← Breaking Points with Krystal and Saagar
Breaking Points with Krystal and Saagar
4/30/26: Trump Orders Indefinite Blockade, US Tries To Collapse Iran Economy, Trump Delusional Oil Bet
01:03:04
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Krystal Ball
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Krystal Ball
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- [02:35]
Sagar Enjeti
Hey guys, Sagar and Krystal here.
- [02:37]
Krystal Ball
Independent media just played a truly massive role in this election and we are so excited about what that means for the future of this show.
- [02:44]
Sagar Enjeti
This is the only place where you can find honest perspectives from the left and the right that simply does not exist anywhere else.
- [02:50]
Krystal Ball
So if that is something that's important to you, Please go to BreakingPoints.com, become a member today and you'll get access to our full shows unedited ad, free and all put together for you every morning in your inbox.
- [03:01]
Sagar Enjeti
We need your help to build the future of independent news media and we hope to see you@breaking points.com Good morning everybody. Happy Thursday. Have an amazing show for everybody today. What do we have? Crystal?
- [03:13]
Krystal Ball
Indeed we do. Keeping the focus on Iran today. Trump is saying that Iran is going to cry uncle over his blockade. We're going to dig into the numbers and see which country is likely to cry uncle first, actually. Also, Rory is going to join us again. Talk about the oil markets. Gas prices are really spiking wildly right now and the markets broadly seem to be realizing that we are in it for the long haul in terms of the level of pain. So a lot to get to with him. We're also gonna do a deep dive into those Lego propaganda videos. Dropsite News had an exclusive with the creators digging into their motivations and Tim Dillon had some things to say about those videos as well. Dave Smith is also going to rejoin the show to get into some of the politics of Trump's coalition and how they are feeling about this whole absolutely disastrous war in Iran.
- [04:04]
Sagar Enjeti
Yeah, the New York Times did a focus group of Trump voters. The highest grade somebody would give him was A C multiple Ds and Fs. Most common word was what? Betrayed. I'm pretty sure that's when things are going well. In addition to a poll that found him doing worse than Jimmy Carter did in 1979, which takes time on inflation specifically, which Impressive. Yeah. Anyway, thank you all to subscribing for the show breakingpoints.com if you are able. We deeply appreciate your support. If you're watching this on YouTube, please go ahead and hit the subscribe button. We deeply appreciate it. And if you're listening to this as a podcast, please share an episode with a friend. This one might in particular be a good one, especially the Rory interview A lot of people, I think, are going to be waking up today. You know, the normies are starting to be shaken because they can see gas prices. Yesterday in Illinois, there was just two price cycles in the same day with a roughly 25 cent increase each time. So a 50 cent increase in gas just in the same day? In one day, just in that state, I believe the average there is now $5 a gallon. So if you got a friend, a grandma or an unc or somebody's like, hey, why is gas going up? Send them one of our episodes. Let's go ahead and start then with Donald Trump and crying uncle, which he says Iran will now do.
- [05:17]
Krystal Ball
Yeah. Yesterday in the Oval Office getting asked about, hey, how long do you think this is gonna last anyway? And him gloating about what a brilliant strategy this whole thing is. Let's take a listen.
- [05:27]
Sagar Enjeti
How long are you prepared to maintain the blockade?
- [05:30]
Pete Hegseth
Could that go several more months? Well, the blockade is genius, okay? The blockade has been 100% foolproof.
- [05:37]
Sagar Enjeti
It shows how good our Navy is.
- [05:39]
Krystal Ball
I can tell you that.
- [05:39]
Pete Hegseth
Nobody's gonn play games. We have the greatest military in the world and I built much of it during my first term and we've been building it since Iran, the same thing. I mean, militarily, we've wiped them out. They have no military left. It's all the Navy's at the bottom of the sea. The Air Force is never going to fly again. We've got an amazing military now.
- [06:02]
Sagar Enjeti
Now they have to cry uncle.
- [06:04]
Pete Hegseth
That's all they have to do. Just say, we give up, we give up, but their economy is really in trouble.
- [06:12]
Krystal Ball
So he says, sager, it's a genius strategy. I don't know whether he believes the stuff that he's saying about their Navy being completely sunk and that their air Force will never fly again. But there are a lot of reports in Western media that that is not remotely true. So look, this is the game now. He seems to be betting that our economic blockade of Iran will be enough to squeeze them, to force them to come and to capitulate. And, and most people are looking at this and going, well, we've been doing the maximum pressure campaign on Iran economically for how long now, that didn't cause them to capitulate. So I don't know why you think this time will be different.
- [06:46]
Sagar Enjeti
So I don't think he actually believes it. I just think that this is the worst, best option because what we know is in front of Donald Trump are three separate ones. One is to basically just say, we lost and leave. It would be, I mean, the biggest strategic disaster for the United States at the very least since Vietnam, arguably, maybe even more like way more than Iraq. Think now at this point, just because of the humiliation. Again, I'm not downplaying the level of casualties. I'm talking about at a strategic level. The world's most powerful military losing 50% of its interceptors and capacity in a 38 day war, then leaving the Straits of Hormuz effectively under Iranian control. Haven't seen anything like that since the helicopter left the South Vietnamese or the embassy in South Vietnam. It might even be more, as Professor Pape has said, because it's not like South Vietnam had control over 20% of the world's oil supply. We're in unprecedented times. So that's one option I would even honestly at this point, I would still advocate for that option, as disastrous as it may be. We live in a new world. You made a horrific gamble and you lost. Pull it out. No one to fold them right. The second option is the blockade, which is maximum pressure without maximum pressure, plus which is sanctions, regime denial of oil, trying to get to the Iranians to the table. The problem is they're more unified and they have much more of a reason to basically go all out to protect their economy. Their civilian population knows exactly why they're suffering. It's because they're literally under attack by an act of war and a blockade. The other option would be some sort of a strike. And actually we're hearing just this morning CENTCOM and others are preparing new plans for the President. Those will be on his desk today in a Situation Room meeting which would basically restart a series of limited strikes, which we all know how that would be. And it would lead to a more continuation of the war. But all of this is trying to do the same problem that we had in Vietnam. They want to break the back of the enemy. They want them to cry uncle, to give up. It just misunderstands. I mean, we couldn't do it with 500,000 ground troops in South Vietnam. Not even the President, this current president wants to do that. So he doesn't wanna strike more because it would risk more of the Gulf oil assets. We have a lot to lose. The price of gas is going sky high already. We have all these problems all over Asia. All of the US allies are furious with us. The German, what? Chancellor, it's called us being humiliated. I mean, we're watching a breakdown in the global empire. And more of a strike would only lead to more of that, an accelerated Timeline. This is in some way a face saving move. But in another way though, it is a slow rolling disaster. As we are gonna spend a huge portion of our show on today. Everything that we've warned about with oil, it's all starting to come true right now. As we've said, things don't happen overnight. It takes a few months for this stuff to get baked in and it's bad, it's really bad.
- [09:40]
Krystal Ball
And now we're two months in and it's starting to be the case that traders are realizing that there is a, an immovable reality here because oil is not just some stock that you trade. It is a real thing with real substance behind it that eventually that reality and you know, the traders are going to coalesce and we're getting to that point as it becomes increasingly clear that there really isn't a taco on the table. I mean, that is what they've been betting on. Also, I know Ryan is doing some reporting, supposed to have a report next week about the way the treasury has been directly intervening in the markets to keep oil prices from spiking. But that also has a limited shelf life and they may be running out of mechanisms that they can use as well. But to your point, Sagar, I mean, the bottom line is here we are defeated. And it's a question of whether we are going to acknowledge that reality now or if we're going to acknowledge it a month down the road or three months down the road or years down the road. That is the question. How much pain are we going to take before we acknowledge the reality that this was a loss? We are defeated, the world is not going to be the same and we have to reckon with that new reality. The alternative to that, I suppose is you could do full scale ground invasion, potential nuclear weapons. I mean, that would be the other road to try to secure some sort of quote unquote victory out of this thing. And obviously the American people have no stomach for that. They haven't had any stomach for any of this. So that is effectively where we are negotiating the terms of our own defeat and the length of time before we acknowledge the reality of what this war has meant and what this war has truly revealed. That's the bottom line of, you know, wars reveal the actual state of the world, not the one that people and nation states had imagined existing. And that is not something that you're going to be able to put back in the box at the same time. Let's put a two up on the screen. So, you know, the Iranians Ability to continue to trade with the world is very central, obviously, to this strategy of the total blockade. And there is no doubt that the American blockade has reduced their ability to export oil, for example. But it is also true that they are able to get around the blockade in certain ways. They also have many land borders so they can can ship goods over land as well. There are some indications they've got new deals with Pakistan as well. In any case, this is a report that 52 Iranian ships were able to breach the US blockade. This is all a very dangerous game because, you know, it doesn't take any much of anything for us to return to a hot war. This is an incredibly, incredibly unstable situation. And you have the Iranians out saying that, you know, if you do take us to the point where we are having to shut down oil wells and those wells are being damaged, we consider that an act of war. We consider that equivalent to bombing those oil wells, and we will respond in kind. They also, as we've talked about before, you know, more sort of hawkish elements have consolidated. They have a lot of strength because the logic that they have been pushing seems to be the logic that makes the most sense to a lot of people within Iran at this point and because the US And Israel have assassinated some of the more reformist, moderate types within the government. So that is something to consider here as well. At the same time, Pete Hegseth, Secretary of War, was testifying before Congress yesterday, is the first time, I believe he's testified before Congress since they launched this war without consulting with Congress. And he immediately gets caught up on this question of, hey, I thought you said you obliterated the nuclear weapons program. How does that square with now your justification that you had to launch this war because of the nuclear weapons program that you said you obliterated? Let's go ahead and take a listen to that.
- [13:31]
Pete Hegseth
They haven't broken yet, okay? We haven't gotten there yet for all of the. Well, their nuclear facilities have been obliterated. Underground. They're buried and watching them 24 7. So we know where any nuclear material we claiming we're watching a second here. We had to start this war. You just said 60 days ago, because the nuclear weapon was an imminent threat. Now you're saying that it was completely obliterated. They had not given up their nuclear ambitions and they had a conventional shield of thousands of. So Operation Midnight Hammer is nothing of substance. It left us at exactly the same place we were before. So much so their facilities were bombed and obliterated. Their ambitions continued so their nuclear weapons
- [14:18]
Krystal Ball
were bombed and obliterated. I mean, first of all, he's lying. Second of all, soccer. If you take him at face value that we have to continue this until their ambitions are destroyed, what are you gonna do, you know, like get him in a room and use some psychotherapy, some MK Ultra style program to take the ambitions out of their mind? I mean, that's not something that a war can solve. So it commits you to endless engagement here. Which is exactly what people like Hagseth just goes along with. Whatever. I don't think he's really a player here other than just pushing Trump in the most sycophantic way he possibly can. But this is what the Israelis and the neocons want, is this idea that we must continue, we must be in a hot war until they give up even their nuclear. The idea, even the concept of possibly pursuing any sort of nuclear ambitions.
- [15:05]
Sagar Enjeti
Yeah, that's the preposterous nature of it. And look, I mean the way that they technically try to define ambition is to give up all highly enriched uranium for 20 years. Let's be clear. They want a literal. They want to be able to come in, take all the uranium out, give a 20 year moratorium on enrichment. Now, the Iranians are not actually nearly as unreasonable as they make them out to be. They said, look, we'll do five years, no enrichment. However, you have to allow us to downblend that highly enriched uranium and maybe some of it can go to Russia and, or under the inspections of some Internet, the iaea. But for the administration, they can't do five years because that would basically be JCPOA plus two. Except now we've launched this massive war and we're basically in the exact same position as we were previously. In fact, a vast majority of the uranium that we're trying to get away is exactly the uranium which was enriched post JCPOA and withdrawal of the war. They have 11 tons right now of highly enriched uranium. Now we don't know where it is. There might be other facilities. So that's the alleged definition of what they're talking about. But by nebulously defining it as nuclear ambition for however you want, the war can continue on forever. And again we're gonna do our whole segment about who's gonna cry uncle first. Like I'm putting my money on us actually, because I don't even wanna be paying what we're paying right now, let alone what we're gonna pay in two months from now.
- [16:25]
Krystal Ball
The American people are already crying.
- [16:26]
Rory Johnson
They should cry Uncle.
- [16:28]
Krystal Ball
Yeah, do it like we never wanted this to start with. And you know, no, we do not accept that this is a reasonable trade off because we were never bought in to begin with. Meanwhile, for Iranians, it's existential. You have strengthened the support. One of the things we're gonna talk about with the Lego video makers is these were guys who were actually critical, and now they're out there churning out some of the most effective pro Iran propaganda in the entire world. I think that's incredibly emblematic of the way that you have actually strengthened this government's position with these attacks. At the same time, you know, Hegseth was playing his whole like a high moral righteousness card when one congressman described this war as a quagmire, which I think is a very accurate description of what we are, because we are bogged down in this thing. We can't figure out how to get out of it, can't find an off ramp. Even the German chancellor is saying that there's no exit ramp and that the entire nation is being humiliated. Let's go ahead and take a listen to Pete on this one.
- [17:31]
Pete Hegseth
I hope you appreciate how reckless it is. When I said reckless, feckless and defeatist of Congressional Democrats at the beginning, that came after watching you say the same thing on CNN this morning. A quagmire. My generation served in a quagmire in Iraq and Afghanistan. Years and years of nebulous missions and utopian nation building that led us to nothing. What we have right now, the way you stain the troops when you tell them two months in, two months in. Congressman, you should know better. Shame on you calling this a quagmire. Two months in the effort. What they've undertaken, what they've succeeded in, the success on the battlefield that could create strategic opportunities. The courage of a president to confront a nuclear Iran. And you call it a quagmire. Handing propaganda to our enemies. Shame on you for that statement. And statements like that are reckless to our troops. Don't say I support the troops on one hand. And then a two month mission is a quagmire. That's a false equivalent. Who you cheering for here? Who you pulling for? Our troops are doing incredible work. They've done incredible things for the entirety of this mission and achieved incredible battlefield successes. And you sit there and go on TV for your clickbait about quagmires. It undermines the mission. Your hatred for President Trump blinds you to the truth of the success of this mission and the historic stakes that the president is addressing, which the American people support.
- [18:58]
Sagar Enjeti
So welcome to. There's a decent portion of our audience which wasn't alive in 2002. That's what it was like. This is. Welcome back, folks.
- [19:05]
Krystal Ball
Yeah, if you criticize the war, hate America, freedom fries, all of that, that's exactly what he's doing. From a man who claims to have a critique now of the Iraq war and of endless warmongering, but he loves to play to the cameras and do this whole. Let me. I mean, he wants Trump to see that and be impressed with how tough he was and how much he stood up to the Democrats, et cetera. It's just so obnoxious. And I think everybody, I don't know, I think everybody sees the rope.
- [19:34]
Sagar Enjeti
I think people see through it. But I mean, at the end of the day, look, we have an almost an imperial system. Our Congress is gone, like the you. I've compared it to Versailles. That's basically what we're living through. Let's get the next one up there on the screen. This is important too, is all signs of any potential deal or movement. It's just not there. Trump has rejected Iran's offer and says a blockade stays until there is a nuclear deal. And remember, whenever he says Iran won't say they won't have a nuclear weapon, what he means is they won't agree to a 20 year ban on enrichment. That's what he actually is trying to say. So don't let them define the terms because they had the same terms before the war. This was an interview with Barack Ravid, and what he said basically is that the naval blockade was going to stay until they cry uncle, as he said on camera. Centcom, as they said, is preparing a plan for a, quote, short and powerful wave of strikes. Now, they kept saying weeks, not months. It's been two months. It's actually been more than two months as of today. It's been two months and two days. So now what? Oh, it's just gonna be a short but powerful. Iran has said that if strikes resume that they're not going to stop. Now, I don't know, to be honest, and we've talked about this privately, I think that they're playing their cards incredibly incorrectly. The US And Israel were genuinely near the breaking point, especially Israel. Whenever it came to their munitions, the US Was getting pretty close to being like, having to really pull in the big guns, like completely draining all of the stockpiles from across the world. They decided to stop firing. It's also, you know, the price of oil, gas. They basically gave a reprehension to the entire market. The oil prices today are right back to where they were right before the ceasefire. But if they had continued shooting, the oil price probably would have gone to 1 4200. Now I get it. I don't want my country destroyed and my power plants killed and potential nuclear weapon used against me. So they're trying their best to try to maintain like some semblance of their infrastructure in their country while also balancing the necessary time for defense. But right now they're almost in a position where one of the reasons why Japan struck the United States first from Pearl harbor was exactly to avoid this type of situation. And I'm not justifying Pearl Harbor, I'm just telling you why they thought they needed to do. They were like, look, they cut the oil off, there was an oil embargo, we have X number of days. Now they've also said that they won't allow us to invade the Dutch East Indies or these other places where there's more oil, oil. So we have two choices. We can capitulate to the United States and they believe that capitulation was to withdraw from China, which for them unacceptable when I'm talking about Manchuria or China specifically, not just Manchuria. So we cannot compromise on this. So that means that we have no oil. We have two options. We can strike the United States cuz we will inevitably get into a war with them or we can invade and then we can obviously face the wrath of the, you know, the Pacific, the Pacific Armada when the time comes. Well in that logic, which again no excuse but they backed themselves into that led them to the decision for Pearl Harbor. I think this is honestly very similar. Like they do not want to be at the total mercy of the United States Navy for a long period of time, that is death on a long enough timeline. And they know that, they're not stupid. So they have a few things left in their arsenal which is basically asymmetric war and horizontal escalation to try and capitulate and force the world to force the US's hand and to tank our markets and to make gas intolerable here in America. If there is a short wave of strikes, that is almost certainly what is going to happen. And I don't think that the guns stop firing. We're lucky that the gun stopped firing at all. It was very, very unlikely that it were to actually happen this time around. I just don't think so. I could be wrong of course, but I really do think, I think this time it will also humiliate Golubov and Arachi and Peshka, all of the people, so called moderates in their government who, let's be honest, they have been pressing hard for a ceasefire. They have a lot to lose too. They're all very rich, they control a nice country. Ish. They've got decent positions and nice homes and irgc. But we're getting pretty close to a point where that voice. Think about it, you know, very. Think about it logically. Like if in a government, if you push a ceasefire and the ceasefire is broken, which it already has been, and you're under an act of war and you get struck again, why would that person continue to have any leverage inside your government? It's like Chamberlain and his government losing power after 1940. They're like, look, you don't have the, you know, you don't have the necessary analytical decision making to lead our country through this crisis.
- [24:11]
Krystal Ball
You don't have the stomach for this.
- [24:11]
Sagar Enjeti
Yeah. You just don't. So we have to go in with somebody else. That's, that's very, I mean it's not democratic, but it is, it is, it's logical in terms of who is running the country right now.
- [24:22]
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- [26:52]
Krystal Ball
Pets age 0 to 10 even this framing from Axios of like, oh, Trump rejected this, this offer from Iran. The idea that there was an offer from Iran was a manufactured Barack Ravid Axios report before the markets open. And this is based on Scahill's reporting. What there really was is they were saying, look, we're not talking about anything with you until the war stops, including the blockade. We figure out this Strait of Hormuz thing. And by figure it out, they don't mean we're just gonna, it's gonna be wide open and go back to what it was. They mean we're establishing a new reality where we charge tolls and we basically are in control. And then at that point, then maybe we can talk about the nuclear file. But they framed that as like, oh, a new offer from Iran. What it actually was was it was a worse position from the US Perspective vis a vis Iran. So in other words, they strengthened their terms and said we're not even gonna talk about this stuff until we deal with with a new reality in the Strait of Hormuz. But that was framed because they needed it for the market opening as like, oh, a new offer on the table. And so now, no surprise that Trump says, well, I don't like this offer, cuz it was never really an offer to begin with. In any case. We've got this from the Wall Street Journal. Trump tells aides to prepare for an extended blockade of Iran. You know, we're looking at now months and months. Trump originally thought that this would be four days. He apparently told, I think it was the French that Trita Parsi was talking about. He told them, like, listen, if you wait a week, it's gonna be too late to help us out here. No, it was the uk if you wait a week, it's gonna be too late here, cuz it's all gonna be said and done here. We are already two months later and now he's telling his aides and the US Military, let's prepare for a lengthy blockade. And as much as, yes, the blockade is very painful for Iran. I mean, it also requires the, an incredible expenditure of US military assets to maintain this blockade as well. We've got three carrier groups in the region already. I mean, it's just a massive amount. We got some sense from Pete Hegseth, although he downplayed the number there of just how expensive this all is, how much taxpayer dollars is going to this every single day. And at the same time, you also have voices in Trump's ear that he is considering strongly apparently that say, hey, we need to do, we need to strike their capabilities around the street of Hormuz and that'll be what changes the negotiating dynamics and brings them to the table and forces them to capitulate as if another bombing campaign, like we already bombed them a lot along with Israel. We had all sorts of targets that we hit. You can listen to Pete Hegseth brag about how many things we hit and how much of their infrastructure we took out, how much of their military assets, blah, blah, blah. You think one more bombing campaign is really going to change the dynamic? That's foolish. I think in a lot of ways the Iranians are looking for an excuse to go back to war because of the dynamics that you're talking about here. They seem to be sensitive to being the first aggressors, the ones that are seen as the first aggressors. They seem to really want to try to maintain that moral high ground. And you can question whether or not that is the right strategy or not. But that does seem to be their approach. So I think they would be happy to have some strike from the US to give them justification to continue on that horizontal escalation. Path that they were pursuing previously.
- [30:23]
Sagar Enjeti
Yeah, I mean you just keep looking at this, this seems unsustainable to me. I just do not believe that the Iranians could withstand three months of blockade without a resumption of hostilities. First of all, I mean, let's remember what blockade even means. Blockade doesn't just mean stopping ships, it means boarding the ones and, and seizing them where potential fire drone attacks. I mean look, if you're a carrier and you're heading out and you know you may be seized, what are you going to do? What would the United States do? Well, you can start putting guns on board, maybe bombs, maybe you would even set it up as some sort of a sabotage attack. I'm not like leaking secrets to the enemy. This has all happened before in the history of blockades. It's just, and you can see the logical pattern this would go. And also the of cost to the United States. Cuz you're talking about carrier strike groups. It's not just that. Everybody at the Pentagon getting paid overtime and all this spy satellites and the level of attention and I mean this is a crisis across the globe. I was just, you know, I was just tweeting about this yesterday. Japan Airlines, get this. Is now charging A surcharge of$350 per ticket for aviation. 3, 350 per ticket. Any flight North America and Europe. That's more than double what it was before. South Korean airlines are all doing the same. And they were originally just going to do it for June and now they're doing it for May. By the time June and July hits, there will be no surcharge because there'll be no flight. Like that's what we're trying to, you know, articulate for the rest of the world. You know, I was reading again like Japanese citizens, 70% of them want the government to institute energy conservation because they can see the writing on the wall and their Prime Minister's like, oh, don't worry about it, we have enough oil. Like no you don't. You actually don't. You have maybe enough oil for 200 days, but you're burning through it like already. And a lot of it is trying to keep the pressure down. China is also, you know, they're, you know, we talk about grand strategy. The Chinese originally had an oil export ban. Well, they just took it off. And now the Australians are bowing down at their feet saying thank you because they're getting a bunch of jet fuel from them. And so the Chinese are using this as a, a major piece of leverage selling oil to whoever they can. The Russians, I mean, that goes without saying. The amount of influence that they've been they're doing backflips in the Kremlin over this entire exercise, $120 a barrel. We just gave them enough in a year probably to fund the Russian war machine for five more years in the war in Ukraine. Like it has been a disaster. And so the last thing there in terms of costs. I just love this. It's a good transition for economy. Here is Ro Khanna versus Pete Hegseth on the cost of Americans food and gas as a result of the war and Pete Hegseth's response. Let's take a listen.
- [33:02]
Pete Hegseth
Do you know how much it will cost Americans in terms of their increased cost in gas and food over the next year because of the Iran war? I would simply ask you what the cost is of an Iranian nuclear bomb. I'm going to give you that. I would simply ask you what the plain gotcha questions about domestic things. I'm not. You're asking. You're saying it's a gotcha question to ask what it's going to be in terms of the increased. Why won't you answer what it costs to prevent Iran from getting a nuclear bomb? I'll give you that, sir. But let me what would it cost? What would you pay to ensure Iran doesn't get a nuclear bomb? Do you. What would you pay? I reclaim my time. Do you not know? You had no one do the analysis of what the increased cost of gas and food on the American people are going to be? What is the cost of Iran holding that straight at issue with nuclear weapons? It's $631 billion, which means it's an increase of $5,000 a year for American households. Now, let me give you this point. You're saying that your operation is preventing a nuclear Iran. Will you acknowledge that there is an economic cost to the American people for doing what you believe is necessary to make Iran denuclear? Will you acknowledge the economic cost? We have an incredible economic team that's managing this better than what the previous administration did to our economy. What the previous administration did for the. You know what's upsetting and you're going to. You know what is upsetting? Incredible. You didn't even do the analysis on how much it's costing the American people. It's one thing if you said, okay, it costs the American people $5,000, but we think it's worth it. That's what we've done in World War II in other wars. Here's what it costs. You got to pay for. You don't even know what the average American is paying. You don't know what we paid in terms of the missiles that hit the Iranian school. You don't know what we're paying in terms of gas. You don't know what we're paying in terms of food. Your 25 billion number is totally off. It's the incompetence.
- [34:58]
Krystal Ball
Imagine calling the queries about gas and food prices a gotcha question. Imagine. And all he has is like, oh, it's worth it. How much would you pay to keep Iran from pursuing a nuclear weapon? Which, again, is like, hey, I thought y' all said you obliterated this nuclear program. And you know what? We didn't have to pay anything because we had a deal called the JCPOA that you all got out of in the first Trump administration. And then this time around, there were negotiations for an even better, from a US Perspective, deal that you destroyed because you decided you wanted to bomb them instead. So they create this false narrative that it was necessary to Pay, you know, $5 per gallon gasoline with no end in sight in order to achieve some sort of blow against the Iranian's nuclear ambitions. You have made it more likely they pursue a nuclear weapon. We're paying, you know, at the pump, and food prices are gonna go up and the economy is gonna be hit and we're gonna lose jobs and all, and we're risking a global depression to end up in a worse situation with the Strait of Hormuz closed and then more likely to pursue a nuclear weapon. So, congratulations.
- [36:08]
Sagar Enjeti
New analysis just came out today. Half of the estimated tax refund has already been gone as a result of gas. So, okay, half of the estimated increased tax refund. By the way, the majority of that refund went to boomers. So, you know, you're the people who got the refund, and now you're paying more for gas. So there's that. There's also this point about the nuke. How much would you pay to prevent Iran from getting a nuclear weapon? I can virtually guarantee you that outside of Washington and like Tehrangelus, that there was nobody on February 27th who was like, I cannot sleep at night because of the nuclear ambitions, the fake nuclear ambitions of the Ayatollah Khomeini. Nobody. The vast majority of people who went to bed on February 27th and woke up like somebody else did at 4, I think, 4:30am on February 28th checked their phone and was like, oh, here we go. It had nothing to do with whether we were gonna go to whether Iran was gonna get a nuclear weapon. It came out of nowhere. And even when the war was happening, not that many people were dying. Yeah, some stuff was blowing up. We have vague awareness. But again, the 99% of people, they're not watching our show or any other news. They're just going to the pump and they're like, huh, that's up. Trump says it'll be over soon. Okay, now it's starting to set in. Now is when people and I think the normies are all starting to be like, oh, wow.
- [37:27]
Rory Johnson
Wait, wait, wait.
- [37:28]
Sagar Enjeti
He said it was gonna be over in a few weeks. He said there would be a three. It's actually $4.50 now a gallon right now. I think the national. The price of gas today is 430. It will be 450 probably by the end of the month and it'll be five within two months if nothing changes as a result, it could be even $6 a gallon if this continues for a long period of time. And then the shock effects from there are crazy. I mean, I was looking yesterday, the price of oil, Brent crude oil is up 99% year to date. I mean, that is a crisis. And Nobody, nobody on February 27 said that that was worth it. In order to be in this war. They might retroactively. A lot of the propagandists maybe, but the vast majority of people say that this is complete bullshit. So, yeah, if that's what you got, good luck to you. Seriously.
- [38:15]
Krystal Ball
RO hooked him there, right?
- [38:16]
Sagar Enjeti
Let's get to the economy.
- [38:19]
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- [40:52]
Sagar Enjeti
to the economy, we've mentioned it quite a bit and the theory that President Trump laid out is who's going to cry uncle first? So this was elucidated, I think very well in an interesting exchange between Congressman Seth Moulton and Secretary Hegseth. Let's take a listen.
- [41:06]
Rory Johnson
How much has Iran profited from your administration lifting the sanctions on Iran
- [41:13]
Sagar Enjeti
when
- [41:13]
Rory Johnson
you started this war, I can tell
- [41:15]
Pete Hegseth
you Iran is financially devastated right now. Okay, well, junction with the Treasury Operation Economic Fury. They're at a point where between the blockade and what we've done to them militarily, remember they don't have a navy. They can't contest the blockade. Okay, between what we've done to the
- [41:29]
Rory Johnson
military and financial, they're at a place
- [41:32]
Pete Hegseth
they have very few options.
- [41:32]
Sagar Enjeti
How many Chinese missiles can they buy for $14 billion? Does that sound like winning?
- [41:39]
Pete Hegseth
They're not. We're ensuring. And they're not buying Chinese missiles.
- [41:43]
Sagar Enjeti
They're not buying missiles. I'm not so sure about that. But it actually highlights a good point, which is, remember during the war, Iran made more from oil export than it ever had in modern history by removing sanctions and more. The estimate is in the tens of billions of dollars. Now obviously they are feeling the pain right now, but as Trump said, somebody has to cry on gold first. First, let's start with the Iranian economy. How is it? It's kind of hard to know. Let's put the next one up here on the screen from the Wall Street Journal. Take it with a grain of salt. They say Iranians feel the pain as their economy descends into a death spiral. So what they point out is that businesses are closing, unemployment is soaring and food is increasingly unaffordable. War has imposed a heavy cost. More than a million people are out of work. Soaring food prices and a prolonged Internet shutdown has slammed online businesses. Talks between the two have stalled. There is a big question right now not only about the Iranian employment rate, but it's really about oil, which is the backbone of their entire society. Nearly a million people and another million people indirectly have been said to be out of work and or looking for work. And a significant portion of the 25 million people who are normally employed in Iran and the cost of living has reached some 67% in the month through the mid April. So obviously that is a disaster. However, let's point a few things in the government's favor. Usually governments who are under attack have civilian populations which are willing to take immense cost even if it means that they have to continue a war which is not even that popular. Now let's say, and take let's Ukraine for example, one of the projections here in the United States was we can cripple Iranian GDP by 10%. Ukraine was able to mount a sufficient fighting force, yes, with a huge amount of US support, et cetera, with a 20% reduction in GDP. A 20% reduction. And they still are able to continue the fight to this day. Yes, they're basically backstopped by the United States and by NATO and all these other countries. But it's not like Iran doesn't have its own lifelines that it can call if it needs to. So just the idea that a 10% reduction will lead to immediate capitulation has almost no bearing in history Whenever the stakes are completely existential. Now, on the other hand, you're gonna have the North Vietnamese strategy, which they would often say out loud. They go, look, you may have killed a million of our soldiers. We don't care. We will keep fighting until our country is no longer under attack and this north and south are unified. You have all these domestic problems at home. You are not gonna nearly be able to keep up the fight as long as we are. And if that's the total war mindset of Iran, I have no doubt that they will outlast a lot of the consternation and really like, you know, social explosion here in the United States for what will come for a prolonged period. Because, you know, I was talking about this with a friend recently about gas because they were like, sagar, if your theory was correct, why didn't people revolt over Biden when gas was $5 a gallon? And I was like, well, they kind of did. They voted and the vice president. So there's that. But two people, hardcore Democrats, especially at the time, they actually bought that bullshit about Putin's price hike, remember, in that whole campaign. And at the very least, what people could appreciate is it's not 100% Biden's fault. Like, it was indirectly his fault, but it wasn't 100%.
- [45:07]
Krystal Ball
It's not like he didn't launch Russia's. The ones that invaded. And you also had. Part of it was also Covid. Yeah, Covid. Shocks which are, you know, contributed to multifactor.
- [45:18]
Sagar Enjeti
Yeah, this is 100% your fault. That is a very different political landscape. Like, we all know gas was 290 on the day of February 27th. Now it's 4:30. So whose fault is it? And he's taking credit. He said, I'm proud to do it. I'm happy to do it. That stuff will roll over and over again. So to choose, this is actually very different than being thrust by the forces of history and mismanaging a crisis, as opposed to. To entering a crisis at your total behest with the knowledge that this may happen. Like, the actual effect on the population level of that is going to be radically different whenever it comes to crying uncle. Because we're like, hey man, we didn't want this. We didn't want you to do it. Then you did it and we said no. And then you kept it going and we keep saying no. It's a very, very different Democratic.
- [46:05]
Krystal Ball
Well, and to your point, there actually was a revolt. And not just here, but around the world. I mean, almost every incumbent party got thrown out in the entire world because of inflation. So whether people were directly attributing it to the Ukraine war and our role in deciding to continue that and blow up any sort of a peace deal or not, they blamed leaders for inflation when there were more historical forces at play. Whereas here, and you also have, people are still pissed off about the tariffs and thought that was insane. So the negative impacts on the economy have come directly from Trump, and he is quick to take credit for it all the way around. The other interesting thing in this article from the Wall Street Journal about Iran's economy is they talk about how the Iranian government has put in place a variety of supports. Both they've increased wages. They've also provided more in terms of food assistance, which also speaks to the fact that they did earn some money during this war, so that they're able to offer those sorts of social support to help to ease the burden here. But there's no doubt that, of course they're going to suffer if the blockade continues longer. But if you just think about it logically, we've been doing the maximum pressure campaign for years at this point. We've been trying to crush Iran for literally decades. Think about Cuba. Same thing. For decades and decades, we've been trying to squeeze them and make life so miserable and cut them off from the world that eventually their quote, unquote regime will fall. It has not worked. It has not worked. So why you think this time around, maybe if we just do it a little harder, that's gonna be the key. There really is no historical precedent for that ultimately working out. And then, you know, Iran has some flexibility in the way that they respond. And much like Russia, you know, had thought through, okay, if the sanctions, full sanctions are levied against us, they planned and prepared for how they would be able to maneuver. And how would they would be able to handle that? Well, Iran has been contemplating this for years as well, and they do have some options. We can put B2B here up on the screen. This is what I was referring to earlier about how they have a variety of land routes. They are not just on the water. They're also countries that they border with that they have reasonable relationships with as well. Pakistan, in particular, appears to be working together with them. They say Iranian container ships are now docked and Karachi and other ports to transship cargo overland into Iran. This analyst says reason number 342, Trump's blockade won't work. Iran is a continental state with plenty of alternate transit routes, so they will pursue that. Not that it's gonna completely make up for the fact that this blockade is in place, but it does give them some other options. At the same time, you've had yesterday a significant decision here from the Fed Chair Jerome Powell, speaking about how, you know, he's concerned about inflation. And so Trump has been thirsting after this interest rate cut, which, you know, previously actually would have supported. Now, I think that that rationale is evaporating as we increasingly push towards likely higher inflation due to the cost of fuel and the way that will ripple throughout the entire economy. So in any case, rates are staying exactly where they are. Let's go ahead and take a listen to Fed Chair Jerome Powell justifying that decision.
- [49:32]
Sagar Enjeti
Inflation has moved up and is elevated, in part reflecting the recent increase in global energy prices. Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle east are contributing to a high level of uncertainty about the economic outlook. And we will remain attentive to risks to both sides of our dual mandate.
- [50:02]
Krystal Ball
There you go. He ties it, the decision, directly to the war in Iran and the way that could impact inflation.
- [50:09]
Sagar Enjeti
Yeah, exactly. And, you know, let's continue kind of down this theory is. I was just reminded, I had to look up the book. I had to read it when I was in graduate school. And it was about the. It's called the Great Illusion. And it was this very pollyannish theory in 1909 where we can't have war because it'll cost too much money. It was right before the Great War. And actually there was a theory in the opening days of the Guns of August where they were like, guys, the war will be over soon because we're all gonna go broke. There's no way that we could sustain this. What ended up happening, they're like, okay, we're gonna nationalize. All industry currency will be completely depegged from gold, and we're going all in. We'll take as many loans as possible. Whenever things get existential, all the previous rules go out the window.
- [50:50]
Podcast Announcer
And.
- [50:50]
Sagar Enjeti
And at this point, look, you're forgiven for thinking that in the year 1909, in the year 2026, saying, oh, maximum pressure's gonna work. I mean, how long have we had sanctions on Iran? 2009. So it's been almost 15 years of crushing sanctions on the country. With a brief break during the jcpoa, this country is more sanction proofed and ready and able to survive it than any probably other in the world, except for maybe China, China and Russia. Now, as a result of what happened to them, their population, at the very least, they came close to a revolt. And even then the revolt was put down, yes, violently, but that happens sometimes and it didn't succeed. And if they were going to revolt, they would have in the opening days of the war. Instead, we've seen a massive surge in nationalism continuing on our front. For why I think there'll be a revolt here. Put B4 up here on the screen. April consumer sentiment just came in at the lowest on record. Quote, anxiety about the war in Iran has left Americans in the grimmest economic mood on record. The University of Michigan consumer sentiment has now dropped to 49.8 from 53.3 last month. That is below the previous low seen in June of 2022 when shoppers feared searing inflation and the worst reading in more than 50 year history of the Michigan so this means that we now have a lower reading on how people are feeling about inflation than Biden did whenever gas was at $5 a gallon. So now imagine when gas does hit $5 a gallon or $6 a gallon and you're seeing more of these churning forces in our economy. Now you may ask then Sagar, then if that's true, then why is the S&P 500 up? It's actually a very simple story. Let's put this one up here. I was just reading all about it this morning. Is that Amazon, Google, Microsoft and Meta are now collectively spending more than the Manhattan Project did every single month and more than 12 times the Manhattan Project every year. On AI, the total number is 3/4 of a trillion dollars just this year with an allocated 450 billion the year before. So if you add that up, that's what like $1.3 trillion which is, is, I don't know, 1 15th of the entire US economy GDP and just spent on AI development by these big four companies in the last two years. That's why the markets are up. That's why Google stock is going sky high. Their profits are really high and they're spending a ton of money. Meta stock is down 6%. Oh boohoo. It's actually still up very, very much, you know, in the last few years, all based on AI sentiment. OpenAI Nvidia, all these other companies are booming, all these chip makers. That's the reason why the markets are up. And I will remind you all that while the Biden years were the worst years I think in modern American history, at an economic individual Level that the S and P, if you look at it over the four year period was up by 60%. Are you 60% better off? Yes. If you own the stock. No. If you had, I don't know, had to spend gas or buy a house or do anything, buy health insurance, any of these other like basic staples of life, that is the core problem. So don't just look at markets to reflect your reality. You've had way too much evidence now in modern years to know that this is not the case.
- [54:06]
Krystal Ball
Yeah, and in fact I think they are increasingly a counter indicator as you know, with AI being the main investment vehicle and being mostly what is propping up our economy. Because I mean when Google is massively spending to build out their AI infrastructure, is that benefiting you? No, actually it's probably going to destroy a lot of jobs if it is successful. That is the goal. And also what it looks like is like data centers in your community which at best have, they have short term you create construction jobs, but over the long term they create basically no job, like very few long term jobs and investments in communities. So there's another number that just came out this morning that also indicates the way that the economy has come apart. So the fortunes of the top corporations and also the wealthiest individuals are completely divorced from the reality that most people experience. So you had annualized GDP growth of 2%, which is not great, but it's not like, you know, it's not devastating, it's not negative. And what they point to is this major AI investment is what is propping that up. Alongside you have the top third of income earners who continue to spend at effectively the same rate. And that's what's propping up the entire economy. So if you aren't in those, you know, top consumer, in the top income percentile, if you aren't benefiting from the massive data center Manhattan Project, a month AI spend and you're in the rest of the, you know, 2/3 to 80% of the nation, you are getting screwed. Your reality is coming apart from the rest. And so, you know, it creates actually real problem for like a democracy problem. Because that pressure that would come and what Trump watches most closely is the markets. That pressure that should come, that should push him towards getting out of this thing in some sort of way is mitigated very much by the unequal nature of society. At the same time, I do want to point out one area that is not looking so hot and that he does also closely watch is the bond market. So we can put B6 up on the screen. This is from Kobesi Letter. This is the US treasury market. Incredibly important because why? This is how expensive is it for us to finance our debt? That's what the bottom line here is. And they write, the bond market is collapsing again. 10 year note yield is now silently back above 4.4%. That's the exact same level that has led to multiple market interventions by President Trump. Simply put, the US economy cannot afford the 10 year note yield rising substantially above current levels, levels as we saw in April 2025 and March 2026. President Trump is highly attentive to the 4.5% level on the 10 year note yield, which we previously labeled as our policy pivot point. At the current pace, we could see 4.5% within a matter of days. Meanwhile, US oil prices are above $108 a barrel. Gas prices are up another 5%. Today, 30 year mortgage rates are at 6.5%. Bond market will soon become the center of attention. And the 30 year note yield has actually hit 5% at this point, which is a significant marker. And you know, these may seem like small movements, but this is something the President has paid close attention to and for good reason. And what it means is, you know, that we have to pay people more to hold our debt. It is a sign, by the way, of a lack of confidence in our country and in our economy. And that's part of why it's so significant when there are even small movements in the bond market.
- [57:39]
Sagar Enjeti
Yes, exactly. And look, overall, I think you can look at our consumer sentiment, you can look at the gas price of where we are today. It's 430A gallon. I just checked. It just crossed $6 a gallon statewide in California, which is the highest in the nation. Our producer Griffin says in Los Angeles, it's not uncommon to see $7 a gallon. And let's, you know, put it into context. So isn't Cal, I believe California is the most populous state, I think like 14 million people, something like that, that a lot of people live there. So 14 million people are paying $6 a gallon. That means the vast majority of Americans, between California, Texas, New York and Florida, the most populous states, only one of those has gas that's less than 4 bucks a gallon and are spending orders of magnitude like billions of dollars. The average current estimate is currently costing $70 a month in additional dollars per household. I mean, it doesn't sound like a lot, but 70 times 12, that's over 500 bucks whenever it comes to an entire year, which is basically the savings for the average household. I wish it were more. It's not. So you can easily see how this can spiral completely out of control. And that's just at 4:30. So Trump thinks that they'll cry uncle. I'm pretty skeptical. I think America's already crying uncle and will continue and frankly should they should continue to do so. Okay, we've got our friend Roy Johnson standing by. He's gonna talk about the oil markets and what's happening. Let's get to it.
- [59:02]
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Support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SI Advisory Services by Public Advisors llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available@public.com disclosures let's talk about modern home shopping.
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- [62:05]
Sagar Enjeti
Joining us now is our great friend of the show, Roy Johnson. He is the founder and editor of Commodity Context on Substack, which we'll have a link down in the description. Thank you so much for joining us, Rory. We appreciate it.
- [62:15]
Rory Johnson
Thanks for having me. Good morning, guys.
- [62:17]
Sagar Enjeti
Good morning. So, Rory, big news yesterday. Let's put it up here on the screen from the Financial Times. Oil topped some $120 as Trump signaled an extended Hormuz standoff. As I understand it, that is down more this morning, more as a result of contracts expiring. But these two things still put oil at a very, very high price relative to where they were obviously before the war started. But even where the ceasefire is, what are we seeing right now in the oil markets and what can the world begin to expect?
- [62:49]
Rory Johnson
Yeah, so before that sell off you mentioned this morning and again on the last day of Brent's contract expiry. So these are the monthly contracts that roll off at the end of every month. You get a lot of volatility in the last day of the of the contract and today's that day. So we're getting a lot of that volatility to the downside because we got a lot of it to the upside yesterday. Overnight we saw Brent prompt futures contracts rise to above $125 a barrel and I think even more importantly, that was for June. Even more importantly, July rose above 113. I think it's actually that July contract that's about to become the front of the curve and is even more important. I think this, you know what's going on. The same thing that's been going on for two months. The Strait of Hormuz remains closed. We are now down more than 600 million barrels of unproduced oil to date at this stage, guaranteeing at least a 1 billion barrel hit to global supply for the year. And I think the price is just finally beginning to reflect that. I think, as you noted there, in addition to this, there have been comments and reporting on. The White House is thinking that maybe just another two months of blockade on Iran would weaken their position and make them more amenable to compromise. But, you know, sure, it might make Iran more, more compliant. It's going to make the rest of the world far more desperate as well.
- [64:00]
Krystal Ball
Can we put C3 up on the screen? This was your analysis from yesterday that I want you to explain to us. You said, There she goes. US commercial petroleum inventories fell by a headline, 17 million barrels plus another 7.1 million barrels of SPR crude draws.13 of. What is that? MMBB. What is that?
- [64:21]
Rory Johnson
Million million barrels.
- [64:23]
Krystal Ball
Okay, million barrels total crude draw. Anyway, explain to us why this was significant to you, what you're seeing in these numbers.
- [64:30]
Rory Johnson
Yeah. So one of the things that's been weird about the crisis so far and I think has been stunted, the oil market's ability or kind of willingness to bid these prices higher, is that US Inventories, which are the most visible inventories in the oil market, released every week by the Energy Information Administration from the Department of Energy, those actually showed inventories pretty high, not just for all products, but for crude specifically. And what we had been anticipating. So this goes back to Trump's new fascination with these tanker maps of all of these tanker tankers steaming towards the US Gulf coast to pick up crude for a Hormuz starved market. Eventually those, those, you know, tankers were going to spike imports, which they're doing, and it's going to start drawing down domestic US Inventories. I think that is the signal the market needs to say, oh wow, this scarcity is here. So in total, you had a 23 or 24 million barrel draw in total petroleum stocks. And that's normally, you normally get a build of, let's say, plus or minus 5 million. That's kind of a normal range. So this is much, much larger. And I Think indicates that what we expect it to be coming is starting, which is basically the rest of the world sending tankers in order to try and buy oil from North America because the rest of the world is currently willing to pay more for oil than is North America. And this is going to be the result is our inventories are going to draw down here until we bet our prices up high enough to keep those barrels at home.
- [65:54]
Sagar Enjeti
Okay, so then let's run through that scenario. So what does that look like? So one of the reason, again, as a layman I'm looking at it, is when we draw the inventory low, could we run out of oil, or is it going to be that the price goes so high that all of US are paying $650 a gallon for gas? Let's take the White House at its word currently. Who knows what it is. Two more months, this will continue. All of these isn't the journey time. It's like a month or so already in terms of the tanker. So what does that start to look like in terms of the price physically for everybody with, as you have very well educated us, it's about the refined products for the things that we actually use.
- [66:33]
Rory Johnson
Yeah, so that's exactly right. So I don't think the United States is going to run out of oil. And again, people are like, oh, Rory, well, where's, where's zero on that chart that you showed? Zero is not really a relevant number because if we got to zero, we and the rest of the oil market is already basically dead. So we basically need to stop inventories from drawing down too much because you have operational minimums. The whole idea of the oil market is it's this giant flowing chemistry set. And the flowing aspect is important. It needs to keep flowing every day at roughly the same rate. These stocks are there to basically even out the natural imbalances between production and consumption. When you don't have them, you get into much tighter, spikier markets, which the deeper we go is basically a lack of liquidity in kind of the pricing for those barrels. So my expectation is that we're going to keep drawing down North American barrels until prices rise. But given that North America is wealthy and has a relatively low price sensitivity for our demand for petroleum products, I have no doubt that North Americans will be able to pay the prices that will keep those barrels there. But I think, really, I think this is kind of a narrative check. The president had become obsessed with this idea that US Energy dominance. The United States was going to be a net beneficiary of Hormuz being closed and the spike in energy prices. And he only saw it through the lens of export increases, which, again, we know that Trump is obsessed with terms of trade, so that is his first pass at this. But the only way that you get a spike in exports is by it puts upward pressure on prices. So, yes, it's going to help, maybe it's going to help on an offset on GDP for the shock. But the vast majority of voters do not produce oil. They consume oil. And again, very important to remember that this is an election year.
- [68:16]
Krystal Ball
Yeah, yeah, great point. Yeah. If you're an oil executive, the landscape may look pretty good. If you're someone who's just trying to fill up your tank at the pump or pay prices at the grocery store, the landscape is very, very different. Put C2 up on the screen. What can we say, Rory, about the Iranian oil industry? Because the whole bet here is that, you know, very quickly, Iran is going to run out of storage. They're going to have to have to shut down some of their oil production. That is going to be damaging to those oil wells. That is the calculus that Trump is engaged in here. To think that they are going to. This is going to be devastating to them, that that's going to cause them to capitulate, going to cause them to cave imminently within weeks is what the White House has been floating. What do we actually know here about the realities for Iran?
- [69:01]
Rory Johnson
Yeah, so I think it's important to kind of walk through the causal chain here. So up until the blockade, Iran was still basically exporting its oil at full tilt and benefiting from the gangbuster kind of rise in oil prices. So it was getting windfall profits. So that was obviously not great from the perspective of trying to build pressure on Iran. So the first step was to blockade their exports. So now they're not going to be earning money on those exports, but they're still able to produce crude into inventory domestically. So they don't need to shut in the wells yet. The question is, how long do they have, how much inventory space do they have both between onshore tanks and basically empty tankers floating around? They can keep filling after that. And the timeline is kind of in the ballpark of 10 to 20 or 30 days, depending on which source you're using. And that, I think, is a big source of the debate right now in the policy sphere. But after that, then Iran has to shut in production. Now that could be damaging to Iran's product long term production capacity. Producers don't like to shut in Production, it could damage reservoir pressure and other things like that. But again, important in this context, this blockade only started on, like, week six or seven of the, of the war, after already the rest of the Gulf had been forced to shut in 13 million barrels a day of production, more than kind of six or seven fold what Iran would need to shut in. And that's been shut in for, at this stage, almost two months. So it's, there's, there's a little bit of a timing mismatch here as well. Like maybe this would have been more effective if the Trump administration had stocked, had started the blockade immediately. But at this stage, if we're thinking about, you know, how much, much patience Iran could have with this kind of economic harm, the rest of the Gulf has been dealing with it much, much longer. So I think there's an important issue here on scale as well. And again, it's important to remember that Iran has, you know, the most sanctioned country in history for decades and decades now. They're used to economic pressure like this. In fact, the IRGC often relishes in that kind of like, rally around the flag and kind of look at, look at the Great Satan, what they're doing to us US. But the United States and the rest of the global economy is not going to be as comfortable with kind of another two months of this, because if we get through to, you know, summer driving season, if we get through to June and Hormuz is still not open, we're going to have inventories at deeply precarious levels. And my fair value models are showing that we could be upwards of 180, $200 a barrel by the end of June if Hormuz remains closed and we don't get additional policy actions like, let's say, yet more SPR releases or Strategic Petroleum releases, which I think would be my base case if this lasted that long.
- [71:26]
Sagar Enjeti
Right, That's a great point. All right, C5 as well. This was Gala Boff from Iran. Seems to, he might be reading your own feed. He says three days in, no wells have exploded. We could extend to 30 and livestream the well here. That was the kind of junk advice the US Admin gets from people like Besant who pushed the blockade theory and cranked oil up to 120. Next stop, 140. The issue isn't the theory, it's the mindset. So they seem very tapped in to this logic, Rory. And they are denying exactly what the US Is claiming. And really, I think showing some of the analysis you just laid out about their ability to survive this. So do you believe, Gabi, some of its propaganda? How much of this are we supposed to believe?
- [72:06]
Rory Johnson
Yeah, I mean, certainly Galyboff's kind of comments here are bravado, are kind of, you know, know, extraordinarily online bravado. I should know, which is, I think, an ongoing meme of this war. But I think he's like, there's, there's a kernel of truth here. Again, I think that the Trump administration is overconfident on this point. They basically got this idea in their head that combined between the, quote, $500 million a day that Iran's losing from the blockade and now they're going to be, you know, all of their wells are going to explode if they, if they can't get the oil. Like, this is all pretty junk science. And I think that the longer this goes on, I think the more that's going to be exposed. I think at this stage, it's very clear that the Trump administration has no good options. And as of yet, clearly Trump is just choosing not to make a decision. This is just the status quo extended out. At the same time, you're hearing reports that CENTCOM is preparing plans for another sharp short series of bombings and strikes on Iran. Like, the signals are all over the place. And it's very clear that the Trump administration doesn't really know what to do here because, again, there aren't any good choices unless they're willing to concede on major things that Trump in particular is not willing to concede on, like the nuclear program.
- [73:19]
Krystal Ball
Well, your comments about the super online war sets us up for our next segment quite perfectly. So thank you for that segue and for your analysis, as always. Rory, great to see you.
- [73:27]
Sagar Enjeti
Appreciate it, man.
- [73:28]
Rory Johnson
Thanks a lot. Guys,
- [73:46]
Sagar Enjeti
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- [75:07]
Rory Johnson
Eminem's popped caramel do sound different.
- [75:11]
Sagar Enjeti
Oh, no.
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Rory Johnson
People are gonna be obsessed.
- [75:13]
Sagar Enjeti
What do you mean? Hmm.
- [75:15]
Rory Johnson
People hate the sound of chewing.
- [75:17]
Pete Hegseth
Maybe they won't like the crunch.
- [75:19]
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Sagar Enjeti
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- [75:30]
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- [75:36]
Krystal Ball
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