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PDB Situation Report | March 13th, 2026: The Strait Of Hormuz Showdown: How The U.S. Can Secure The Gulf
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- [00:01]
Mike Baker
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Admiral Mark Montgomery
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Mike Baker
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Admiral Mark Montgomery
Thank you for having me.
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Mike Baker
We should start by talking about Iran. That seems to be the hot topic. Where have you, this may be a strange way to phrase the question, but where do you stand on this conflict? I mean, from the very top, you know, 30,000 foot view, strategically did it make sense? And what do you think will be the end game result? I know that's a massive playing field, but fire away.
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Admiral Mark Montgomery
So look, if, if the president were to tell me my strategic goal here is to prevent Iran from being able to impose its will on its, on its neighbors, its Arab neighbors in Israel, and affect US national security interest in the Arabian Gulf, I would have said I'm, I'm in on that. On that kind of war, I would have been in for one. On regime change, I don't think we set up the proper conditions for that at the beginning. So that's probably not an option. We can change how the regime acts. And I think that's what I'm for. So I do support a four or five week air campaign that removes their ability to fire missiles, that reduces their ability to fire drones, that's harder to remove, that reduces their maritime capabilities, that removes their air defense systems, that takes out some of their IRGC leadership and capabilities and that sets back their nuclear program again, with the goal being that, you know, for the next three, five, seven years, depending on which of those topics you're talking about, Iran can't impose its will as it has been doing for the last three decades. It is the single source, single greatest source of, of malicious behavior in the
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Daniel Turner
Middle East, a Middle east that has
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Admiral Mark Montgomery
been a pain in the butt. And so from my perspective, including, by the way, remind people they've killed a thousand American soldiers since 1983, you know, six or seven hundred in the, in the Iraq conflict. But you know, a thousand overall, three or four hundred of our NATO partners and A number of Israeli soldiers and a lot of Israeli civilians. So they are not a good actor. But this isn't about retribution. This is about preventing them from imposing their will on the Middle east and on US Security interests in the Middle east for the next three, five or seven years. And in that case, I am okay with this conflict.
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Mike Baker
Based on what you are seeing in terms of the results so far of the campaign, is there a way to kind of say, I think we've pushed the ball down the field five years, seven years, further than we have at any time in the past 50 years.
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Admiral Mark Montgomery
So we have pushed it further than we ever push it, that's for sure. Because we're probably not, you know, eight or nine thousand strikes into it, but
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Mike Baker
we have not accomplished what we need to accomplish.
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Admiral Mark Montgomery
I mean, one of my greatest concerns, when I hear the President say we won last night in Kentucky, I mean, first of all, win's a tough thing to say exactly in this kind of conflict, but we're winning. I'd go home with that. We're achieving a lot of mission, but we haven't won. And in fact, the most dangerous thing right now, we're at a very dangerous point. Iran now recognizes that at risk is its control of the Straits over. They've controlled it for 40 or 50 years. That's at risk. And they're going to fight for that, I think, and act to maintain their control over that. It's more important than ever that we keep pressing through with these attacks so we can set the conditions that two weeks from now we control the Straits of Hormuz and we bring shipping through and we tell the Iranians this is going to happen, and if you stick your head up, we'll knock. It'll be whack a mole, and we'll knock it down. But we are going to bring these ships through here, but we're still two weeks away. And what my largest concern is that sometimes when the President says we won, the next words out of is about our cease operations that would actually lead to a capital L loss for the United States and for our allies and partners. Because very quickly we become clear to everyone that Iran remains in control of the Straits or Hormuz at this very, you know, at this time. We have not yet established our control over that.
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Mike Baker
But how. Talk to me about what that looks like. What's that operation look like to actually take control of the Strait because they don't have to close it. Right? I mean, a lot of this is perception within the shipping industry and the insurance industry. So what does an operation look like for us to say legitimately we've taken control of the straight?
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Admiral Mark Montgomery
I like the way you asked that, because this is, this is about changing a perception that it's closed to a reality that it's open. So from my perspective, that's two lines of effort have to be pushed simultaneously. The good news is they each end about the same time, sometime between March 21st and 28th, you know, 10 to 14 days from now. And that's the first line of operation, is we degrade the military threat to tankers and US Navy ships in the strait. And that is continuing to knock down the missiles, the mines, the drones, the small unmanned surface combatants that would threaten U.S. forces in the tankers in the Gulf. You got to knock that down to a militarily manageable risk. The second thing that has to happen is we have to bring the right forces in to execute the convoy operations. And that is an unblinking eye that looks, you know, 50 miles either side of the straits and 100 miles back. And we have that in place. The second is that we have combat air patrol, probably either two or four set slots, which means four or eight aircraft persistently overhead whenever we're convoying with F15s, F16s or F18s equipped with what's called the Advanced Precision kill weapon system, APKWS, a cheap rocket, a 25,000 rocket that is extremely effective against the shahed drones. It's used extensively by Ukraine, it used extensively by us over the last two years in the Middle East. It's effective. And in a maritime environment like that would be very effective. The third thing you need is armed helos, probably operating off of ships to take that have rockets to take out the ships. They're backed up by the aircraft. But if a small boat comes out, helicopters have a field day with it. And then the fourth and the most important, the one that does not exist at this moment is 10 to 14 large surface combatants. You know, we know them as Aegis destroyers, like the Arleigh Burke class destroyers you're seeing on the TV launch of the Tomahawks. Those same ones have a great air defense system. They're the perfect escort ship. I think 10 to 14 of them is kind of the right number to at least get the initial choke. You know, the 250 ships, they're stuck on the, on the inside the Gulf out. And, and, you know, and eventually not initially, of course, we'll be joined by allies in that, probably the British, the French. We really ought to be joined by The Japanese, Koreans and, and Australians who all have ages, destroyers themselves and would be fantastic. We'll have to see if that happens. And so to me, once you have both those lines of effort in place, then you have control over the straits or Hormuz.
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Mike Baker
This is going to sound odd, but do you see a role? I mean given how important the Strait is. I take your point about the Japanese, you know, South Koreans, you know, particularly because of LNG movement through the Strait. But do you see a role for China, for the PLA Navy to. I know this is going to sound odd, but to partner with the US on something like this.
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Admiral Mark Montgomery
No. And a longer answer.
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Mike Baker
Really, you don't want to think about that?
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Admiral Mark Montgomery
Okay, no, listen. We're fighting for authoritarian states right now. China, Russia, North Korean, Iran have been allied. Ukraine would tell you today they are fighting Russia, China, North Korea and Iran, in that order. And Iran was armed by China and Russia. After Israel bombed them in the 12 Day War. China began to feed back in precursor agents to rebuild missile defense systems. Excuse me, ballistic missile attack systems. I'm sorry, China's an adversary. They have no interest in us being successful. They, they like what's going in the Middle east because it's bleeding US readiness wise. You know, it's, it's spending money, spending munitions and here's the second part. China since 1949, since the communist took over, has a track record of never ever, ever helping in any international organization or environment. They're cheap skates at the United nations when it comes to paying bills. I mean we may not pay our bill, but at least we volunteer to have a big bill. We don't even do that on top of it. They don't contribute to security anywhere in the world. So the short answer is no. The long answer is no. And in fact my biggest concern is that those guys are going to try to transfer high end crews. But they've tried to several weeks ago. I mean there was of trying to transfer high end Yakant YJ12 missiles. Missiles that would really worry me in the straits. You would. We're good at that. Cruise missile if you give me, you know, some time to watch it. But if you launch it 10 miles away from me, I'm going to have a problem. So you know, even in a high end US destroyer. So from my point of view, China is an, is an authoritarian regime that has been no help, has no intention of actually helping and if anything would make things worse.
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Mike Baker
Yeah, well, I love the answer because I couldn't agree with you more and I Thought it was very, very eloquent.
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Admiral Mark Montgomery
I'm glad you had.
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Mike Baker
Yeah, thank you very much. Yeah. And of course also they are about the only ones currently receiving oil shipments from Iran. And obviously they've also ignored the sanctions on Iran and their energy industry for years. So, you know, they have no problems with that. Is that the way you've laid that out, the four or so steps that need to be done to actually take control of the Strait? To someone like me who doesn't have decades of experience within the military conducting these sort of operations, it sounds like a lot longer than, than two weeks to gain control. Do you get the sense that the White House is already moving in that direction or do you get the sense that they're thinking to themselves, let's declare victory, go home and hope that oil prices stabilize and gas prices stabilize at the pumps?
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Admiral Mark Montgomery
Yeah, I'm really afraid that the President is going to pull the plug on this. That would be a strategic error of the most significant one he had made in either of his presidencies. And what I mean by that is at that point, very rapidly, every, as I said earlier, everybody in the Middle east and everybody in the world would understand that Iran controls the Straits over moves. And that is a significant, that would become a significant challenge for democracy, you know, for all our allies and partners or particular democracies. Everyone but China who has special deals with, with Iran. So from my perspective, the last week, look, the President's doing great on this. You know that he has gotten out. He's given General Kane and Admiral Cooper the, the leash they need to do 900 strikes a day between us and Israel to persistently attack when errors happen. We've examined them and move forward. We haven't become angst ridden. We're doing the right thing. And look, do I think we could have planned better for regime change? You bet. But I also think that might have been six months or a year from now, really, if at all. And probably politically, timing wise, it's the one time he could do this. I would tell the President, hey, take
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Mike Baker
the two more weeks of heat.
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Admiral Mark Montgomery
The dude, this dude has taken a lot of heat over the last 12 years. Right. You know, I mean, so you can
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Mike Baker
take two more weeks of heat, take
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Admiral Mark Montgomery
that heat and take the big win. The big win is after four or five weeks of combat operations, hammering this adversary, pushing them back three, five, seven years in those areas, establishing US control over the Straits or Hormuz and saying we are the ones responsible for, for this security, telling the Iranians, here's The here's the end game. It's not a peace, it's not a ceasefire, it's not a treaty. We are going to control air defense over your country, turn to China and Russia and say if you try to ship them weapons, we will shoot down the planes and we will seize the ships. You are not going to rearm these guys and then telling our allies and partners thrive, telling the Arabs and Israelis thrive, expand the Abraham Accords, become, you know, a prosperous Middle east without the Iranian knife, you know, snuggled in the ribs of your back. From my perspective, that's the long term solution. The President's got to take that big win.
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Mike Baker
Yeah, well, I hope he's listening. In fact, I do hear that he's a big fan of the President's Daily Brief. Although that might be the. The actual pdb, I'm not sure. Admiral, if you could stay right where you are, sir. We have to take a quick break and then we'll be back with more from Admiral Montgomery right here on the PDB situation Report. Hey, Mike Baker here with an important message for homeowners. Now, if you're a homeowner like me, you know that things never break around the house when it's convenient. You know what I'm talking about. Like the heater that conks out in the dead of winter or the AC system gives out in the middle of summer. Right? Look, we insure our health and we insure our cars. But our biggest investment often isn't covered for everyday breakdowns. And homeowners insurance, well, usually leaves you paying out of pocket for repairs. That's why I want to thank HomeServe for sponsoring this episode. They offer subscriptions with 24. 7 access to trusted local contractors who handle problems fast. For over 20 years, home service helped over four and a half million customers get that. Four and a half million customers. They've got a nearly five star post repair rating and home service A plus rated with the Better Business Bureau. Help protect your home systems and your wallet with HomeServe. Plans start at just $4.99 a month. Go to HomeServe.com to find the plan that's right for you. Again, that's HomeServe. And Home Serve is not available everywhere. Most plans range between 499 to 11.99amonth your first year. And terms apply on covered repairs. The New York Post has been delivering impactful headlines for over two centuries. And every weekday morning, I'll bring them straight to you. I'm Caitlin Becker, host of the New York Postcast. From Washington to Wall Street. If it matters to you, you'll hear it here. And it wouldn't be the Post without the stories other outlets like to ignore. So ask your smart speaker to play the NY Postcast. Listen and subscribe on Apple Podcasts, Spotify or wherever you get your podcasts. Hey PDB listeners, Mike Baker here with a quick recommendation for your podcast playlist look. If you like deep, insightful conversations with world class thinkers and who doesn't come on, check out the Jordan Harbinger Show. It's available on Apple Podcasts, Spotify or wherever you listen. Jordan sits down with people who've been in the room at the highest levels, from national security leaders to thinkers reshaping how we understand the world. You'll hear ideas and stories that go way beyond the usual sound bites. Two episodes I'd recommend an interview with our friend Ryan Macbeth on Venezuela's collapse. That's a clear look at how a once wealthy oil state unraveled and what that means of course, for regional stability. And also his conversation with Douglas Murray where they explore the pressures facing Western democracies and what those trends mean for long term stability. Download the Jordan Harbinger Show. That's H A R B I N G E R just like it sounds on Apple Podcasts, Spotify or wherever you get your shows. Or just go to jordanharbinger.com start to dive right in. It's one of those podcasts that makes you smarter, so give it a go. Welcome back to the PDB Situation Report. Joining us once again is retired Rear Admiral Mark Montgomery, Senior Director of Foundation for the Defense of Democracy, center on Cyber and Technology Innovation. Sir, thank you very much for sticking around. Now I want to stay focused on Iran, but I kind of want to shift a little bit to look at a couple of issues that have been cropping up but not really getting, I don't think, as much attention as they should. The first is, I mean everything's connected nowadays, right? Nothing happens in a bubble. The world is very small. The Ukrainians have been dealing with Iranian designed shahed drones for four years of Putin's invasion and they've come out in recent days with an offer to assist with what's been happening in the Gulf region. The number of drones being fired off at at the various Gulf states by the Iranians. What can you tell me about that?
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Admiral Mark Montgomery
Yeah, thanks. You know, I actually spend about eight weeks a year in Ukraine training with their military and helping them on some things and so I've gotten to watch their counter drone capability up close and personal in a very protective way for myself. And they are impressive. They run a dual level program. One is that F16 aircraft with advanced persistent kill weapons as I mentioned earlier, and helicopters with those same rockets shooting them down. And that kind of covers wide areas, but that doesn't give you the kind of direct defense you need of like a high value radar air base, you know, military facility, presidential house, whatever it is for those. They then have ground based counter drone systems and they have cool names like General Cherries, you know, Bullet and Mirops and Octopus. But they're all pretty cool. I've watched them. They have a thing called the Nemesis Brigade, a brigade sized unit that goes and does all this counter drone activity. And very impressive. They have five or six different at any one time counter drone things going. They're all 70 to 90% effective. So you fire two and you're really close to 100%. And they, they're cheap, they're anywhere from 5 to $15,000. And they're all kind of targeted at shahed with the Russians, they're called Jaran. But their Shahed design, as you implied, Iranian drones, they have offered so in the middle of their own cluster that they have going with Russia under attack, they're attacked every week by 1500 ballistic missile cruise missiles or drones every week. Way more than we're seeing in the Arabian Gulf. They see it every week for, you know, the last three and a half years for sure. And yet in the middle of that, they're willing to give us people and equipment to do it. This is what the United States international strategy calls a model ally. Someone who spends a ton of money on defense, fights an authoritarian regime and when you ask for help, gives it. We didn't even ask for it. They volunteered it to us and our air partners. They are a model ally. That stuff will be highly useful. And then when the war is this current engagement's over, we need to sit back, study these weapons, do joint ventures and produce them so that we have them in Japan and Korea, in Guam, in the, you know, Taiwan, the Philippines as well as all over Europe.
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Mike Baker
It sounds like just in recent days again that, that they've had a number of conversations, whether it's with the Qataris or Omanis or whomever, and that they are starting this process of contracting sort of joint ventures, not necessarily to produce but, but to work together and then maybe have these things produced in Ukraine, which of course helps Ukraine economy. And it needs a lot of help after this past four years. Do you get the sense that there is sort of the Gulf states are welcoming this with open arms or, you know, how quickly can this come online, in other words?
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Admiral Mark Montgomery
Well, look, the Gulf states traditionally look to us first for a weapon system, whether it's a F15, F18, F35, F16, they buy from us, Thaad Patriot they buy from us. We don't have a counter drone capability. So now they're looking to another potential ally or partner in Ukraine and do it. So I 100% think it's going to happen. I 100 that once. Not just the air partners, our European partners, they're already doing a little bit of it. Like the octopus is a joint UK Ukrainian counter drone being produced. But US Companies will be in joint ventures and, and Asian companies will be doing. Asian countries will be doing it as well, you know, Taiwan, Japan and Korea. So I 100% believe that this Ukrainian technology to get there and I got time impressed every time I go, I go there about once a quarter every three months. It's generationally changed. Both the drones and the counter drones are evolving, evolving in a way that our defense industrial base. A level of agility I've never seen. And weapon systems, whether it's software or hardware, really impressive. So yes, I think this is a long term solution and Ukraine is a model ally.
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Mike Baker
Is, is that a failure in strategic thinking or planning on the part of the US Government that we don't have a robust counter drone program?
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Admiral Mark Montgomery
Yes, unfortunately. You could see this start the Azerbaijan Armenia conflict of 2021, you could see the edges of this where Azerbaijan really was very aggressive in using these drones and there was no answer for them, but we didn't really respond to that. But now there's no excuse that three and a half, four years into war, three and a half years into a big drone part of the war, that the United States had not altered its procurement system. I'm going to give Secretary Hegsett some credit here and I'm often critical of him, but I'll tell you, he was his new. His vision for how you change military procurement and acquisition is critical. We've got to get in place. We've got to be able to put small amounts, you know, in smaller contracts like I got our drone one. Quick investments, quick hitter investments. Maybe they fail, it's okay, but you do multiple bets and then one or two or three of these delivered. The good news is the Ukrainians already did the testing for us. We know which ones are going to succeed because we literally are watching them succeed.
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Mike Baker
Yeah, yeah. You would think that that would give us the ability, right, to, to almost bypass, I don't want to say completely the, you know, research and development phase, but get straight into the, the manufacturing aspects of it. But sticking with, sticking with the Ukraine conflict? Well, sort of, I mean, we're, we're focused on Iran. But there have been some reports talking about Russian support for Iran during the course of this conflict that kicked off on 28 February. And the initial reports suggested that the Kremlin was providing intelligence support in terms of location of US Assets for the Iranians to do this. The White House was fairly dismissive of that. I don't know whether it's because they just didn't have or believe that the reports was credible, or perhaps they didn't want to drag Russia into what's already a complex conflict and so they'd prefer to just publicly say it's not happening. But now the reporting seems to indicate that it's more than just intelligence sharing. It's also tactical assistance in terms of how best to carry out these drone strikes. Because on the other side of the coin there in Ukraine, obviously, you know, the, Russia has had four years of experience on the offensive side with the drones. So what have you heard about that? That was a long, you know what, I, I talked for about two and a half hours there. Just to get to the question of what have you heard about that?
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Admiral Mark Montgomery
No, well, look, I like what you said. I heard the same things you have. And what I'll say is what I said Ukraine was a model ally. I'll now say Russia is a model adversary. Right. That literally they, why would we think anything other than this is happening? Ukraine has helped, I mean, excuse me, Iran helped Russia so much. Those shahed drones, not just the several thousand drones they transferred, they then gave intellectual property to build shahed factories in Russia where they now have evolved into Duran, you know, they call them the Duran, but two, three and five drones and that are hammering Kiev and Lviv every other night. So it's, why would I think anything other than that? I, I 100% believe Russia is assisting Iran. If China and North Korea could assist, they would as well. They're assisting Iran. They're a model adversary. When I hear Steve Witkoff say that, well, Putin told me he's not doing it. You know, that's like, I hear it, my four year old said he didn't take the cookies, please come on.
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Mike Baker
He Wyckoff said he heard it and then he repeated and said, well, you know, and Putin told Trump the same thing during a Phone call and then I heard it against Yuri Ushakov. He told me that they weren't doing it. And I thought, well, there you go then. If they're, if they're saying it's not happening, I'm sure we can take them at their word. No, no, absolutely. I don't trust Putin as far as I could throw him out a four story window.
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Admiral Mark Montgomery
Not sure it's a four. All his, all his opponents, a lot of 14 story buildings, but. Okay, yeah, sorry.
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Mike Baker
No, you're right. It's a, it's a, there's a significance to it. It's. So, I guess it Last, last question. If I could, and I, I know there's some speculation involved in this, but if we're talking in two weeks time, do you get any sense, do you see anything so far that tells you that there is a willingness on the part of the existing Iranian regime to finish this, to exit, or do you get the sense that now we're in a position where we could declare victory, meaning the White House could declare victory, but it won't matter because the Iranian regime sees the straight up Hormuz. And unless what you're saying, unless that scenario is played out, they continue to control the straight up Hormuz and they just do that until they can extract as many concessions as possible.
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Admiral Mark Montgomery
Now you're absolutely, this is the, so two weeks from now, we fast forward. If we have not established those conditions,
- [30:36]
Mike Baker
we can't end the war.
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Admiral Mark Montgomery
I mean, this is the problem. This is why you have to establish those conditions for the exact reason you said, if you do not, if we don't have control of the Straits or Hormuz, the IRGC still going to, they're going to be like, you've taken off an arm and a leg, but I'm still going to fight you, you know, and so, you know, my concern, my concern here is that, you know, we're going to have to have, you know, it's not like at midnight on the 27th of March, boom, we're done. It's got to be. The conditions are set now we can negotiate. Now here's my one hope. We, we, apparently, judging by the fact that we are monitoring traffic light cameras, we were jamming cell phones when we needed to for that strike. I've been a guest, we've been listening to their communications and I have to believe over the last two years we've caught at least one senior IRGC guy like calling his wife, going, you would not believe these crazy dudes I work with. We got to where's our money in the islands.
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Mike Baker
Exactly.
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Admiral Mark Montgomery
You know what I mean? Somebody going, yeah, we realize, okay, that's someone who is not an ideologue. You know, he was in it for
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Daniel Turner
the money or in it for power.
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Admiral Mark Montgomery
That's the person, that's our Delsey Rodriguez. And we've got to go grab that person and, you know, kill the people around them to create the conditions where that person is. We can then deal with that person because honestly, at this point we're probably gonna have to find someone we can do it. It's not going to be the Supreme Leader's son. I believe we just killed his father, his mother, his wife and his nephew in the last week. I don't if he is alive or not unconscious, in a coma. He's probably not a future American partner. We've got to find the person to work with and then we've got to set the conditions where that person goes. I'd like to speak to you and I'm willing to accept some conditions that we have not accepted in the past.
- [32:20]
Mike Baker
Yeah, I couldn't agree with you more. We need, we need a fracture within that, particularly the irgc, which typically over the years they've been considered true believers. But you, I like what you're laying out there. You would have to think that there are some individuals who go, that's enough. This is it. Right? I mean, A, I'm not an ideologue and B, this is the only opportunity at this stage of the game. We've been hit so hard that if we can't, you know, I guess you're talking about mounting a coup or whatever, how you want to refer to it. But the people of Iran need that top cover. You can't ask them to go back out in the streets and get slaughtered by the thousands again when there's still an existing security apparatus. But if you do get that fissure, if you get that fracture there. So I think you're spot on there, sir. This has really been fascinating and very much appreciate you coming back on and I hope that when we call you again, you'll be willing to pick up the phone anytime.
- [33:18]
Admiral Mark Montgomery
This is a great conversation. I'm glad that we got Iran and Ukraine and really all the conflicts going on right now. It's a good summation, exclude.
- [33:27]
Mike Baker
Thank you, sir. Admiral Mark Montgomery. We'll have you back on, I hope very soon. And I hope that when we do, we'll be saying they've implemented your straight up Hormuz plan, because I agree that is the way this is going to have to play out. And then of course, there's the follow on questions. How long does that go for? How do you, how do you create those conditions? I think you talking about at that point an international force. You share that burden amongst all the allies who are gaining the benefit from it. So everyone should be invested in that. And now I'm coming off of my soapbox. So coming up next, energy markets, you may have noticed, are on edge as the war with Iran threatens oil flows through the Strait of Hormuz. Daniel Turner, he's the executive director of Power of the Future. He'll join us to break down the growing energy crisis. So please stick around. Hey, Mike Baker here with an important message for every small business out there. Now, small businesses, you probably know this. They face an uphill battle with big banks, right, where getting a loan means endless of work and delays for bank rates. Without that, wait, go to Cardiff Co PDB for up to $500,000 in funding. Their application takes less than five minutes, has no impact on personal credit and approval, happens in minutes with same day funding. It's the fastest way to get the capital you need to keep your business moving forward. Now, many banks try to lock out small businesses, but Cardiff has the key. Cardiff wants to approve your business loan if you've been in business for at least a year and are pulling in $20,000 a month in revenue. Apply now for up to 500,000 DOL in same day business funding at Cardiff Co PDB. Once again, that's Cardiff Co PDB. Real growth, fast funding. That's Cardiff.
- [35:11]
Daniel Turner
Hey, Bill O'Reilly here.
- [35:12]
Mike Baker
Please check out my new interview series.
- [35:14]
Daniel Turner
We'll do it live.
- [35:16]
Admiral Mark Montgomery
Each Thursday, I sit down with the
- [35:18]
Mike Baker
most influential people in America for a
- [35:21]
Daniel Turner
no spin chat, no script. Anything good happen you can find, we'll
- [35:28]
Admiral Mark Montgomery
do it live on Billo reilly.com, youTube
- [35:32]
Mike Baker
or wherever you download your podcast. Welcome back to the PDB Situation Report. Global markets are showing fresh signs of anxiety as the war with Iran enters its second week. Now, oil prices briefly surged to nearly $120 per barrel this week amid fears that the fighting could lead to long term disruptions to energy flows across the region. Shipping traffic through the Strait of Hormuz has also slowed as insurers and cargo operators reassess the risks, raising new concerns, of course, about when energy supplies will be able to move freely again through one of the world's most important maritime chokepoints. For more on this, I'm going to turn to Daniel Turner. He's the executive Director of Power of the Future. Daniel, thank you very much for taking the time here on the PDB situation report.
- [36:23]
Daniel Turner
Thank you for having me.
- [36:25]
Mike Baker
So what should we talk about? Let's see, there's that thing in Iran. Let's. Let's start from. Well, actually, I'd love to start from wherever you think. What's the most important thing that people should know right now, from your perspective, being neck deep in the energy business,
- [36:47]
Daniel Turner
everyone is jittery. And when oil markets are jittery, they only go up. We don't have a supply problem.
- [36:53]
Admiral Mark Montgomery
Right.
- [36:53]
Daniel Turner
If I were Europe or even some of the Asian markets, our Asian allies, I would be nervous because they do have a supply problem. Right. They are dependent on the Middle east for oil and gas. I've seen reports that the UK has only a few days left of natural gas reserves. We don't have that problem. Yes, we are paying more. I don't want to see high prices. I don't want to see people suffer when they fill up their. Their. Their gas tank. I have a farm. In addition to running power, the future. I fill up my tractor, diesel is through the roof. I don't want to pay it. But we don't have a supply shortage. We have very nervous markets, and we need calm to restore a little bit of order to those markets.
- [37:36]
Mike Baker
Okay, well, how does that happen in the midst of a conflict when it appears as if the Iranian regime has no intention of lightening up on the Strait of Hormuz?
- [37:45]
Daniel Turner
Yeah, yeah. And this is where, you know, I'm not a military tactician, so I don't want to speak out of my expertise, but you need 150 or so tankers to get through those straits every single day. And when you are a captain and you have a $250 million cargo or payload, you're not going to take a gamble. Obviously, you probably can't get the insurance. So there's multiple reasons why you are anchored and you're not budging. If you are oil producing in the Gulf, you're running out of storage, and so you've stopped production only because your storage is. I mean, this is a cycle that has to move constantly and constantly. And something that we experienced during previous blips we'll just call what the Biden administration did to oil and gas blips. This disruption you can disrupt really quickly to come back online is hard. Right. This is not an industry that activates very quickly. You can shut it down on a second, but every delay is going to delay getting it back online. And that's that's a little bit of my concern.
- [38:52]
Mike Baker
I've been surprised, I'll tell you the truth. I've been surprised at how, I'll use your word, jittery, but, but how nervous and how risk averse. And I understand what you're saying about, you know, the, the risks involved. But the industry seemed to put on the brakes even before we started seeing incidents of vessels being targeted in, in the strait and around the strait. And it, it seemed as if they were very quick to, to say, okay, that's it. And honestly, Iran hasn't closed the strait. I think they've realized that targeting, you know, maybe now at this point, 16 or so vessels and the threats that were put out there before that started to happen, you know, they don't have to do much to create this chokehold.
- [39:47]
Daniel Turner
And this is where I think the other partners in the region are going to get heavily involved. Right. This is bad for global markets, of course, that's bad for American markets. But if you are the uae, if you are Qatar or Qatar, if you are Kuwait, it's really bad. Right? Because these petro states, 85, 90% of their GDP is oil and gas. They cannot quite literally afford to have markets shut down for longer than this. And a lot of their economies are, their stability is based upon the high net worth of the oil and gas executives.
- [40:25]
Mike Baker
Right.
- [40:25]
Daniel Turner
It's why people, when they go to Dubai or they go to Doha and they see this opulence, this garish opulence, it's because oil and gas is flowing. So that's a little bit of comfort I have is that yes, America is vested in having this resolved, but these countries are really, really vested. And add on top of that that Iran has attacked them. So I think you're going to see them start stepping up very, very quickly.
- [40:52]
Mike Baker
Well, I hope you're right because I agree on a number of levels, including sort of a military operational perspective, you know, the Gulf states. Look, I think a lot of people may not recall or didn't know that these Gulf states supported Iraq during the Iran Iraq war, which, which was a nasty conflict. I don't think Iran's forgotten that when it comes to these. And plus also obviously they house, a number of them house important US Military facilities. So I, I hope you're right because I think them getting more, I don't want to say in the game in terms of offensive actions against Iran, but they need to exert more pressure. And I think Iran's strategy initially was to do what they're doing, target These states, including civilian infrastructure in places like Kuwait and Bahrain and Saudi, and thinking that they would then pressure the US into stopping this. But the concern here, again, I'll kind of go back to what I was alluding to before, is that Iran can't go toe to toe with the US And Israel. They know that militarily, but they have this amazing leverage point. And so the concern is, you know, it's one thing for the White House to declare victory and say, okay, we've wrapped it up, but if the regime doesn't want to, because now they want to extract some concessions before they say, fine, you know, we'll get back to, you know, business as usual. That's going to be a difficult moment in time, particularly if oil prices have got up over $100 a barrel again.
- [42:28]
Daniel Turner
Yeah. And you also see the American military, the President, Secretary Hegseth, they have been reluctant to have this big offensive against Iranian oil and gas infrastructure. And I think that's very deliberate. They know that they want a favorable regime in place. The Iranian people want their peace and prosperity of the Shah years, of pre Ayatollah years. In order to get that, they need oil and gas revenue. They have a huge oil and gas infrastructure, a very successful one. So I think when you compare it, for example, what we saw in Venezuela, there was no damage to the facilities because President Trump knows to have a stable Venezuela and a stable South America, they need the petrodollars, they need the industry to thrive. We could end this resolve very quickly if we carpet bombed their oil and gas revenues. But then what are they left with? Then they're left with a failed state like we saw in Afghanistan, for example, and that will turn to further chaos. So it's a tango, there's no doubt about it, of, of winning without doing unnecessary damage to help the rebuild process.
- [43:36]
Mike Baker
Yeah, it's a great point that you make because I think it's, I mean, Carg Island. A lot of people I've seen and I've talked to, they say, well, why aren't we just bombing Carg island, which is their major, you know, exit point? I think nine out of 10 barrels, they push out the door, goes out of Carg Island. And, and you're absolutely right. The reason we don't is because then what are the people of Iran left with? Right. And I think that, correct me if I'm wrong, that facility is, is what, 65 years old, 70 years old, was built by Aramco or Amoco or, or
- [44:07]
Daniel Turner
some time ago and it's been bombed Several, several times. And it's been rebuilt several times. And it got back to full fruition in around 2009. It's producing around 5 million barrels a day or bringing to market 1.5 million barrels a day, but it has the capacity to go to five. So if you're the country of Iran and you look at, God willing, it gets favorable leadership, 5 million barrels a day is a lot of revenue to rebuild, to stabilize. That's what I think the president has to look at long term and say, once military action is done, are we going to have an unstable economy, country? And what brings stability is peace and prosperity and bread.
- [44:53]
Mike Baker
Yeah. The ability to generate revenue. I, I'm very cynical about the idea that we're going to get a better government.
- [45:01]
Admiral Mark Montgomery
Right.
- [45:01]
Mike Baker
That the regime is somehow going to collapse. There's just really no signs yet of any actual fractures within those organizations, the key organizations. But should there be right and should there be the opportunity, then you need that revenue stream. That's why Carg island has been so important. They didn't bomb it during last year's 12 Day War, which was interesting again to a lot of people. But I think you're absolutely right. That's the reasoning behind it. Daniel, if you'll stay right where you are, don't go anywhere. And we'll be right back with more from Daniel Turner, executive director of Power of the Future, also a farmer, apparently. We just learned that. That's breaking news on the Situation Report. We'll be right back. Hey, Mike Baker here. Now, folks who know me know that I may be partial to an ice cold gin martini or two on occasion, usually whenever happy hour rolls around. But the truth is I don't want to pay for it the next day. And that's why I love Zbiotics.
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Admiral Mark Montgomery
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Mike Baker
Exclusions and additional charges may apply for licenses. See homedepot.com license numbers. Welcome back to the PDB Situation Report. Joining us once again is Daniel Turner. He's the executive director of Power of the Future. Daniel, thank you for sticking around. Appreciate it very much. You mentioned briefly, I just want to kind of take a quick left turn, but you mentioned gas as well, LNG that gets lost in the wash year a lot because people just imagine we're just talking about barrels of oil. But that strait is very important, right, To Europe and to China, to Asia for LNG purposes.
- [48:05]
Daniel Turner
Oh, it is. It's absolutely critical and especially as you see huge development in Asia. They need LNG desperately. It explains why this $40 billion Alaska pipeline that's being built for natural gas is funded almost exclusively by Japan, by South Korea. It's a great strategic step of the administration to lure them our direction rather than have them get natural gas from the Qataris or from the United Arab Emirates, et cetera. But yeah, these are huge petrochemical hotspots and it emphasizes the world runs on this. Right. And that's what I do with Power of the Future is advocating for these American energy jobs. We can wish it were another way. We can hope that the world ran on wind or solar, but it doesn't. It may one day. But right now we live in a deeply fossil fuel intense lifestyle and those people who control the fossil fuels can set the tone for the world. And I think President Trump's dying trying to do it with American hegemony as the guiding principle.
- [49:12]
Mike Baker
Yeah. Yeah. Well, if the world could emulate Washington, D.C. which by all accounts, seems to run on hot air. See what I did there? That's like a dad joke right there. So is it true that, look, there is oil moving through the strait, right? Iran is kicking oil out the door, but is it true that it's almost all going to China?
- [49:35]
Daniel Turner
I've heard mixed reviews. I've heard that everyone is turning off their transponders and ships are getting out, but they're not being tracked. I've heard it's only Chinese ships. I don't know. The fact that I don't know. And again, I'm not someone super powerful or influential, but if I don't know, and I'm pretty good at this, that means a lot of people don't know. And that explains the jitters of the oil and gas market. Right? They just don't understand what's happening. And when they're nervous, they begin to panic. And panic means higher prices. When you look at what happened, for example, a couple. God, it seems like it was a decade ago, but the operation in Venezuela was not very long ago. There was no movement in oil and gas markets because it was clear, it was simple, no one was concerned, no one panicked. Right now there's a lot of uncertainty and oil markets hate uncertainty.
- [50:28]
Mike Baker
What about that's. I'm really glad you brought up Venezuela.
- [50:30]
Admiral Mark Montgomery
Right.
- [50:31]
Mike Baker
Because to what degree? I mean, talk to us in sort of, you know, without getting too far into the weeds, you know, what was the state of Venezuela's oil industry? At what capacity was it operating when Maduro was picked up? And what's its ability in relatively short terms to make up for some of the shortfall? I realize what you're saying there's not a supply problem, but there is. If you can't move it, there is.
- [51:00]
Admiral Mark Montgomery
Yeah.
- [51:01]
Daniel Turner
I like to say Venezuela was using dial up modems in the sense that they had the Internet. It was just slow and it wasn't really caught up. It is a lot quicker to inject new technologies and new equipment into existing wells and produce more than it is to drill from scratch. So Venezuela was producing, I think just under a million barrels a day. They have the potential to hit 5 or 6 million barrels a day. They have the world's largest oil reserves that are yet known. I think America probably would have more, but there's a lot of America we're not allowed to even explore, so we can't answer that question. But of those that have been explored and proven, Venezuela wins. So when you invite the American oil and gas industry and say, hey, look, we'll give you security, we'll give you stability, you'll recuperate all of your losses. Do you want to invest? They're going to say yes because there's this huge pool of oil that they want to play in. I think it makes sense that they went to Venezuela before the Iran engagement because they realize this is 80 some odd million barrels injected into the world's oil supply. That's really important leverage because they knew this was going to have huge oil and gas disruption. They're not naive.
- [52:19]
Mike Baker
But is there a short term run up to that, to them getting to significant capacity? I mean, is there this rebuilding, this modernization of their infrastructure or are they now where this is a short term resolution?
- [52:34]
Daniel Turner
Yeah, and I think that buildup is months, not years.
- [52:39]
Mike Baker
Right.
- [52:39]
Daniel Turner
I think it's relatively quick with how quick this industry works. Again, this industry is super advanced and agile. What it usually just needs is cooperation from the government to do its darn job. We saw that, for example, with oil prices just at the beginning of the Trump administration. Right. There was no new technology, there was no new discovery, but oil went from the average of $90 a barrel to $62 a barrel within a matter of weeks. And that was just because of the stability that was brought by getting rid of the uncertainty, getting rid of regulatory, financial, market uncertainty, permitting uncertainty. You can get a lot of oil and gas out of the ground if you have cooperation from government.
- [53:25]
Mike Baker
What do you hear about, I mean, sticking with Venezuela for just a minute, but is it a fairly active environment right now in terms of the oil majors popping in and saying, okay, let's see, what have we got here as opportunity?
- [53:38]
Daniel Turner
Absolutely. There was that really interesting roundtable that the President had with the largest oil and gas producers in the nation. I think around 20 of them around the table. One or two said that they were unsure, but the rest all said like, yeah, we'll jump into this. And that's kind of indicative of the industry as a whole. It's why that show a landman is so like there is a bravado of the oil. Kind of like the Marine or the CIA operative. There is a sense of like, oh yeah, this is what we do. And that excitement and that, that energy is, is what, what encourages them to go to a place like Venezuela and say, wait a way, do I show you what I can do when I get here? If you can tap into that, boy, you can do great things in this country.
- [54:24]
Mike Baker
Yeah, I like how you, you threw the Marines and the CIA all there together. Yeah, all together. All bravado but you, but you're right, there's, I mean I, you know, it's not quite the way people think it is from the movies and the beach books. But yeah, the show, the agency, it certainly has a risk appetite, you know, and it's not like we're sitting around saying let's wrap up the Iran shenanigans so it can get busy with Cuba. But, but there, you know, you're always kind of forward looking and, and thinking about what's going to impact what. I don't want to disappear down that rabbit hole. What is the, this is going to sound like a strange question, but the, the pricing for oil, we, we've seen these wild swings, right, in the past few days. But what is, from the industry's perspective, right, if they were completely honest, what's the sweet spot for a price for a barrel of oil?
- [55:16]
Daniel Turner
$72. The reason why I'm throwing like a,
- [55:20]
Mike Baker
I mean, very specific.
- [55:22]
Admiral Mark Montgomery
Yeah, very.
- [55:22]
Daniel Turner
Oh yeah. I mean I'm trying to be some. They have to make enough money so that they can have a profit, so that they can put that profit into further explore, exploration. Right. Like acquiring land and beginning to drill for oil is a $60 million venture, right? I mean, and you haven't produced a drop of oil yet and you are 60 million in the hole. So they need to make enough money on daily oil sales to recuperate loss and to go into the future. But they know they can't make so much money that they're going to have Congress up their rear end. They're going to get hulled before Senate hearings. People are going to start protesting, throwing bricks through their windows. So they know that the days of $140 barrel of oil are not sustainable. Will they ride that train for a little while? Absolutely. What you saw that in the Biden years though, they weren't able to reinvest. There was no permitting, there was no, there was no access. So what did they do? They bought back their stock, they gave themselves bonuses and they got yelled at by Congress. How dare you make money. What else am I supposed to do with the money? I have to do something with it. I'm not going to declare it on my taxes. Right. So yeah, So I mean, we thought of making enough.
- [56:33]
Mike Baker
26 model year. Sorry, sorry. The 20, 26 year model year for the Porsche is coming out. What am I supposed to do with my funds?
- [56:42]
Daniel Turner
So look, 72 is the sweet spot.
- [56:46]
Mike Baker
72 is. Okay. That's, that's, that's Daniel Turner. I think I I think what, I mean, would Putin argue that, you know, something over 100 is the sweet spot?
- [56:56]
Daniel Turner
Of course he wouldn't. He's going to try to get it to that level. But, but American energy production will prevent him from doing that.
- [57:03]
Admiral Mark Montgomery
Right.
- [57:04]
Daniel Turner
The Saudis wanted at that level as well. They tried to do that in the first Trump administration and we just out produced them. OPEC kept slashing production, we just out produced them and the price never got to that. Right. And you have to see that they, their margins are obviously much greater than ours because they don't have an osha, they don't have sexual harassment and diversity Fridays. They don't have to, you know, they, they can employ 14 year old kids and not pay them Social Security and health care. So they would love to have, have $150, $120 barrel oil. And then we have naive Americans who go to these places, countries that I've had to spend a lot of time in that I don't like. And they say, wow, look how glitzy and glamorous and world's tallest building, world's fanciest. Just how do you think it's built? It's built on slave labor from an industry that America used to dominate. And I want to dominate it again for good.
- [57:58]
Mike Baker
Yeah, yeah. No, again, self sufficiency is, is the key. Is there anything being mindful of your time, we'll have to wrap, but is there anything that realistically the industry, the energy industry can do about the current situation, about the, let's go back to the word jitters, about the nervousness, about the price swings? Or is it basically, we have to stand by and wait and see what the Iranian regime does.
- [58:28]
Daniel Turner
There's nothing the industry itself can do. They are producing as much as they possibly can and at this price point, they're going to try to produce even more. But again, it's not like a spigot that you can just turn on the taps, right? You can't increase oil production from the wells you already have drilled. You can try to drill more wells, but that's four or five years in the process. So there's nothing they can do. This is global markets at work. And President Trump's accepted that. He thinks it's for a greater cause and I hope he's right. I believe he is. Yeah.
- [59:04]
Mike Baker
Yeah. No, well, I do think that there was a real reason to go in, but I'm not sure that there was this thinking at the end of the day that said, well, maybe we do declare victory, but maybe that doesn't mean anything because maybe the regime has decided that, again, they'll continue to exert pressure in this one area, the one area that they can go toe to toe with the international community, meaning the Strait of Hormuz, and extract every concession they possibly can before they're willing to stop their shenanigans. Daniel, this has been great conversation. At least I think it's been a great conversation. So thank you very much, man. I really appreciate you being here. Daniel Turner, Executive Director of Power of the Future. I hope you'll pick up the phone next time we call you, man. Anytime.
- [59:55]
Daniel Turner
Thank you for having me on.
- [59:57]
Mike Baker
All right, well, that is all the time we have for the PDB situation report. Now, look, if you have any questions or comments or anecdotes or limericks. Look, all you gotta do is reach out to me at PDB@the first tv.tv.com. you know what we do with your comments and your questions, right? We all gather around the table once a month, including the interns. It's a pretty good team of interns. And we select your best questions, comments, we kind of mush them together. That's a technical term in production. And we create what we call a monthly ask me anything episode. Right. Well, within reason. Let's do that. So I guess the point being, keep your cards and letters coming.
- [60:34]
Admiral Mark Montgomery
All right?
- [60:35]
Mike Baker
To listen to the podcast of this show ad free. You can do that, and it's very simple. Just become a premium member of the President's Daily brief by visiting PDB premium.com. i'm Mike Baker, and until next time. Now, you know the drill. Stay informed, stay safe, stay cool.