[We have again launched this Iran war post before complete due to wanting to catch market action. And it may a bit telegraphic. Please come back at 8:00 AM EDT or refresh browsers then for a final version]
As I have said, the best hope for ending the Iran war sooner rather than later is an investor revolt. That has finally started in a serious way, with the increase in oil prices over the weekend and the resulting dislocations in financial markets overseas during their Monday trading. The oil price surge to nearly $120 was merely blunted by report in the Financial Times that G7 finance ministers are meeting at 8:30 AM EDT to consider a release from their strategic petroleum reserves of about one-fourth of the total, or 300 to 400 million barrels. By way of comparison, US daily consumption is estimated at 20 million barrels, the EU’s 10 million, and India’;s 6.
And this emergency move would not address the rise in LNG prices due to operation halts in Qatar, nor the cascading effects of a Strait of Hormuz closure on other markets, from fertilizer (as in food production) to industrial chemicals to apparel. One site points out that heavy crude supplies the sulphur for sulfuric acid, which is deemed an essential chemical in electronics manufacture, for instance, in etching chips.1 Consider another real economy effect, effect, reported last week:
Aluminium Bahrain has declared force majeure on shipments due to Strait of Hormuz disruptions, sending aluminium prices to a four-year high. The shipping paralysis, fueled by escalating regional conflict, threatens both global aluminium supply and Gulf food security.
Similarly, even after the oil-price-calming Financial Times report of an oil reserves release went live, Ipek Ozkardeskaya, Senior Analyst at| Swissquote reported that US natural gas was up 6%.
Bloomberg reported that Trump will address House Republicans at 8:AM EDT, and one assumes the Administration hopes that he can successfully calm rattled nerves and positive reports will leak from that meeting. Given how Trump has been ever more erratic and unhinged from reality, the odds are good that this session will be yet another own goal.
And even if these measures succeed in calming the markets for a bit, the impossible-to-deny underlying deterioration means that financiers will be unable to view the damage to the global economy as short-lived and will reprice assets accordingly. Even if Trump and Netanyahu were to experience a Damascene conversion and decided to stop fighting this week, all that would mean is Iran would halt its attacks. The US and Israel have been so persistently dishonest and duplicitous that Iran cannot trust that a stoppage by the US and Israel was anything more than yet another ruse, intended to get Iran to relax its vigilance.
Iran’s incentives now are to break the will of the US and Israel. That means it will keep the Strait of Hormuz closed until it can force a capitulation of some sort.That may come about via regime change or some other severe reduction in the freedom of operation of both Trump and Netanyahu due to powerful internal factions imposing discipline. But that is a political process and political time moves more slowly than financial time, and here probably also damage-to-the-real-economy time. Keep in mind, as we have explained longer-form in earlier posts, that closure of oil and gas production facilities produces compounding damage. The longer they stay shuttered, the longer it takes to get them back to full operation. The economic damage compounds over time.
To fill in more details, first on the markets front:
Bloomberg stated that Brent crude oil has come close to $119.50 a barrel before falling back (and I saw it in real time as over $119). Bizarrely, the Financial Times did not report the price action accurately:
Brent crude, the international benchmark, leapt 24 per cent in Asia trading on Monday to $116.71 a barrel but later fell back to be up almost 19 per cent at $110.85 after news of the G7 meeting. West Texas Intermediate, the US marker, rose 28 per cent to $116.45 before falling back to around $108, up almost 19 per cent.
Further updates from Bloomberg at 7:00 AM EDT in Stocks and Bonds Slide Globally as Oil Tops $100: Markets Wrap:
Europe’s Stoxx 50 neared a correction, approaching a 10% drop from its February peak. The region’s bonds faced a steeper selloff than their US counterparts, with traders fully pricing in two European Central Bank interest-rate hikes and raising bets on a Bank of England move. The yield on two-year UK gilts jumped 21 basis points.
The dollar has risen on higher US interest rates and worries about prospects for Asian economies, which are particularly exposed to an energy price shock. The Nikkei dropped by 7% The KOSPI index in South Korea dived by 8% despite its government considering a domsestic oil price cap. Pakistan halted stock trading.
Gold also retreated. We have pointed out that during the crisis, gold prices often took a sudden leg down, which looked like leveraged traders dumping it as their presumed-least-distressed position so as to cover margin calls. The trigger now looks different. Bloomberg said that gold is stuck in Dubai and is “being sold at a discount as grounded flights make it harder to move the precious metal.”
Fresh updates on the Bloomberg live feed are not cheery. In the last hour:
Saudi Arabia Starts Oil Output Cuts as Storage Fills up
Hitting the wire:
• Witkoff, Kushner Visit to Israel Has Been Postponed: Axios
• Witkoff, Kushner Israel Trip Had Been Planned for Tuesday: Axios
• Axios Reporter Cites Israeli Official Familiar With the Matter
But also in the past hour:
Getting some readership on the Bloomberg terminal is a Washington Post opinion column by David Ignatius. He wrote:
“A few senior officials in Israel are starting to voice concern about the escalating, open-ended attack on Iran — and suggesting possible exit ramps that might halt the war before it further damages the region and the global economy.”
Ignatius was clear to note that an official cited wasn’t speaking for Israeli Prime Minister Benjamin Netanyahu, “who said Sunday that in the next phase of the war, Israel wants ‘to destabilize the regime, to enable change.’”
And a bit before that:
Fitch Ratings says the closure of the Strait of Hormuz is likely temporary, regardless of how long the conflict may last.
Erm, this cheery view reflects a lack of perspective on the incentives in play.
Confirmation of our view of the potential downside of continued mayhem in the Middle East:
“This may be a war but it’s also perhaps the biggest energy supply/logistics crisis we’ve ever seen in modern history:” Mizuho’s Jordan Rochester. “Oil is now on a $100pb handle and it might be there to stay,” with greater likelihood of $130-150pb scenarios as time goes on.
— Lisa Abramowicz (@lisaabramowicz1) March 9, 2026
And the news about energy production goes from bad to worse:
From the Aljazeera live feed:
Trading.com CEO warns oil price likely to hit $150
Peter McGuire, CEO of Trading.com Australia, says the speed and volatility in oil price hikes are “dramatic”.
“The most important thing at the moment is the velocity of what we have seen as far as movements to the upside,” McGuire told Al Jazeera, noting that as recently as Thursday oil prices were between $75 and $80, before suddenly jumping to $90 and then spiking as high as $116 in Asian trading today.
While the price has fallen back to about $106, “the volatility swings over a given hour is just dramatic – this will impact consumers and, in the long run, inflation if this was to last for weeks, or possibly a month or more”, he said.
And from the same feed:
Bahrain’s Bapco Energies declares force majeure
Bahrain’s Bapco Energies has announced force majeure on group operations, according to state media…
The announcement comes after thick smoke was reportedly seen rising from the direction of the Bapco oil refinery in the country.
A witness told Reuters that smoke surrounded the facility after the government earlier said injuries and damage were sustained in the Sitra area as a result of an Iranian drone attack.
Bapco is Bahrain’s main oil refinery and a key facility in its energy sector.
And again from Aljazeera:
Another busy night as wave of attacks targets Gulf countries
At around 03:15 local time (00:15 GMT), the threat level was elevated here in Qatar, and the alerts that we’ve been getting on our mobile phones went off.
A few minutes after that, we started to hear the sound of explosions that were due to interceptor missiles that were countering those missiles coming in from Iran. We heard the sounds of about 12 to 13 explosions. Then, about 10-15 minutes after that, the threat level was lowered again, with the alerts saying the threat had been eliminated.
The Ministry of Defence also issued a statement saying the armed forces had intercepted a missile attack targeting Qatar.
Beyond what’s happening in Qatar, there’s also been another wave of attacks in other countries throughout the region emanating from Iran.
In Bahrain, at least 32 citizens, including children, were injured in an Iranian drone attack on Sitra, an area south of the capital, Manama, according to state media.
In the United Arab Emirates, it’s been another busy night and morning for them countering attacks, with the Ministry of Defence saying air defences were responding to incoming missile and drone threats from Iran.
We also know that there was a fire in the Fujairah oil industry zone that was the result of debris falling from an intercepted drone.
#Iraq’s oil production has collapsed by about 60% as the Iran war means there aren’t enough tankers to load the nation’s crude.
The country is now pumping about 1.7 million to 1.8 million barrels of oil every day, down from about 4.3 million a day before the conflict began,…
— Giovanni Staunovo🛢 (@staunovo) March 8, 2026
The BBC live feed focused more on Trump than the Gulf but also reported on the fresh strikes. In its summary section:
US President Donald Trump says the “short term” price increase is a “a very small price to pay” for world peace
And a key update:
Ending war will be ‘mutual’ decision with Netanyahu, Trump says
US President Donald Trump says a decision on when to end the war with Iran will be a “mutual” one he will make with Israeli Prime Minister Benjamin Netanyahu, according to a report by the Times of Israel.<
Trump, who was speaking in a phone interview, said the pair had “been talking”, adding that he would “make a decision at the right time”.
Asked whether Israel could continue the war against Iran if the US decided to stop its strikes, Trump declined to entertain the possibility, adding: “I don’t think its going to be necessary”.
When asked about Mojtaba Khamenei being named as the country’s new supreme leader, Trump also declined to comment, saying: “We’ll see what happens”.
Trump has previously made his opposition to Mojtaba known, saying: “Khamenei’s son is unacceptable to me”.
The Financial Times feed included account of both fresh Israeli and Iranian strikes plusthis fresh item:
EU dismisses concerns of European oil shortage
The European Commission dismissed fears of an oil shortage as a consequence of the conflict in the Middle East.
“There is no imminent oil supply shortage in Europe . . . we do not see any concern or emergency situation at the moment,” commission spokesperson Anna-Kaisa Itkonen said.
“We are far less concerned about the security of supply than we are of high energy prices,” Itkonen said.
Erm, I had not heard anyone expressing concerns about an EU oil shortage. Gas may prove to be another matter.
The vicious strike on oil facilities in Tehran will only further harden Iranian resolve:
I don’t think you understand how catastrophic the oil refinery bombing in Tehran is.
Burning petroleum releases sulfur and nitrogen oxides that mix with rain to form sulfuric and nitric acid, essentially turning rainfall toxic.
When Saddam burned Kuwaiti oil wells in 1991,…
— Ariana Jasmine (@arianajasmine__) March 8, 2026
Douglas Macgregor reported an hour ago that Israel was under fresh Iran air strikes, after this Hindustan Times video published:
I do not want to become unduly hopeful, but reader raspberry jam, who know more than a little about Israel, described what might lead the settler colony to throw in the towel on Project Iran. From comments yesterday:
raspberry jamMarch 8, 2026 at 1:03 pm
Ok this is what Iran needs to be doing to drive Netanyahu to the bargaining table (visible strikes in civilian areas that can’t be obscured by censorship). In the last few days of the 12 days last summer it was the residential blocks getting hit in Allenby (upper class neighborhood in central Tel Aviv) that led to normal Israelis accepting maybe they were out of their depth. They didn’t know about the lack of interceptors. Netanyahu was under serious pressure to stop the strikes after it was clear civilians were not safe
And:
raspberry jamMarch 8, 2026 at 5:26 pm
On a personal level I absolutely agree. But as an observer with more familiarity with Israel itself and the current political climate, right now I don’t see a clear path to getting there from here. If you believe (as I do) that much of what is driving Netanyahu’s actions is staying out of prison due to his ongoing corruption trial that keeps getting delayed by war-driven states of exception (I think it was telling that on day 3 or 4 Trump was bleating at Herzog again to pardon Netanyahu immediately “so he could focus on the war”), then I see only a handful of routes for Israel to stop:
– Jerusalem is flattened, including the Temple Mount/al-Aqsa and the Knesset: extremely unlikely IMHO
– Netanyahu is assassinated: 40%, either by Iran before the end of hostilities or by the Kahanist/settler faction shortly after if he cuts the war short
– Netanyahu is arrested: 30%, requires significant military backing in addition to factional cohesion by the non-Kahanists in power, something that has not yet been in evidence the last 5+ years (but Bennett appears to be maneuvering)
– Netanyahu is removed in a military coup: 10%, may be possible if there are enough high ranking officers who refuse to follow orders to preemptively use the nukes
– Enough civilian infrastructure (not necessarily casualties) is destroyed to destroy the fantasy of Israeli air defense during wars on seven fronts: 90%, it was how the war last summer ended (it will be spun as some form of victory or blaming the Iran populace for not rising up when given the option to lay the foundation for a future round)
Janta Ka Reporter, which I like due to its showing extended clips, highlights yet more Trump insanity as well as the degree to which UK elites, as demonstrated by the BBC, are still all in for Israel
An important story that is likely not to get the circulation it deserves, from Aljazeera in Israel unlawfully used white phosphorus in Lebanon: HRW
In a new report released on Monday, the New York-based rights group said it confirmed the authenticity of seven photos showing white phosphorus munitions fired over a residential area in southern Lebanon’s Yohmor, with fires breaking out in at least two homes there on March 3….
The use of airburst white phosphorus is unlawfully indiscriminate in populated areas and does not meet the requirement under international humanitarian law to take all feasible precautions to avoid civilian harm.
The chemical substance ignites when exposed to oxygen and can set homes, agricultural areas, and other civilian objects on fire.
HRW found that in Yohmor, the munitions were used unlawfully over concentrations of civilians, which resulted in fires breaking out in homes and other civilian property.
And for some comic relief:
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1 There are no doubt alternative sources for sulphur, but it would take time to increase production and get them integrated into supply chains
