We were surprised at the market under-reaction to unprovoked US-Israel launch of a war with Iran, particularly since Iran had not only threatened a closure of the Strait of Hormuz but had just held live-fire drills to demonstrate their ability to do so. It appears that bigotry and Western narrative control were able to shore up the idea that this would be a short conflict and that Iran would return to the negotiating table after the US broke its legs, or better yet fall quickly into civil unrest, making regime change or balkanization possible.
It is going to be an interesting race to see which element of the unraveling of the US-Israel fantasy of a quick and easy ouster of the Iranian government choke-chains their prosecution of the conflict first. We reported yesterday that, per Bloomberg, Gulf states were already catastrophically low on air defense missiles, with Qatar having only 4 days’ worth left and the Saudis, a week, with both begging for replenishments. Below, we’ll provide further updates on the continuing Iranian destruction of US bases in the region. Last I checked, Iran was on its 14th wave of missile and drone attacks in Operation True Promise 4 and has just deployed what I believe is its first, not second, generation of Fatah hypersonic missiles. Richard Medhurst has assembled video footage showing that Israel air defenses are cracking.
But in a series of shambolic press briefings, including one in which Secretary of State Marco Rubio claimed the US attacked Iran because Israel said it would and outcomes would be better if we went in with them rather than reacted,1 Trump doubled down. After promising a short war, Trump is now invoking a variant of the Western promise to support Ukraine for “as long as it takes” to defeat Russia with, per Bloomberg:
This is an admission that the much promised raid or short war scenario is kaput, and the Trump Administration and Israel are scrambling for a Plan B. But ex Israel going nuclear, the belligerents are already running out of road. It was close to telegraphed before the air strikes began that the US and Israel had only enough firepower to bomb Iran intensely for four to five days, and only for as much as two weeks at a more moderate tempo. The ferocity of the Iranian response suggests that the aggressors are burning through air defense weapons at top speed, although it is not clear quickly the offensive tempo is eating into available weaponry.
But even though most commentary is focusing on the kinetic conflict, financial upheaval could produce even faster and more acute pressure on Trump. The market reaction so far seems similar to the 2007-2008 crisis, where some commentators described the denialism over the accelerating credit market as waiting for the Wile E. Coyote moment, where he remains aloft until he looks down:
Gold has admittedly rallied strongly but that does not have systemic effects. But key elements of the global economy are suffering what could be body blows if the war does not end soon, which now seems vanishingly unlikely.
In a post that went live earlier today, we provided more information on the QatarEnergy LNG shutdown and its implications for global LNG buyers. It included comments from reader Tbuff on the very real risk of a devastating explosion if hit while operating. That suggests that this critical facility will not reopen until hostilities have ceased.
The oil market seems to be sobering up. Iran made clear that it intends to enforce a closure of the Strait of Hormuz. Per Channel News Asia: Iran vows to attack any ship trying to pass through Strait of Hormuz
Brent has risen to over $84 a barrel:
The banner headline at Bloomberg at 6:30 AM EST
The summary in the live feed:
China urges “all sides” of the Iran war to safeguard the Strait of Hormuz
Europe’s natural gas prices jump as much as 33%
Two drones attack US embassy in Riyadh, Saudi Arabia confirms
Hegseth rejects “endless” war, while Trump insists no fixed timeline
Markets in turn lower; Euro Stoxx sees worst drop since April
Alexander Mercouris had questioned why Iran had not sought more assistance from China, such as taking up an offer of a currency swap line to defend its currency. The fact that China is making public appeals to “all sides” when it is Iran that is barring traffic strongly suggests that private entreaties have not moved Iran. Iran looks to have decided to prioritize its autonomy rather than be unduly beholden to bigger powers.
In addition to noting that oil prices had risen to over $85 a barrel, other fresh investor-rattling entries from the past hour:
Falling debris from an intercepted drone caused a major fire at the United Arab Emirates major oil-trading hub of Fujairah.
The site is a critical port for ship-refueling, or bunkering. It’s also one of the largest oil storage and trading centers in the Middle East. Fujairah holds strategic importance for the UAE, with its location outside the Strait of Hormuz.
And:
QatarEnergy will halt production of some downstream products in including urea, polymers, methanol, aluminum and other products, my colleague Omar Tamo reports. That follows the company’s decision to stop output of LNG and related products…
Separately, Qatar said Iran targeted all of the country’s territory — not just military interests, Al Jazeera said, citing a foreign ministry spokesman.
And:
Euro Stoxx 50 Falls 3%, Two-Day Drop Is Worst Since April
While it is schadenfreude-inducing to see rich residents of UAE scrambling to find ways to leave, the future of this family dictatorship is in question, as Professor Sayed Marandi had warned before the war.
The first real signal of a war is not the missile.
It is the price of exit.
Tonight the ultra rich are paying up to £260,000 ($350,000) for a single private jet charter just to get out of the Gulf, because the normal map is gone.
Dubai, Doha, Abu Dhabi, the transit machine… https://t.co/cTanOjWAhk pic.twitter.com/YqYiJBN5Zt
— Shanaka Anslem Perera ⚡ (@shanaka86) March 2, 2026
For instance, from This is Money in End of the Dubai dream: Profound consequences of attack for property, expats, influencers and tourists revealed:
Of the 3.4 million inhabitants, around nine out of ten are from elsewhere. If large numbers of them head home (because of safety concerns as conflict in the Middle East looms), businesses, and society, would struggle to function.
As Douglas Macgregor explained in a talk with Glenn Diesen, lasting damage to the UAE as a commercial center would have knock-on effects for India, as will a $10 increase in the price of oil.
Nikkei has more on India’s oil tsuris in Iran war upends India’s pivot from Russian oil:
The impact from the joint U.S.-Israeli strikes on Iran and the death of Supreme Leader Ayatollah Ali Khamenei is rippling across Asia. The conflict has upended air travel in the Middle East and beyond, closed a crucial shipping lane and cast a long shadow over global energy supplies.
Over in India, the crisis threatens to derail efforts to diversify away from Russian crude. Iran’s move to close the Strait of Hormuz — a critical chokepoint through which more than half of India’s crude oil imports transit — could push fuel prices higher and force New Delhi to increase its reliance on Russian supplies once again.
Another consequential event is the cessation of most commercial flights in the region. Dubai is the biggest hub in the world. Emirates has suspended flights in and out until at least March 4.
The is personal distress aplenty, such as those stranded at airports in the Middle East, per Reuters in From handwashed underwear to fake Adidas, stranded travellers wait out travel chaos. But there are even more stuck at their destination from the outbound leg of travel, unable to get home. For instance, from the Guardian:
More than 100,000 Britons were stranded in the Gulf on Monday, with airspace in the region still closed to most flights and overland evacuation regarded as risky while Iran continues to launch missile and drone strikes across the region.
Downing Street said UK officials were considering all options to get citizens home safely, including using commercial, charter and military flights and bussing evacuees across land borders into Saudi Arabia and Turkey.
I’m completely stranded at Moscow airport… alone, helpless, and running out of hope.
No one from @makemytripcare or @etihad is answering my desperate messages.
Russia doesn’t accept Visa or Mastercard anymore.
I have ZERO cash left. Not even for food or water.
The Etihad…
— Sunil Gupta (@HeySunilGupta) March 2, 2026
The best path for many flights from Europe, and even the US, to Asia are though the Middle East, particularly since no Collective West carriers are now overflying Russia. So what happens to tourism and commerce?
Back to the significance of the market and economic stress: recall that it was Mr. Market that got Trump to TACO when his Liberation Day tariffs created much investor upset. What will Trump do when caught between the rock of tumbling financial asset prices and the hard place of Zionist bloody-mindedness?
And even worse, there will be no fast path to placating the Iranians even if Trump and Israel attempt a climb down. Not only have they have telegraphed that no promise they make will be honored, but even that it is dangerous to attempt to negotiate with them. Alexander Mercouris also discussed long form that the reason that Khamenei and much of the Iranian leadership were all together to be hit by the US and Israel in their surprise attack was that they were discussing their response for the upcoming negotiation meeting. This is the same ruse Israel used to kill Hassan Nasrallah and much of the Hezbollah leadership.
Some YouTubers are voicing more coded versions of what reader What? No! said yesterday, that the US will need to be evicted from the Middle East:
The US is not agreement capable and now not negotiation capable. You just can’t go there, it leaves nothing that can be trusted for moving forward or resolving the situation. So now Iran’s only path is to create the facts on the ground. They will have to remove all the US bases; Israel will have to shed most of its armed forces and won’t be allowed to have nukes. Whether Iran get’s more than that, we’ll have to see.
This actually might not be as big a stretch as it seems. If Iranian bombing wrecks US bases and forces evacuation, as reader karma fubar pointed out, they may be rendered useless by looting:
The stories of the evacuated US bases in the region, combined with their widespread targeting by Iran, got me thinking about two prior events.
The first event was the 1991 Pinatubo eruption in the Philippines. The danger of an eruption was recognized just in time, and the air base was evacuated. The predicted catastrophic eruption did occur, and the base took significant damage. The first ones back were looters. The imperial power that had taken the yoke from the prior imperial power it had destroyed was not well loved by the populace. Later that year the US withdrew from the airbase altogether. With no US personnel left, the remnants of the base were then stripped bare.
The second event was based on satellite images in a NYT article of Iraq before/after the 2003 invasion, which showed a major military depot. After the invasion every structure in the entire depot was quickly stripped to the ground, apparently for scrap metal being purchased by Turkey.
Those US bases in the region may find that regardless of actual kinetic damage, that by the time the US personnel return in force there may be nothing left but battered concrete and Superfund-level toxic buildup. It would be easier to build new bases than to rehabilitate the wreckage of the old. The surviving governments in the region will be far less enthusiastic about allowing new US bases on their territory having seen how the US abandoned their “allies” after making them a target. Many of those bases may now be gone for good.
Before we turn to the kinetic war updates, we need to correct our post from yesterday. Our headline said Iran has attacked a Saudi oil production facility. Iran later announced that it had told the Saudis it had not made the attack. If Iran had indeed wanted to attack the Saudis, it would not make sense to make a denial. That left the Houthis or an Israeli false flag as explanations. We had thought a Houthi attack was more plausible. But new information has emerged:
Mind you, this new information is not a smoking gun with respect to the Saudi droning, but it makes the false flag scenario more plausible. TASS is also amplifying the Iranian claim that the drone attack was a deception:
Israel attached the refinery of Saudi Aramco in Ras Tanura in a false flag operation, Tasnim news agency said, citing a source.
“The attack against petroleum facilities of Saudi Arabia this morning was made by Israelis and is an example of the false flag operation,” the source said. Saudi Aramco’s facilities have never been targeted by Iran, he added.
“According to data furnished to us by intelligence sources, the port of Fujairah in the UAE is also one of the next targets of Israelis as part of the false flag operation,” he added.
As mentioned in our introduction, Richard Medhurst has documented extensively how Israeli air defenses are coming apart:
At the risk of a video overdose, I am fond of Janta Ka Reporter. All of the three items he covers below are important: the Marco Rubio admission that the US went to war because Israel was gonna regardless, the attack on the US Embassy in Saudi Arabia, and at 12:50, University of Chicago Prof Robert Pape describing the smart bomb trap:
Times of India gives a feel for how the rest of the world sees the conflict. Note its inclusion of IRCG reports:
And to Twitter:
🇮🇷 Iran’s new missile tactics throw US, Israeli war planning into disarray
Iran dramatically revamped its missile strategy after the June 2025 war. The past 24 hours have shown how:
➡️ Immediate retaliation: Instead of waiting days or even hours, the IRGC began reciprocal… pic.twitter.com/3RTwkLNzgr
— Sprinter Press (@SprinterPress) March 1, 2026
‼️🇮🇷🇦🇪 Iran has struck the oil infrastructure in Fujairah, — Quds News Network
▪️According to their data, a fire broke out in the city due to the fall of missile debris.
▪️The Dutch company Royal Vopak announced the suspension of operations at its terminal in Fujairah.
▪️The…
— Zlatti71 (@Zlatti_71) March 3, 2026
Updates after 8:00 AM EST are in the comments section.
Thanks again for your readership and insights! Very much appreciated.
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1 We has said this was one of the ways Israel could force the US to attack Iran. Note that this may not contradict the claims in the Israeli press, that the decision to strike Iran was made in a December 29 White House meeting with Netanyahu. The threat could have been made then to force Trump’s agreement.
