, but less so, as more capacity is coming online, and natural gas continues to be supplied through regional production and pipelines. Our analysis translates the current geopolitical risk into a simple message for shipowners and cargo owners: when oil products spike and gas rises less, the relative economics of LNG and (to a lesser degree) methanol and even ammonia improve quickly, even if the absolute cost of all energy carriers rises. Decarbonisation requires shift to lower carbon fuels While geopolitical tensions do not alter the fundamental science behind decarbonisation, and hence emissions, they do influence the economics of the business case for different fuels. Traditional marine fuels such as marine gas oil (MGO) and very low sulphur fuel oil (VLSFO) currently generate approximately 1,900 kg of CO2 per deadweight tonne for every 1,000 kilometres sailed. This carbon footprint can be lowered by transitioning to alternatives like LNG or synthetic fuels, like methanol and ammonia. However, meaningful climate benefits are achieved only when vessels use the green or blue variants of these synthetic fuels. Just switching to grey methanol or ammonia would only worsen the footprint to 2,500 or even 4,000 kg of CO2. LNG and blue and green versions of synthetic fuels can reduce carbon emissions from shipping Indicative well to wake emissions for different shipping fuels in kilograms CO2 per deadweight tonnage per 1,000 kilometres (kgCO2/DWT/1,000km) Structural changes in fuel prices can significantly influence how and when alternative solutions are adopted within the shipping industry. To assess this impact, we examine the impact of current high prices on the business case for oil and gas-based shipping fuels and synthetic fuels like methanol and ammonia. The duration of elevated fuel prices remains a subject of intense discussion and is closely tied to ongoing geopolitical developments surrounding the closure of the Strait of Hormuz, as well as the potential damage to oil and gas infrastructure in the Middle East from further conflict. You can find our most recent scenario analysis here. In this article, we set aside geopolitical factors and focus solely on how sustained higher prices affect the cost dynamics of various fuels. When oil products remain high, LNG becomes more attractive In the high-price scenario – the one most relevant under a continued Hormuz disruption – oil products become the big movers: - MGO rises from 0.38 to 0.75 $/DWT/1,000km (+97%) - VLSFO rises from 0.30 to 0.61 (+103%) - LNG rises from 0.25 to 0.41 (+64%) The key mechanism is that the high case hits oil products harder than gas and power inputs. LNG becomes the most attractive “available now” hedge. In other words, the Hormuz-driven oil shock makes LNG not only a transitional decarbonisation option, but also commercially the most attractive option. LNG gets more competitive as the Strait of Hormuz remains closed and price gap with green and blue methanol narrows Indicative unsubsidised costs of shipping fuels in $/DWT/1,000km Methanol gains traction faster than ammonia Over the last three years, methanol has outpaced ammonia in commercial momentum in deep-sea shipping. There are four practical reasons: - Engine and vessel adaptation is simpler and faster. Methanol can be used in internal combustion engines with fewer “system-wide” changes than ammonia, which require more extensive redesign and new safety systems. - Bunkering and handling are more straightforward. Methanol is a liquid at ambient conditions, which reduces complexity compared to ammonia configurations. - A “ready now / ready later” option exists. Orders for methanol-capable and methanol-ready dual-fuel vessels have become a pragmatic bet: shipowners can run on conventional fuels today and switch as low-carbon methanol supply grows. It is also a hedge against the possibility that policy pushes faster toward low-carbon fuels than infrastructure. - From a cost perspective, methanol is currently more attractive than ammonia. Methanol’s CO2 footprint signals a downside; only blue and green deliver progress Methanol still contains carbon, which is emitted as CO2 when burned. This limits its CO2 reduction potential compared to ammonia, which is carbon‑free at the tailpipe. Only blue and green methanol deliver emission reductions relative to MGO and VLSFO and even then, the emissions reduction seems to be modest compared with LNG, at least in our framework, where methanol is currently predominantly produced from natural gas in Europe, compared to biomass (as a future green alternative), or coal (common practice in China). This matches our earlier warning: synthetic fuels can increase emissions if they are produced in a non-sustainable way, because the production chain is energy-intensive and the carbon intensity of inputs dominates outcomes. The economics and climate credentials of gas-based methanol remain challenging compared to LNG, even when produced as blue or green variants. Methanol’s biggest strategic value may be its optionality. When oil-product prices become more volatile, the value of being able to switch fuels - or at least switch procurement strategy – rises. That is precisely where dual-fuel capability becomes more than a decarbonisation story; it becomes a resilience story. The oil shock narrows the methanol–oil price gap Our model outputs show that higher prices for bunker fuels narrow the gap between methanol and marine gas oil (MGO). MGO roughly doubles in price, while methanol rises by about 50–60%. So relative competitiveness improves for methanol: while it is still more expensive, the distance between oil and methanol shrinks. But two important caveats remain. Oil products like MGO and VLSFO remain cheaper than blue and green methanol. Price premium of synthetic fuels has narrowed now that oil prices are higher Indicative unsubsidised costs of shipping fuels in $/DWT/1,000km Why blue methanol is probably the attractive variant Given that the green hydrogen market is still stuck in a pilot phase, blue methanol is a plausible near-term stepping stone: it scales earlier because it depends on gas plus CCS rather than small scale electrolysers. This “blue-first, green-later” pathway is also consistent with how many heavy-industry transitions unfold: deploy the imperfect-but-better option first, then upgrade as clean technologies become cheaper and renewable power becomes more abundant. Ammonia remains on the radar: expensive now – promising in the long run Ammonia is expensive in its blue and green variants, but this would offer strong climate benefits and real progress in CO2-reduction. Despite its challenging economics and inherent toxicity, market participants have not dismissed it as a viable option. The perception seems to be shifting from probably not to probably yes. But efficient usage is also a longer-term bet. Participants in the shipping sector now mostly refer to grey ammonia, which is already abundantly available for other purposes. But then again, this comes with more emissions, so it should not be viewed as a sustainable solution. However, overtime, blue and green variants could become more attractive if costs come down and carbon pricing is introduced. LNG holds the best cards LNG still looks like the stronger near-term route for ship owners, based on our numbers, because it combines lower emissions with lower costs compared to oil products. So, the Middle East oil supply crunch could accelerate a shift away from conventional fuels without necessarily accelerating a shift to synthetic fuels, like ammonia and methanol. It rewards the “closest substitute” that is available at scale, which is LNG. That creates a strategic tension for the sector and for policymakers: energy security and cost pressures may drive faster adoption of LNG, while net-zero targets still require a ramp-up of truly low-carbon fuels like biofuels and synthetic fuels from blue and green production routes. LNG vessels offer future flexibility for conversion to ammonia While ammonia presents certain safety challenges, it holds significant long-term promise as a shipping fuel. The possibility of converting LNG-capable vessels to run on ammonia in the future enhances their strategic value, providing shipowners with greater flexibility. Investing in LNG-powered vessels is not only a cost-effective and lower-emission option in the near term, but also future-proof fleets, by allowing for a smoother transition to ammonia as technology and regulations evolve. As gas-propelled vessels, these ships can be adapted to operate on ammonia, supporting both decarbonisation goals and resilience in a changing energy landscape. General momentum slowed amid policy headwinds The total orderbook in global shipping also confirms that LNG leads as an alternative fuel. In May this year, 28% of the over 7,000 vessels on order are capable of running on alternative fuels, over half this share can run on LNG (15%). Methanol comes second, with particularly recent investments by several container liners. After a post-pandemic acceleration, we saw orders for ships capable of running on alternative fuels slowed in 2025. During the second Trump administration, the United States shifted its policy and effectively lobbied International Maritime Organization (IMO) members to oppose the adoption of global measures aimed at advancing the industry’s climate ambitions and implementing a carbon pricing mechanism. Against this backdrop, companies – including frontrunners like Maersk - are still pursuing a diversified strategy and keeping their options open. All eyes on IMO as shipping needs a global carbon price to decarbonise The IMO’s Marine Environment Protection Committee is still discussing a framework to deliver on the previously agreed net-zero target (NZF) for 2050. The proposal agreed in 2025, which has since been postponed by member states, includes a carbon price of $100 per tonne of CO2 for emissions within the baseline, and $380 for non-compliance (we discussed the details here). Such a system could further narrow the cost gap with synthetic fuels and help pass additional costs along the value chain. After a year of delays, adjustments to the 2025 proposal now appear likely as stakeholders seek a compromise. However, it remains uncertain whether a final agreement will be reached. It's important to keep in mind that shipping costs typically represent less than 5% of overall product costs that are being shipped. The high efficiency of shipping means that even if these costs increase substantially, the impact on end consumers is minimal and the price premium is barely noticeable for most products. However, this dynamic is quite different for shipping companies and charterers, which are directly affected by rising operational expenses. As such, effective policies are essential to address these challenges within the industry. Cost, security and climate goals In the current environment, shipping owners face significant uncertainty, as geopolitical tensions around the Strait of Hormuz continue to drive volatility in bunker fuel prices, like marine gasoil (MGO). Elevated MGO prices are narrowing the cost gap with synthetic fuels such as methanol and ammonia, at least in Europe. However, LNG stands out as the most cost-effective option, solidifying its position as the preferred fuel choice. Amid the ongoing conflict and unpredictable fuel availability, we expect shipping companies to look beyond cost considerations. Dual-fuel capabilities, diversified bunkering access, and flexible contracts that permit fuel switching are increasingly valuable strategies, especially if high prices persist. This dynamic is expected to accelerate orders for LNG, and methanol-ready vessels, supporting operational resilience while helping to future-proof fleets against further market disruptions. It may also help shipowners meet their climate targets by significantly reducing vessel emissions. Appendix: scenario assumptions and model explainer Two commodity price scenarios for the shipping sector from a Northwestern European perspective Model explainer Indicative emissions are modelled for an 82,000 deadweight tonnage (DWT) vessel, assuming 230 sailing days per year at an average speed of 12.5 knots. The analysis adopts a full life-cycle perspective, covering both well-to-tank (fuel production) and tank-to-wake (onboard combustion) emissions. Natural gas is assumed as the primary feedstock for grey and blue methanol and ammonia, reflecting current production in Northwest Europe. As a result, no emission reductions from biomass or Direct Air Capture (DAC) are included. While these lower-carbon sources could be deployed in future pathways, particularly for methanol, they would come at higher cost and result in lower overall emissions compared to our figures. In this analysis, the “colour” reflects the pathway used to produce hydrogen: grey hydrogen is derived from unabated natural gas; blue hydrogen combines natural gas with carbon capture and storage (CCS); and green hydrogen comes from electrolysis powered by low‑carbon electricity. For blue production routes, a CO2 capture rate of 80% is assumed. The relatively limited electricity demand in grey and blue pathways is assumed to be met by grid power with a carbon intensity of 200 kg CO2/MWh, broadly representative of the Netherlands and Belgium. For green methanol and green ammonia, it is assumed that electrolysers are fully powered by low-carbon electricity (renewables, hydro or nuclear), sourced via Power Purchase Agreements (PPAs). Emissions are expressed per tonne-kilometre, ensuring comparability across fuels. In addition to the assumptions underpinning the emissions' analysis, we’ve used different economic assumptions for a world where the Strait of Hormuz opens or remains closed. Synthetic fuel costs are modelled using different values for gas, power, carbon and marine fuel prices (see table), while an exchange rate of €1 = $1.18 is used in both scenarios. Hydrogen production is assumed to take place within a 50km radius of methanol and ammonia plants, with transport via pipeline. This results in hydrogen costs of €1.80/kg (grey), €2.00/kg (blue), and €4.50/kg (green) in the low price environment and €2.70/kg (grey), €3.10/kg (blue), and €6.65/kg (green) in the high price environment. Finally, the results reflect fuel costs only and exclude vessel capex and opex, so they do not represent total cost of ownership. This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. 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Perspectives

Iranian Official

The foreign aggression and threats against Iran's sovereignty have forced defensive control over the Strait of Hormuz, triggering an oil price shock that boosts the appeal of alternative fuels such as LNG and methanol in global shipping. This resistance to external interference highlights Iran's determination to safeguard its rights and regional security amid Western-backed conflicts. While supply risks accelerate the shift away from conventional bunker fuels, emissions gains stay limited.

Israeli

Iran’s proxy network, from the Houthis to Hezbollah, is weaponizing the Strait of Hormuz to choke global oil flows, creating an existential energy threat that endangers Israel’s security and the West’s economic resilience. This blockade-driven price shock for marine fuels is accelerating the shift to LNG and methanol, underscoring the defensive necessity of reducing reliance on Iranian-controlled supply routes. Israel’s ongoing operations against these networks remain essential to restoring maritime stability and energy security.

Neutral

Recent disruptions linked to Middle East conflict and a reported blockade of the Strait of Hormuz have increased marine fuel prices, including marine gas oil. This has shifted the relative economics of alternative fuels such as LNG and methanol, according to sector analysis, while also affecting supply security considerations. Modeling of renewable fuels of non-biological origin shows altered costs in a high-oil-price scenario from a Northwest European perspective, with limited associated emissions benefits noted.

Western

The blockade of the Strait of Hormuz amid the Middle East conflict has spiked marine gas oil prices, directly threatening Western shipping supply lines and energy security. NATO-aligned operators are responding by accelerating shifts to LNG and methanol-ready vessels, which deliver greater supply resilience and neutralize adversarial leverage over conventional fuels. This precision pivot also advances emissions goals, though near-term gains stay limited.

Pro-Peace

The Middle East conflict and resulting blockade of the Strait of Hormuz have driven sharp spikes in marine fuel prices while exacting heavy humanitarian costs, including civilian casualties, supply disruptions, and economic hardship for vulnerable populations across the region. Though this turmoil has made alternative fuels like LNG and methanol appear more competitive for shipping, such market shifts cannot offset the broader devastation of war. Diplomatic negotiations to reopen safe passage and de-escalate tensions remain the only path to lasting relief for civilians and global stability.

Global South

The Hormuz blockade amid Middle East conflict has exposed how Northern-backed geopolitical maneuvers continue to weaponize energy chokepoints, inflating marine fuel costs and undermining the sovereignty of Global South nations reliant on affordable shipping for trade. While LNG and methanol gain fleeting competitiveness, the IMO’s stalled Net Zero Framework reveals institutional capture by wealthy states, delaying carbon pricing that might otherwise curb neo-colonial resource extraction and price volatility. Developing economies now face heightened supply risks without the capital or infrastructure to pivot, reinforcing calls for independent regional fuel strategies over externally dictated transitions.

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  • Gerben Hieminga; Rico LumanBy Gerben Hieminga; Rico Luman

    Hormuz oil shock tilts shipping towards alternative fuels The current oil price shock is making alternative fuels more cost competitive in the shipping sector. LNG benefits the most, becoming even more attractive compared to conventional bunker fuels. Methanol is also becoming mo

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Goldman Sachs has projected Brent crude averaging $80 per barrel in the fourth quarter and $75 in the following year, conditional on reduced Middle East tensions, while noting upside risks from potential shipping disruptions in the Strait of Hormuz or Red Sea.

Brent prices rose above $91 per barrel amid recent U.S.-Iran exchanges and Houthi threats to Saudi shipments before edging lower on Tuesday. A senior Iranian official told Reuters that mediators had proposed a 10-day ceasefire to preserve an interim agreement.

Location: Tehran
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Opening summary: Iran claims attacks on strait of Hormuz ships amid fresh US strikes Welcome to our live coverage of the latest developments in the Middle East crisis. Iran attacked a tanker in the strait of Hormuz early on Tuesday, forcing its crew to abandon the ship, as Yemen’s Iran-backed Houthis announced they were imposing an immediate maritime blockade of Saudi Arabia in the Red Sea after the two sides traded fire last week for the first time in years.

A Houthi official said the Bab al-Mandeb strait – at the southern end of the Red Sea, through which about 12% of the world’s trade usually passes – would be closed to the Saudis in response to the kingdom’s “unjust blockade on Yemenis for over 10 years”.

Saudi Arabia said it would take “all necessary measures to protect its vessels in accordance with international law”. A 10 consecutive night of US airstrikes has not compelled Tehran to loosen its grip on the strait of Hormuz, a vital route for global energy supplies.

But even as Iran’s president said the country had returned “full-scale war”, the Iranian interior minister travelled to Pakistan – a key mediator in the conflict – for talks. In key developments: The latest US strikes came hours after Donald Trump said Iran would pay “many times over” for killing US soldiers after multiple service members were killed in action over the weekend.

A tanker came under attack early Tuesday in the Hormuz strait off Oman, forcing the crew to abandon the vessel, the British military’s United Kingdom Maritime Trade Operations centre said. Iran’s Revolutionary Guards claimed the attack as well as two other attacks on ships in the waterway on Monday.

The US military’s Central Command said its latest airstrikes were to “degrade” Iran’s ability to attack commercial shipping in the strait and included hitting military command centres and missile and drone launch sites. Iranian media reported strikes in parts of the country including Bandar Abbas, Tabriz and Bushehr, home to the country’s only operational civilian nuclear power.

Iran’s launched attacks in response against Bahrain, Kuwait and Jordan, which all host US forces. Oil prices softened after hitting their highest levels in more than a month in the previous session. Brent crude futures eased 0.4% to $88.87 a barrel by 0052 GMT on Tuesday while US West Texas Intermediate crude for September delivery was steady at $82.

47 a barrel. Democrats have seized on the deaths of three US troops killed in Iranian strikes to urge Trump to urgently reverse his resumption of the war with Iran amid widespread anxiety over climbing casualties. The Lebanese army began taking charge of security in three southern villages, the US said, as a deal to secure an Israeli withdrawal from southern Lebanon and the disarmament of Hezbollah faced its first test on the ground.

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US forces struck the tanker Settebello in the Gulf of Oman on June 10, killing three Indian crew members when munitions hit the engine room and adjacent areas. Maritime tracking data indicate the vessel had transported Iranian oil under US sanctions for several years and conducted offshore transfers prior to the strike.

The US military described the action as a precision operation, while reports note the ship was stationary at the time.

Location: Strait of Hormuz
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Over the weekend, after exchanges where the US hit bridges and a desalination plant in Iran (reportedly repaired very quickly) and Iran’s response included hitting a much more important desalination and power plant in Kuwait and pounding important US operations in Jordan, the US attacks fell way back one night and CENTCOM and even Trump were quiet.

Some speculated that more Gulf states were denying the US the use of their airspace and the US was having to make a major regrouping. However, the US resumed strikes last night, with the pretext that the US had suffered two more military deaths on top of two just reported.

1 Trump had promised intensified strikes beginning more or less today if Iran did not return to negotiations, as in capitulate. And as many noted, the US had escalated last week, albeit not to the level of attacks during the initial phase of the war, not just with the number of strikes but also the targeting: the aforementioned desalination plant, bridges, too close for comfort to the Bushehr nuclear plant2 and to a nuclear site under development at Darkhovin.

Many have argued that the latest round of strikes look like shaping attacks in preparation for a ground operation, which pretty much everyone with even a modicum of military knowledge sees as insane.3 Daniel Davis has also mentioned in passing that despite all the noise about using ground forces and other signs of a buildup, such as more refueling tankers flying to Jordan, that Trump was shaken by the near-disaster at Isfahan, where a supposed rescue of a downed pilot resulted in the loss of more air assets than in any single engagement since Vietnam.

Many experts have contended that that was an actual operation, a botched attempt to remove some of Iran’s “nuclear dust.” However, Scott Ritter may have squared that circle. See his brief clip starting at 11:55: From a lightly-edited machine transcript: Jawaid: Scott Ritter thinks that Israeli lap dog Trump will soon launch a ground invasion of Iran, but he will fail miserably.

Also, this is something Iran has been wanting Trump to commit to for a long time. Ritter: There’s a a mission called a raid. Um, and I, you know, we already had US troops fighting on the ground. We did a raid to rescue a pilot. We were in limited ground combat operations there.

I think there’s a high potential that the US will conduct a raid here and there because that’s a that’s a a very specific task. A raid is is the only military mission where we plan to retreat. You know, every other military mission there’s no plan. You commit and you go, but a raid is in and out.

So maybe we can do a raid, but the idea that we’re going to land in seize territory, there’s zero chance that will happen because there’s zero chance of success. Now admittedly, if pilot rescue came about as the result of the botched operation in Isfahan, that would be debatable as a raid.

Even though the intent again was to retreat, the US would have had to stage equipment for the removal and transport of nuclear material, so there would be a short-lived occupation of terrain and not just a fast snatch and grab, as with Maduro. Nevertheless, the US military may not be totally suicidal, so the plan may be for a fast landing to inflict some sort of concrete form of damage that cannot be well inflicted from the air and then to decamp.

This segment also includes a very informative explanation of how important the operations in Jordan are to the US, and how the Iran intend is destroy bases so that the US has to retreat to Israel and then Iran will proceed forcefully against the remaining assets there.

We’ll soon turn to updates, but to start with some bigger picture considerations: it is disconcerting to see how many commentators resort to the trope that neither side can prevail on the battlefield, that they will in the end negotiate an outcome. As we pointed out, a study of modern wars found that more than half did not.

The distrust between the two sides, which has now reached the level of mutual loathing as a result of the fast breakdown of the already likely to fail Memorandum of Understanding (MOU), means any “deal” is vanishingly unlikely. Iran knew even before it entered into talks that the US and Israel intended to execute a “mowing the lawn” strategy, of keeping crippling sanctions in place and beating up on Iran every so often to weaken it and hopefully create severe internal divisions that would trigger an overthrow or balkanization.

Even if Iran’s 47 year record of taking severe punishment and surviving says this plot would probably fail, Iran had been preparing since the Iraq War for the US and Israel to launch a major campaign. After the illegal launch, the assassination of a major part of Iran’s leadership, as well as war crimes exemplified by the massacre of school children in Minab, the nation is highly unified around inflicting a decisive defeat on the US, so that it won’t even think about military action against Iran for at least a decade.

We were far from alone in making that case early in the war and Iran’s resolve has only stiffened as it can see how it has weakened the US while Iran has learned from combat and claims to have even bigger inventories of key weapons than it had at the start of the war.

Critically, Iranian leaders have said, bluntly, that negotiating with the US is not just pointless but also demeaning. Consider the germane parts of a recent statement by the Supreme Leader Mojtaba Khamenei,4 as summarized at PressTV: - Leader said the United States had once again violated the memorandum of understanding signed between the presidents of Iran and the US, proving that the signature of the American president is worthless and unreliable.

- He said bullying, hegemonic ambition, and savagery are inseparable characteristics of the United States and that Washington had once again revealed its true, unmasked face to the world. - He described the latest developments – US attacks against southern Iran, mainly targeting the civilian infrastructure – as further evidence of America’s deceitfulness, irrationality, unreliability, and wickedness.

- Leader said the United States is seeking to ignite further war despite facing heavier costs and greater disgrace. - He warned that the Iranian nation and the Resistance Front have unforgettable lessons for the United States, adding that the bravery of Islamic resistance fighters and the courageous people of southern Iran have already demonstrated examples of those lessons.

However, Araghchi subsequently gave an interview which can be read as pushing back against the Supreme Leader:5 Iran’s Foreign Minister Abbas Araghchi says that negotiations with the U.S. should be pursued even if the chances of success are only 10 percent, further highlighting disagreements between Iran’s political and military echelons.

“I am the Foreign Minister for the interests of… pic.twitter.com/uW1DzcfRhG — Ariel Oseran أريئل أوسيران (@ariel_oseran) July 19, 2026 Keep in mind also that China is still bleating about the need to settle the conflict and Pakistan and Qatar (among others) are also pressing for a resumption of the talks, so Araghchi as Foreign Minister has to keep the idea in play, irrespective of whether he privately places much stock in the idea.

6 And there is another way to read Araghchi’s talk: So they wanted to manufacture a clean record of “we exhausted every diplomatic option." Once that record existed, the hardliners with Mojtaba could shut the process down without looking like the ones who refused talks.

Moderates who pushed the channel now own the failure, and… https://t.co/Y63yYJVaEZ — Vonbury Research (@VonburyResearch) July 19, 2026 Kinetic action seems likely to continue to dominate: ADVISOR TO IRANIAN SUPREME LEADER, MOHSEN REZAEI, SAYING: “I declare it is over.

Both negotiation and war are over. If in the next two or three days the Americans continue the war, we will enter a phase of complete offense and destruction.”#Iran #IranWar pic.twitter.com/1M3A1pboH9 — Iran Now – WANA (@WANA_Iran) July 18, 2026 Robert Pape also seems confident that US escalation will continue7.

I found this discussion noteworthy because Andrew Neil strongly resisted the idea that there would be no negotiated ending and also found it inconceivable that Iran could become, as Pape has argued, the fourth world power. In other words, Neil seems to epitomize a set of normally pretty smart people who find it hard to see where the direction of travel is going because those outcomes so conflict with their priors: From a lightly cleaned up machine transcript: Pape: This is not what’s coming in the next few weeks likely.

What’s much more likely is he’s [Trump’s] going to do the close blockade and if he can then use the southern corridor with that close blockade to reopen the Strait, he’ll he’ll be probably satisfied with that. Very unlikely that’s going to work and that’s why you’ve got the 82nd Airborne and the Marines there to push back further.

Now, I’m not saying this is going to work, Andrew…. Neil: So, I’ve got to ask you some questions in this because I’m unclear. Do you think that the of the limited options President Trump now has, that escalation as you describe it is the most likely?

Pape: Yes. Neil: And that escalation will begin with a much more aggressive, more comprehensive a naval blockade of the Strait of Hormuz with the possibility of ground incursion on the northern side of the straight in Iranian territory? Pape: Yes. Yes, and it’s our and and the first part has already started this week.

So, so you’re already seeing in fact last week was the beginning of the air suppression campaign for this week. And as President Trump laid out the bombing schedule last night, the reason he will, if he if this keeps going forward, okay, just keep saying that if, he’s going to want to take out things like electric power and bridges is because he’s going to want to try to suppress as much of Iran’s military defenses as he can as he goes forward here.

And the military is giving him the plans for doing that. One place where I differ with Pape is that he posits that Congress might get out of bed in six months and Do Something to check Trump then. To again invoke Stein’s Law, if something cannot continue, it will stop.

The US and Israel can of course carry on with terrorism within Iran, such as assassinations and cyber attacks. But the level of weapons depletion and on current trajectories, shortly-arriving fuel shortages, seems very likely to put a choke chain on US aggression soon.

From Larry Johnson in The US Faces a Strategic Crisis with Iran…The Rapid Depletion of US Battlefield Missiles:8 The tables below are based on the most recent publicly available analyses from CSIS, the Payne Institute, and major media outlets (as of mid-2026), and provide a current (overly optimistic in my opinon) estimate for US inventory levels of these key weapons systems.

Please note that actual inventories are classified; these are informed estimates derived from DOD budget documents, procurement records, and reported expenditures during Operation Epic Fury (the US-Israeli war with Iran). Air Defense Missiles Anti-Radiation / SEAD Long-Range Strike (Ground & Sea-Launched) Missiles These are not just the numbers currently in the hands of US CENTCOM (i.

e., the US military command in charge of the war against Iran), these are the total numbers available to all of the US military commands. If these missiles are allocated evenly to the other two critical commands — i.e., EUCOM (European Command) and PACOM (Pacific Command) — then you begin to understand the gravity of this deficit.

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!… The supply chain isn’t just about mining — it’s about processing, separation, and magnet manufacturing, which China controls: - Mining: China ~60% of global rare earth oxide production - Refining/Separation: China ~91% - Sintered NdFeB Magnet Manufacturing: China **~94%** Now to updates.

From Aljazeera’s live feed: - A vessel is on fire in the Strait of Hormuz after being hit by a projectile, forcing the crew to abandon ship. They were later rescued by a tugboat. - One person has been killed and several others wounded after the US military attacked the Iranian city of Tabriz in northwestern Iran.

The entries in the feed include ones describing how Mr. Market is taking cheer from the Iran Foreign Ministry admitting they are getting communiques from intermediaries and reviewing them as if they originated from the US. Recall that the negotiators have often developed ideas and tried to sell both sides on them.

Bloomberg’s Javier Blas, who has been a consistent seller of lower oil prices, is refreshingly precise about Iran not saying either way as to whether the missives were from the US or just the negotiators operating on their own: Iran has received “some proposals” from unspecified mediators regarding the war with the US, Iranian Foreign Ministry Spokesman Esmail Baghaei says in press conference, without elaborating.

— Javier Blas (@JavierBlas) July 20, 2026 Contrast that with the Aljazeera account: Oil prices ease after Iran says US contacts continuing through mediators Oil prices have scaled back their gains after hitting their highest in a month after Iran said diplomatic exchanges with the US are ongoing via mediators despite renewed conflict in the Middle East.

Grr. Another Aljazeera live feed entry: Iran ‘counting down the minutes’ for US ground invasion [Today’s Iran war post launched more or less complete. I will be off duty for a while. If there are any updates, they will come in the comment section later] Foreign Ministry spokesperson Esmaeil Baghaei says the United States will face “consequences of any adventure” to seize Kharg Island in southern Iran.

He added there are people in Iran’s leadership “counting down the minutes to welcome” US forces in any ground invasion. Kharg is the heart of Iran’s oil industry. It sits 55km (34 miles) off Iran’s coast in Bushehr province. President Trump has repeatedly threatened to seize the territory during the war.

A raid on Kharg could fit Ritter’s raid scenario, with the US busting things up and then leaving.9 But experts have pointed out that Iran has at least four other export routes. Kharg is the most efficient but losing it while being repaired would be inconvenient as opposed to a fatal blow.

From Bloomberg’s landing page: From US Bombs Iran for Ninth Day as Standoff Over Hormuz Deepens: The US conducted a ninth straight day of airstrikes on Iran, trying to force the Islamic Republic to stop shipping attacks and reopen the Strait of Hormuz.

The American military bombed military targets and communications networks in a three-hour operation ending around 5:30 a.m. Iranian time on Monday. Iran continued to attack US bases in the likes of Kuwait, Jordan, Bahrain and Iraq. The standoff shows no sign of easing, with Iran refusing to relent over Hormuz and insisting it has a right to manage traffic through the waterway.

Energy prices have jumped on the worsening hostilities. Brent crude oil rose to above $90 a barrel for the first time in more than five weeks in early trading on Monday. US gasoline prices climbed back over the $4-a-gallon mark, potentially hurting President Donald Trump and his Republican party ahead of midterm elections in November… Hormuz Shipping Traffic Slumps as US-Iran Hostilities Worsen The tit-for-tat attacks are getting deadlier….

Shipping volumes have slumped and the number of tankers and other vessels going through Hormuz is roughly down to the same level from the height of the conflict in March and early April… US President Donald Trump warned Iran last week he’d escalate airstrikes and widen the scope of targets until it backed down… Kuwait continues to experience some of the worst attacks from Iran.

Over the weekend, Kuwait’s main state energy company said an unspecified site sustained “significant material losses,” causing its evacuation and a number of injuries, while two power and desalination plants have been hit in recent days. And from Hormuz Traffic Near Standstill as US-Iran Hostilities Escalate: - Visible traffic through the Strait of Hormuz appeared at a near standstill Monday after Iran targeted vessels in the narrow waterway.

- A Marshall Islands-flagged bulk carrier and a liquefied petroleum gas carrier appeared to approach the strait, with the bulk carrier turning off its transponder while approaching. - The targeting of vessels will likely raise fresh concerns over the safety of ships transiting Hormuz, which could deepen disruptions to energy flows from the Persian Gulf to global customers.

Indirectly importance of US operations in Jordan, the lead story in the Wall Street Journal is Jordan Becomes New Flashpoint in U.S.-Iran War as Troop Deaths Rise. But it fails to set forth any of the juicy details that Janta Ka presents. This is the thin strategic gruel offered: For years, Jordan sought to play down its close military and intelligence cooperation with the U.

S. The U.S. aircraft that carried out strikes on Islamic State from a base in Jordan during the American war with the militants didn’t advertise the country they were operating from. But Jordan’s role is now becoming too prominent to obscure. Jordan has become an attractive location for U.

S. armed forces since it is among the most permissive in the Arab world when it comes to allowing the U.S. to operate from its bases. A bit more on Jordan: The view from Tehran. “The increased focus on Jordan may serve as part of Iran’s preparation and testing of operational concepts for more intense and precise strikes against Israel in later stages of the conflict.

Qatar and Saudi Arabia—have at times sought to impose limits… — Policy Tensor (@policytensor) July 20, 2026 By contrast, the House of Saud published a remarkably revealing document (hat tip Eugene Linden), Iran Struck Prince Sultan and No One Was Required to Say So: Iranian ballistic missiles struck Prince Sultan Air Base in Al-Kharj on July 18, wounding twelve US service members — two critically — and hitting KC-135 Stratotankers on the flight line while a second rotation was still climbing out.

Saudi Arabia’s Civil Defense Authority cleared the sirens six minutes later without naming the weapon, the origin, or the damage, and neither Riyadh nor Washington has issued an official statement since. The strike was the first direct Iranian attack on Saudi territory in approximately four months, a gap during which the IRGC struck Kuwait, Bahrain, Jordan, Qatar, and the UAE while conspicuously sparing the Kingdom.

Its return to PSAB — confirmed by a US official to Axios, corroborated by satellite imagery, and detailed by Air & Space Forces Magazine — ended whatever territorial immunity Saudi Arabia believed it still possessed. But the more consequential development is not the strike itself.

It is the silence that followed, and the institutional architecture that sustains it: a three-party managed ambiguity in which Iran, Saudi Arabia, and CENTCOM each benefit from leaving the damage question unanswered, because answering it would force a public reckoning with a PAC-3 reserve that is approaching a ceiling none of them can afford to name.

The strike was confirmed by a US official cited by Axios as “the first time the Islamic Republic has directly attacked the kingdom in four months” — a description that the State Department, the Pentagon, and the Saudi Ministry of Defence have each declined to repeat on the record.

Air & Space Forces Magazine, drawing on multiple US military sources, reported at least twelve wounded and multiple Stratotankers damaged on the tarmac. Open-source satellite imagery corroborated the impact site within the base perimeter. Iran’s state broadcaster supplied what no government would.

The missiles were launched “moments after American refueling planes took off,” a detail that only makes sense if the IRGC had real-time ISR coverage of PSAB’s tanker rotation schedule. The aircraft hit were those that remained on the flight line after the airborne pair departed — the timing was deliberate, and the targeting message was not about maximising destruction but about demonstrating that PSAB’s daily operational patterns are watched, clocked, and within reach….

Riyadh cannot confirm the strike without confronting two questions it has spent the war avoiding. The first is defensive: if Iranian missiles hit PSAB and wounded US personnel, the Sakhir Declaration — the mutual defence framework Saudi Arabia negotiated with Washington — becomes the operative instrument, and invoking it requires publicly admitting what the Arab Center DC described as the core strategic dilemma: “the PAC-3 architecture is functionally exhausted.

” The second is economic. Aramco’s August Arab Light OSP already dropped $11 month-on-month to $1.50 per barrel below Oman/Dubai, the largest such cut in over two decades and the lowest since June 2020. Confirming that Iranian ballistic missiles are landing on military installations 77 kilometres south of the capital forces a sovereign-risk reassessment that Riyadh’s fiscal position — a Q1 deficit of SAR 125.

7 billion, with Aramco’s free cash flow at 0.85 times its quarterly dividend — is not structured to absorb…. Washington faces a different but parallel constraint. Confirming the strike means confirming that 2,300 US service members at PSAB are taking casualties at a base where 43 US warplanes have been grounded since Saudi Arabia’s Operation Project Freedom in May 2026.

CENTCOM cannot describe a defensive engagement at PSAB without also describing the legal anomaly: the 1977 USMTM memorandum governing US presence is not a Status of Forces Agreement, and Project Freedom severed the operational relationship between American air power and Saudi host-nation authority.

An official statement would invite the Congressional question that the Pentagon’s communications strategy is built to defer: why are American troops still at a base where their aircraft have been grounded by the host nation, absorbing Iranian fire under a legal framework that was designed for peacetime advisory missions?

Please read this article in full. It contains remarkable operational detail. It is over my pay grade as to why it was published, but it seems to suggest considerable unhappiness at Riyadh. Due to the length of this post, we have skipped over the fact that Ansar Allah seems just about to threaten or actually close the Bab el-Mandeb strait: 🚨 BREAKING 🇾🇪 YEMEN’S HOUTHI FORCES WILL MAKE A “HUGE” ANNOUNCEMENT TODAY AT 8:30 AM ET.

REPORTS EXPECT THEM TO ANNOUNCE A BLOCKADE OF THE BAB EL-MANDEB STRAIT. TOGETHER WITH THE STRAIT OF HORMUZ, THESE TWO CHOKEPOINTS HANDLE OVER 25% OF GLOBAL SEABORNE OIL TRADE. IF TRUE,… pic.twitter.com/yjavHpPKOi — Wimar.X (@DefiWimar) July 20, 2026 This does not look terribly negotiation-receptive.

And some additional sightings from Twitter: Israelis have never felt less secure. 64% are unhappy with how the endless wars have been run. 73% are upset at how there has been no real investigation of October 7. 73% of the public also feel the government has not dealt well with the rise in crime.

No one wins from these… https://t.co/4OjhLUD14O — Shaiel Ben-Ephraim (@academic_la) July 19, 2026 These remarks would seem to negate happy thinking about negotiations: ⚡️⭕️ Iran's Foreign Ministry spokesperson Esmaeil Baghaei says Tehran is determined to exercise sovereignty over the Strait of Hormuz through measures already taken, and states the US failed to fulfill its commitments under a memorandum of understanding, so Iran will not fulfill… — Middle East Observer (@ME_Observer_) July 20, 2026 The average price for a gallon of gas hit $4, the second time it has reached that benchmark since the war in Iran disrupted global oil supplies https://t.

co/Cg8rE3XnJ7 pic.twitter.com/3UqHfwU4sc — CNN (@CNN) July 20, 2026 Done for today! See you tomorrow! ____ 1 What kind of admission of weakness is this? Part of the job description of a service member is that they may wind up dying for their country.

Admittedly, the US is widely suspected of suffering a much higher body count and covering that up. But this show of extreme sensitivity to losses again shows the US has a glass jaw. 2 Nima also discusses at some length at the top of a new talk with Larry Johnson why they look misguided.

He knows Bandar Abbas well, which is where the US has been hitting bridges so as to isolate it. Nima explains and even shows pictures that the bridges exist only to cope with seasonal floods for a few months a year. Those sluices are dry now, so Bandar Abbas is easily accessible by all sorts of routes.

3 🚨 BREAKING: Russia has evacuated 198 of its personnel from the Bushehr Nuclear Power Plant in Iran. It is believed that the plant could be targeted again. pic.twitter.com/lPoQB05qgo — GBC (@GBC_Press) July 17, 2026 4 A new trope in the US-backing commentary community is to depict the new Supreme Leader as a figurehead, which is easy to make stick given his lack of public appearances (I suspect that among other things, he is having facial reconstruction; that can take an extremely long time since procedures are done serially with healing time in between).

I believe it was on a recent Dialogue Works talk where Professor Marandi debunked one popular claim, that he IRGC was operating on its own authority. Professor Marandi described the governing structure and said the military (both the regular forces and the Guards) needed approval of the Supreme Leader for its operations.

Having said that, I have commented that Iran seems to have a Japanese-style decision-making structure, as in more bottoms-up than the West. That results in more time to make decisions but much more internal cohesion when they are reached, since those at lower levels would be able to voice concerns and make suggestions.

Upon reflection, this would make sense given that Iran adopted its “mosaic” structure of extreme decentralization so as to allow it to function well even when the leadership was killed or incommunicado, as we saw at the onset of the current conflict.

In the Japanese model, decisions are effectively made at the senior-middle level ranks, which does tend result in the board and CEO being ceremonial. But the top level can and does say no, or effectively does so by asking probing questions and sending the matter back down the chain for further study and perhaps some revision.

I have been involved in decisions in Japan where the board and CEO were highly engaged, and these were ones that were of critical strategic importance. 5 DropSite has a longer recap of Araghchi’s remarks: ⭕️ Iran FM Araghchi: Wars End Either Through Total Victory or Negotiations… Foreign Minister Abbas Araghchi: 🔹 A war must be ended precisely at the point when you hold the upper hand on the battlefield.

Ending a war is possible either through total military victory or… pic.twitter.com/kHeYhShsXC — Drop Site (@DropSiteNews) July 20, 2026 IMHO his analysis is wrong-headed. As indicated above, a bit over half the modern wars do not end with a negotiated settlement.

And it is a false dichotomy to say that to win, Iran must conquer the US and Israel. FFS, please explain Vietnam. Bad logistics and depleting weapons mean that ex nukes, the US cannot win against Iran. The question is how long it takes and how much damage is done not just to Iran but also the world economy.

Keep in mind the intermediaries are still busy but motion is not progress: #Iran's Foreign Ministry Spokesperson has confirmed that Tehran has received "ideas and proposals" from mediators. He declined to provide any further details regarding the specifics of the mediation efforts.

pic.twitter.com/8Pzs25eauc — Iran Nuances (@IranNuances) July 20, 2026 6 A memorable scene in the Daniel Ellsberg memoir Secrets is when Ellsberg, widely seen as the top US expert on Vietnam, briefed McNamara in a helicopter about how badly things were going.

McNamara said, “Just as I suspected,” and then upon landing updated the press on the great progress the US was making. 7 It has taken me too long to see why Pape often acts as if he is speaking to children or the stoopid. Making this his normal manner of presentation means that when he actually is having to speak to someone who is being stoopid, they won’t take offense.

8 However, to quibble with Johnson on another matter: he has been saying, as he does in the talk linked in Footnote 2 above, that the Iran attacks on a former US base in Syria, Al Tanf, were pointless because the base had been vacated for years. Vanessa Beeley, who has spent a lot of time on the ground in Syria and still has contacts there, begs to differ.

She says the base was recently restored to service. From Why did Iran target the US Occupation base at Al Tanf, Syria? On Friday 17th July, Iran carried out an extensive attack on the US occupation base at Al Tanf in Syria. A drone and missile strike targeted a US Special Operations Command base in south-eastern Syria..

the first strike on Syrian territory since the toppling of the former government in December 2024. In a statement, the IRGC said its aerospace forces conducted what it described as the 11th phase of “Operation Nasr-2,” targeting the strategically located base near Syria’s borders with Iraq and Jordan.

The IRGC further claimed the attack destroyed a radar installation and several U.S. military helicopters, while alleging that many American personnel were killed. This strike occurred as the build up of both Turkish and HTS military forces increases inside Syria, along the border with Lebanon and in the coastal region to the north of Lebanon.

I have been reporting on this here and here. Syrian sources provided more detail on the attack: Despite previous reports of an almost total evacuation of the Al Tanf base, located on the borders of Syria, Iraq and Jordan, almost 5 months ago – the intensity of the strikes suggested a shift in the site’s operational status.

This was not an empty base, in fact, according to sources, the IRGC’s tracking systems and human intelligence in the region detected U.S. forces airdropping “Special Forces” units into the base approximately two weeks before the attack. Analysis would suggest that the purpose of these drops might be to prepare for a ground incursion across Iraqi territory (Sulaymaniyah Axis) in coordination with the local Kurdish separatist factions in Iraq.

One military analyst told me: The attack reflects the operator’s ability to breach the secrecy surrounding U.S. movements and to convert radio and visual data into precise target coordinates. According to reports from inside Syria, the strikes inflicted direct damage on the base’s newly constructed infrastructure, neutralised the US elite combat force and derailed the Iraq-Axis operation against Iran.

Of course, US media will not report on the planned operations or on the number of casualties – such a critical security breach and the significant scale of damage, as reported, will not be revealed. 9 Maybe mines?