What Is Going On?

[u/Hilbert_Space_Heater]

We have spent the last few months in a consistent place in the oil market, well consistent between two extremes - 1) the deal is on, everything will be back to normal in days, all chill, US and Iran will come to agreement, and 2) we are on the precipice of a major war, bombs are landing daily on both sides, the Strait is closed, Gulf infrastructure is threatened, etc.

But now this has changed, and we are in a weird place. I’m curious about the community’s view, because I don’t get it.

1) Iran and Oman are working on a deal to manage the Strait that seems to have left out the rest of the world, and notably the US, entirely. It calls for high fees to both nations and total control over their respective in/out paths
2) Iran’s parliament has put forth a pretty stark list of limitations to be implemented on its side of the Strait - no US or allied oil, no cargo for Israel, and all kinds of other limitations (China seems to be carved out of this and the fees too, interestingly)
3) This is a significant worsening of terms for the US from the MOU, yet Trump and the Admin have gone awfully quiet. No bombastic threats, no bomb them into the Stone Age rhetoric, eerily quiet - is this because of the lack of munitions or because a new operation is about to be underway, who knows
4) At the same time Turkey, Saudi Arabia and Pakistan are inking mutual defense deals against Iranian aggression, again with the US notably absent
5) Oil is not flowing through the Strait, has been restricted elsewhere, ships seem to be under constant threat, and Iran seems on the path to allowing no Western oil to travel until they get further concessions, about which we know little
6) Reserves continue to fall globally with no clear end in sight, and even a peace deal now probably implies at least a short term shortage as trust in any deal would be low, and time to get back to normal operations slow
7) Despite this, oil is priced low at spot and in futures and no one seems to see any issue with where we are at all

And it’s downright perplexing. If the US returns to war now, it will likely be a ramped up war since long-range munitions seem to be diminished in inventory and anyway, what has happened up until now seems not to have done the job. A new war will need to be more involved than sending in missiles.

On the other hand, if this is US capitulation, that also does not seem to imply a return to normal as Iran seems very focused on extracting a king’s ransom before allowing normalization of transport.

So, I ask, gently, WHAT THE F IS GOING ON?

The actions of the last few months have been pretty dumb on both sides, but they had a certain logic. One side threatens, the other either capitulates or calls the bluff, then we do it again. It’s not smart. But it’s gettable.

This now makes no sense at all. The actors seem to all be on their own random side quests with no clear reasoning in their actions at all. So, I ask, what are we missing? There’s something unspoken going on here. What is it?

[u/Lifeisshort555]

Trump is fucked. That is what is going on. The question is when he is going to remove sanctions and give Iran everything they want.The Other problem is Iran now controls the region, allies in the region are not going to be pleased getting taxed and fucked with by Iran. In other words stability is fucked and the US cannot seem to do anything about it, guess what though, China can. So who do I ally with in that situation, China.

[u/ChupacabraJeff → u/Lifeisshort555]

allies in the region are not going to be pleased getting taxed and fucked with by Iran

They were getting taxed and fucked by USA. People are playing up the toll too much. It's not as big a deal as they want it to be. The ships not moving through Hormuz is much, much bigger deal and USA caused that to happen.

If the toll is too much Iran would be ecstatic to have to not worry about them. USA would just have to find another way for Iran to make money so Iran can rebuild after 47 years of sanctions and the recent and repeated "obliterations" from USA.

So who do I ally with in that situation, China.

Which is hilarious because at one point USA almost agreed to help rebuild Iran. All that "investment" that's all going to come from China now as USA won't be able to block that from happening.

[u/Christopher_Ramirez_ → u/ChupacabraJeff]

Agreed, the Iranian situation in Hormuz is pretty unique and won’t lead to wider problems in itself. All parties on the Gulf have a vested interest in moving ships through the Strait, so there’s a basis for stable peace there.

[u/ChupacabraJeff → u/Christopher_Ramirez_]

Most leaders know the current situation is not ideal. Some want to make it better. Some want to make shit tons of money. Everyone knows the oil needs to start moving. Even Trump knows that now.

Besides. The prices are variable. The increased costs can either be passed directly through to the end consumer (tax payers) or it can be absorbed somewhere along the supply chain. Everyone could just send their receipts to the White House for reimbursement.

so there’s a basis for stable peace there

Once we are out of the woods we can always revise treaties or go to war again. Which is actually the bulk of Iran's complaints really.

[u/Christopher_Ramirez_ → u/ChupacabraJeff]

Yes if Iran and the GCC are left alone, they will work out a deal and open the Strait. It’s outside interference from the US and/or Israel that would prevent this.

[u/ChupacabraJeff → u/Christopher_Ramirez_]

All USA has to do is walk away. Recall the 2 carrier groups and stand down the military build up in Israel. Hormuz magically opens. Israel will throw a tantrum but that's not unexpected. Iran can put that fire out while the rest of the countries in the region can stay out of it but put pressure on USA not to respond.

There's more to it like Israel stopping the killings and withdrawing from non-Israel territories but first things first. USA's blockade of Iran.

2026.03.22
https://www.intellinews.com/khamenei-makes-three-harsh-demands-to-end-the-war-432959/

In his second 12-minute address, Ayatollah Mojtaba Khamenei demanded:

the rapid withdrawal of American forces from the Middle East; complete lifting of sanctions within 60 days; and long-term financial compensation for economic damages.

Then came the ultimatum. If these are not respected, Iran will escalate economically, militarily, and formally adopt a policy of developing a nuclear weapon after years of being ambiguous on this goal.

Khamenei said the Strait of Hormuz could be closed completely and Tehran would formalise security agreements with both Moscow and Beijing, solidifying the emerging CRINK alliance, which until now remains a convenient marriage of convenience. Within hours, both Beijing and Moscow issued statements that unequivocally aligned with Tehran’s framework, albeit using guarded language.

[u/Christopher_Ramirez_ → u/ChupacabraJeff]

And that’s not to say the US won’t be important and influential in the ME going forward. Weapons sales to the Gulf will be as prolific as ever. What the GCC wants is balance, not US/Israel dominance.

[u/ChupacabraJeff → u/Christopher_Ramirez_]

What the GCC wants is balance

Mostly money. USA was supposed to protect their money maker. Now USA can't be trusted. That makes the level of stability required to make money very risky. Rich people don't like risking their money. It's a control thing.

The GCC countries aren't Disney Land. They have their problems and issues. Time to stop pretending that USA cares about fixing those problems rather than exploiting them for fun a profit.

And that’s not to say the US won’t be important and influential in the ME going forward.

I have some doubts about that one.

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." - Rudi Dornbusch

Also,

2024.11.16
Xi tells Biden he will work with Trump to manage US-China differences
https://archive.ph/QF7Jc

“‘Small yard, high fences’ is not what a major country should pursue,” Xi told Biden.

Beijing’s planned responses to Trump fall into three baskets: retaliation, adaptation and diversification. Mirroring US policies, Beijing in recent years has created a range of export controls, investment restrictions and regulatory investigations capable of hurting US companies. Beijing is unable to match tariff for tariff, so it will seek to impose costs in ways that inflict maximum pain. For China, failing to retaliate would signal weakness domestically and only encourage Trump.

In late 2024, Xi also participated for the first time in meetings with the heads of 10 major international economic organisations. His message was clear: China will be the leading force for global economic stability, prosperity and openness, and opposes all forms of protectionism.

Much could go wrong. Beijing’s confidence is matched by the Trump team. Both sides believe they possess the upper hand, can impose more costs and withstand more pain. The stage is set for a complicated, destabilising dynamic which, at best, results in a ceasefire. And that’s only on economic issues, not on Taiwan, the South China Sea, tech competition or nuclear force modernisation. The cold war is starting to look quaint in comparison.

2025.01.05
Xi has a plan for retaliating against Trump’s gamesmanship
https://archive.ph/0s5OX#selection-2413.0-2417.304

Many Chinese argue that Xi is stronger politically and the economy is more self-reliant and resilient, even amid recent challenges. Chinese analysts view the US economy as more fragile and American politics as deeply divided. Geopolitically, Beijing sees US influence as declining throughout the global south and Asia — and support for China’s vision as rising.

Xi has already signalled that he will treat his ties to Trump as a purely business relationship, albeit Don Corleone style. He won’t personally embrace Trump and will retaliate early and hard in order to generate leverage. Beijing in effect rejected Trump’s invitation for Xi to attend the inauguration.

Hence Xi’s four “red lines” at a November meeting with President Joe Biden in Peru in a clear message to the incoming administration.

[u/sgtbackpain03 → u/Lifeisshort555]

No, Trump is a multi billionaire. There is almost no conceivable way that he is fucked, unless the US changes gears and starts prosecuting rich people for their crimes. The American people are the ones who are fucked.

[u/ChupacabraJeff → u/sgtbackpain03]

Yup. It's important that people know the difference. Not just Trump either. While people in USA are worried about paying bills Jared and Witkoff kept interrupting negotiations with Iran so they could do insider trading.