Today’s Iran war overview will of necessity be a bit sprawling, which means in giving information to either explain or substantiate some key points, we will be a bit heavy on videos and long tweets where readers will benefit from digesting the source content. So apologies for not having distilled this recap so as to make it easier to digest. The flip side is you will be better informed if you do dive into this material.
The major development is that the US is doubling down even harder on its pretense that it will carry on the conflict as long as needed to overthrow the Iranian government, and has voiced the idea that it might go as long as 100 days, meaning into September.
Our comparatively optimistic view is that it will last nowhere that long, not due to what many predict, the US and Israel becoming exhausted militarily, but a serious market swoon and potentially a full bore crisis.1 We anticipate that will start to happen when investors stop listening to the deranged patter from the Administration and digest the implications of a mere additional month of closure of the Strait of Hormuz, and the odds that it could go on well beyond that. And unlike the state of the kinetic war, where fog of war plus propaganda can keep them significantly in the dark, the state of tanker and other vessel movements through the Strait is highly visible. I am not one to engage in forecasts, but it seems inconceivable that investor denialism about the inability of the US and Israel to open the Strait of Hormuz in any reasonable time frame (never, but the “topple Iran” fantasy is still in play) and the considerable and compounding real economy consequences of that cannot hold beyond mid-April, and could start to take hold in a more serious way as soon as next week.
We will turn later in this post to more information about the systemic impact of the Strait of Hormuz closure, including why energy supplies would not quickly go back to their pre-conflict level, which means a more durable impact than most investors seem to be considering now. We will also explain the Trump scheme to have the US provide or backstop war risk insurance is not even remotely achievable on any relevant time frame.
Now to the kinetic war and related political developments.
US and Israel fans were taking considerable cheer yesterday from the fact that Iran has slowed its tempo of missile attacks. That did not last long. The banner headline at Bloomberg later in the day:
From the body of that account:
Iran launched a fresh wave of missile and drone strikes across the Gulf on Thursday evening, with attacks reported in the United Arab Emirates, Bahrain, Qatar and Kuwait.
Bahrain’s oil refinery was hit and set on fire, and there were reports of explosions near Abu Dhabi’s international airport. The UAE earlier warned Dubai residents of incoming projectiles, urging them to seek immediate shelter, before signaling the all clear about an hour later. Qatar also told residents to remain indoors, while the US said it’s suspending operations at its embassy in Kuwait.
After a period when the intensity of Iran’s missile and drone attacks had waned, the latest assaults showed that Tehran still has the capability to hit targets across the region simultaneously. The attacks keep the pressure on the Gulf states’ air defenses and make it unlikely that airspace will reopen to commercial traffic anytime soon.
With Iran continuing to thin US/Israel/Gulf State air defenses, it can do more damage with smaller attack waves as more of its missiles get through.
This very recent TRT segment recaps the pounding on both sides. The reporter managed to film in Tel Aviv and show damage there as well as other fronts:
Despite the fact that the US and Iran are continuing to exchange blows, with Tehran and other Iranian cities taking real damage while the situation in Israel is largely hidden due to the effective operation of military censors, the fury and desperation from the Administration are rising as the Iran government remains intact and continues to pound targets across the region. Trump is managing to reach even higher notes in his register of insanity with his demand that he participate in the selection of Iran’s next Supreme Leader.
And if you thought I am being hyperbolic as depicting the Administration as more and more visibly unhinged, consider:
‘No more rules and political correctness’ – Hegseth stated that the US will do whatever it wants with Iran.
‘If you think you’ve already seen something – just wait. The amount of military power we can project over Iran is many times greater than what we have now – if we combine… pic.twitter.com/d3ETJH6GKA
— Zlatti71 (@Zlatti_71) March 6, 2026
I hope readers do not see this reference as degrading our reporting, but yours truly has invoked mythology to explain some of the behavior of the Trump team. This segment from V for Vendetta seems fitting:
Back to this conflict. Daniel Davis has given an good overview of the insanity of a ground campaign in Iran, even a limited Kurdish incursion scheme. He also contrasts that with the increasingly empty Administration escalatory talk as proof of the lack of a Plan B.
We featured Davis’ earlier explanation of why the idea of a naval convoy to escort ships thought the Strait of Hormuz was simply asking form them to become easy targets for Iranian missiles and drones. To see how desperate the Administration is to keep up the fantasy that there is a path to victory, see the Fox clip with Keith Kellogg, starting at 18:23. Kellogg suggests that the US take an island in the Persian Gulf. I am not making that up. Needless to say, Davis takes that apart:
At the very end, Davis shows footage of a US strike in Iran purported to have destroyed one of its underground bunkers. The size of the explosion is consistent with having hit something of value, at the very least munitions or fuel storage.
Scott Ritter gave a long-form debunking of the idea that Kurdish or other irregular forces would be effective two days ago, with Nina at Dialogue Works. Starting at at roughy 37:00, he also covered a point that readers have made, that Turkiye would be extremely unhappy about this operation and would stomp on it.2
Max Blumenthal on Judge Napolitano describes the punishment inflicted on Tehran. The entire talk is valuable but one part explained the pathological hatred that Trump exhibited towards Iran at the State of the Union address. Blumenthal contends that the Israelis convinced Trump that Iran was behind the assassination attempt in Butler, Pennsylvania.
Blumenthal also depicted the idea of sending in the Kurds as a vehicle for introducing US special forces, and that Netanyahu was particularly keen about getting US boots on the ground. As numbers increased, it would lead to casualties and deaths, leading to even firmer US commitment, such as the need for vengeance or the belief that only an eventual victory will legitimate their sacrifice.
Larry Johnson provided an update on a key element of the war, which is how far along Iran is in degrading US and Israel air defenses. Do read his post, The Failure of US and Israeli Air Defense, in full. Some key bits:
Since February 28, 2026, amid escalating US-Israeli strikes on Iran and Iranian retaliatory attacks (including drone and missile strikes on US diplomatic facilities and regional bases), the US State Department has ordered the closure or indefinite suspension of operations at several US embassies in the Persian Gulf and broader Middle East region. These include:
Saudi Arabia….
Kuwait….
Lebanon…
Operations at the US embassies in Doha, Dubai and Manama also have been dramatically scaled down. The videos posted during the last five days show Iranian missiles and drones hitting targets in the six Gulf countries virtually unopposed.
The real damage is being done to US military bases/installations in the region. The following US military bases/installations in the Persian Gulf (or directly associated with Gulf states) have been confirmed or reported as attacked/hit since February 28, based on US military statements, satellite imagery analyses (e.g., Planet Labs), media reports (NYT, CNN, Al Jazeera, Stars and Stripes), and official confirmations from host nations. Here is how the Western media sources are spinning these attacks:
Naval Support Activity Bahrain / U.S. Navy Fifth Fleet Headquarters (Manama, Bahrain)….
Al Udeid Air Base (near Doha, Qatar) — The largest US military facility in the Middle East….
Ali Al Salem Air Base (Kuwait) — Struck by ballistic missiles and drones. Satellite imagery showed damage to buildings and structures. Kuwait confirmed interceptions and hits; part of multiple strikes across Kuwaiti sites hosting US troops.
Camp Arifjan (Kuwait)…..
Camp Buehring (Kuwait)….
Al Dhafra Air Base (Abu Dhabi, UAE)….
The damage that is being inflicted is far greater and more severe than the Pentagon is reporting. The most damaging result of the Iranian attacks has been the destruction of critical radar systems that are supposed to provide an early warning of Iranian missile launches…..
To avoid over-hoisting from Johnson’s post, I have skipped over the detail on the embassies and the bases, and most important, the damage to radars thus far. While some of what the US calls bases in some cases might be more accurately called installations, as Johnson shows, Iran has made strikes of real consequence on our biggest operations in theater as well as critical radars.
Another sign of things not going according to US plans:
Tomahawk Reloads
With Omani ports under attack and completely exposed to the Houthis, as well as the ports in the Horn of Africa, the American fleet can only be reloading its Tomahawks to the east, most likely in Pakistan or India.
This procedure has to be done in ports,…
— Patricia Marins (@pati_marins64) March 6, 2026
Now to the systemic economic/financial market risk. The Administration has effectively admitted that the closure of the Strait of Hormuz will be longer rather shorter via its messaging to the US public that this could be a 100 day war. In the meantime, traffic in the Gulf is at a standstill From the Financial Times
Yesterday, the Financial Times provided another key element of why the downside of a Strait of Hormuz and LNG production halts are even more serious than they seem: that for the LNG, the longer the operations are shut down, the longer it will take to get them to full operation. And it isn’t just LNG; oil players will have to shut down once they run out of storage. From the pink paper in Gulf oil producers face race to resume exports before storage fills up:
The Gulf’s biggest oil producers are facing a race against time to resume exports before their storage tanks fill up, with Saudi Arabia estimated to have as little as two weeks before it would have to cut production.
Iraq on Tuesday became the first major exporter to begin reducing output, announcing it was winding down production at three of its largest oilfields.
Further oilfields across the region are poised to shut down over the coming days, taking millions of barrels of crude off the market, unless energy shipments through the Strait of Hormuz are able to resume….
Saudi Arabia, the world’s largest oil exporter, has the most extensive storage in the region, but satellite imagery suggests that some facilities are becoming stretched…
Richard Bronze, head of geopolitical analysis at consultancy Energy Aspects, said Saudi Arabia’s buffer was likely to last longer than those of its neighbours. In addition to domestic storage, the kingdom can divert several million barrels a day through its east-west pipeline to a Red Sea terminal, bypassing Hormuz. That could give Riyadh three to four weeks before it needs to trim production…
The cost of shutting down oilfields can be significant, said Fraser McKay, head of upstream research at energy consultancy Wood Mackenzie…
McKay estimated that if the shut-in is brief and orderly, the field could be brought back online in a week or two. “However, the longer it is shut in, the more likely it is that the wells will need some work to be restored,” he said. Since Rumaila has a mix of old and new wells, its operators may leave some wells running if they think they will be hard to bring back online….
Producers may start to wind down even before storage capacity is exhausted, keen to make sure they close fields in an orderly way to avoid damaging their reservoirs.
We are already seeing the cost of the loss of oil revenues, physical damage, flight of some high income residence, and air space closures leading Gulf States to consider pulling back on investment commitments (including those to the US) as well as liquidating investments to make up for the loss of oil and tax income. From Reuters:
Gulf states could start to review their overseas investments and future commitments as they consider options to ease the pressure on their budgets following the U.S.-Israeli attacks on Iran, the Financial Times reported on Thursday….
For decades, the Gulf’s rise rested on two core assumptions: that its rapidly growing cities offered safe haven in an unstable region and that vast wealth from uninterrupted energy exports would keep flowing. Recent events have shaken both pillars at once.
“A number of Gulf countries have begun an internal review to determine whether force majeure clauses can be invoked in current contracts, while also reviewing current and future investment commitments in order to alleviate some of the anticipated economic strain from the current war,” a Gulf official told FT.
From the original Financial Times story:
An adviser to a Gulf government said the prospect of an investment review by the wealthy states had caught the White House’s attention. They manage some of the world’s largest and most active sovereign wealth funds, and Saudi Arabia, the UAE and Qatar last year pledged to invest hundreds of billions of dollars in the US after President Donald Trump visited the region.
They are also big backers of sporting events around the world and have all been investing heavily domestically to develop their nations and diversify their economies.
Any move that affects investments in the US or other western states may raise the pressure on Trump to seek a diplomatic strategy to bring the war to an end.
We also mentioned another systemic risk, that of higher food costs and potential reduced output due to the impact of the Strait of Hormuz closure on fertilizer supplies. While reader PlutoniumKun contended in comments that there are big reserves of fertilizer, that may only be true in the EU. OilPrice suggests otherwise:
Global food production is structurally vulnerable because roughly half of all food depends on synthetic nitrogen fertilizer, a substantial portion of which is exported from the Gulf region through the threatened Strait of Hormuz.
Unlike oil markets which have a strategic buffer, fertilizer trade operates on a just-in-time basis with no equivalent strategic stockpile to offset a prolonged disruption.
A sustained disruption would not cause an immediate price spike but would lead to reduced nitrogen availability, lower crop yields months later, and ultimately result in tighter inventories and elevated food prices.
Finally, to the other Trump “hail Mary” scheme, of having the US provide war risk insurance to carriers. This from the absolutely must read The Invisible Siege: How Insurance Markets, Not Missiles, Closed the Strait of Hormuz by Shanaka Anselm Perera. It explains why shipping (not just tankers but any carrier) will not pass through the Strait of Hormuz without war risk coverage, includes an impressive, in-depth discussion of the structure of the market, and how already unduly thin reserves for war risk were depleted thanks to the Houthi attacks. The buffers are now so thin that the loss of one tanker would wipe out what little remains.
Perera also covers in depth why there is absolutely no way the Trump Administration will be able to step into the breach. Before you reject his idea, consider: advanced economies have developed very extensive mechanisms to backstop banks, since the payment system is essential for commerce. Even so, with ample warning of the accelerating 2007-2008 crisis (there were three acute phases prior to the Lehman collapse), authorities in the US, UK, and Europe failed to get in front of the problem. And they failed to impose adequate reforms afterwards, as proven by the way the collapse of a merely pretty big, purely domestic Silicon Valley Bank, forced a large scale emergency intervention.
There is nothing remotely like that sort of pre-existing supervision and rescue infrastructure in insurance.
Key bits from Perera:
The structural implication is stark: the Hormuz actuarial blockade will persist not for the duration of Operation Epic Fury’s kinetic campaign, but for the duration of the insurance market’s reinstatement process. Those are two fundamentally different timelines. The kinetic campaign may last four to eight weeks, as the administration projects. The insurance reinstatement, based on the only available reference classes, will require six to eighteen months under even a favorable scenario. The gap between those two timelines is where the alpha lives…
What makes the current timeline particularly intractable is the nuclear overhang. The International Atomic Energy Agency confirmed that 440.9 kilograms of sixty-percent enriched uranium has been unaccounted for since June 10, 2024, the last date of human verification. Director General Rafael Grossi stated that the loss of continuity of knowledge needs to be addressed with utmost urgency. This quantity is sufficient for multiple nuclear weapons if further enriched. Regardless of how the kinetic campaign resolves, no reinsurer will restore Gulf war risk capacity while nearly half a metric ton of weapons-proximate uranium remains unaccounted for in a country undergoing simultaneous military bombardment and leadership succession. The nuclear tail risk, priced at approximately zero in current markets, is the factor that could extend the insurance reinstatement timeline from months to years.
IMHO, another monster market uncertainty is that Israel has never honored any ceasefire. So insurers cannot be certain if the conflict has really stopped. Continuing:
The third precondition is the absence of government backstop infrastructure. When aviation terrorism risk became commercially uninsurable after September 11, 2001, Congress passed the Terrorism Risk Insurance Act. The legislative process took fourteen months. During that interval, terrorism coverage for commercial property was essentially unavailable in the private market. In the maritime domain, the equivalent backstop does not exist. The US Maritime Administration possesses dormant authority under Title 46, Chapter 539 to issue war risk insurance binders, but this requires Presidential activation and covers only US-flagged vessels, a negligible fraction of global tonnage. The United Kingdom’s War Risks Club, government-reinsured since 1913, provides cover for UK-flagged vessels. Japan created a 7.6-billion-dollar sovereign guarantee during the 2012 EU sanctions-era insurance disruption, but the process took approximately two months.
No government has ever created a comprehensive marine war risk reinsurance facility from scratch during an active crisis in less than several weeks. The fastest precedent is MARAD activation, which could theoretically produce US-flagged vessel coverage within days. The slowest is new legislation, which requires months. The relevant question is not whether governments can act, but whether government action can replace the global reinsurance architecture that just withdrew. The answer, based on every historical precedent available, is that it cannot. Not within the timeline this crisis demands.
And in the “too important to miss” catchall: Analysis Suggests School Was Hit Amid U.S. Strikes on Iranian Naval Base New York Times.
____
1 Forgive me for channeling my inner Tom Friedman, but my taxi driver today (who I have had before, a chatty and inquisitive young man) volunteered that Thais are hoarding cash, out of concern that bank networks could go down and they would not be able to make payments by app, which is very popular here. If people this far from kinetic action are taking protective measures, it suggests that many consumers and businesses around the world are or will soon start hunkering down, which is a recessionary force operating independent of energy price increases. He also volunteered that China was supporting Iran.
2 Forgive me for not having well cleaned up the machine-generated transcript of the relevant parts. I will do that after the post is otherwise complete:
Well, you remember I told you I was pulled out of amphibious warfare school to go on a planning staff for the comm of the Marine Corps to plan amphibious operations. This was in uh September of 1990. United States was in the process of moving 700 plus thousand troops into the region to fight a war with Iraq, including hundreds of thousands of ground troops, ground combat troops, many divisions worth of troops. Um, back then we were geared to do this…
Just remember, we got to go to Iran…
Logistically, this would be a nightmare, but we could do that. Move through to get to the Iraqi Iranian border where we then would have to cross in. Have you looked at a map of Iran? Have you seen the mountain ranges that separate um Iran and Iraq from say Thran, the seat of power, or from anywhere?…the Iranians have been preparing for decades to receive us and destroy us and annihilate us. Uh so we have that option. It would take us nine months to more than a year and a half to build up the forces capable of carrying out such an operation.
Or we could get the Marine Corps and say you need to do a uh a seizure of a port.
We used to train for that. 1985 I actually helped write the plan for the seizure of Chabahar and Ponder Ababas…
We’re not geared to do that today. How do we get um, you know, it would take we we’d have to use at least three brigades in the initial assault. How do we get three brigades on the ships? I don’t think we can anymore. Um, but if we could, how do we get them close to the Iranian shore without getting sunk?
So now we get to you know plan B where CIA paramilitaries join special operations and special forces start to work with uh you know indigenous forces to create um you know indigenous proxies uh militias resistant groups etc. We know some exist. We have the Baluchcci Liberation Army working out of Pakistan. CIA has a long history of working with them. We have the Kurds. We’ve been working with the Kurds forever. Um we got Azeris that could come in lore. I think you’re familiar with the Lord people sort of in the Kurdish area but separate from the Kurds.
We got the AAZ Arabs. We got MEK. It’s always out there. Although I don’t think the Iranian people will rise up and uh and rally around me, but they’re very good at being used to disable, blow up, and destroy things. Um and we got the monarchists that can always raise a flag, shout at the Kmen, and then run away. Um, you know, so now we we right now the decision apparently has been made to um arm the Kurds. I don’t know, are you familiar with Kurdish history?
It’s never a good idea to arm the Kurds because two things always happen. The Kurds lose and then they get betrayed and abandoned….What is Turkey going to do? sit there and go, “That’s a good idea.”?… So Turkeykey’s not going to let the United States come in and arm 10 20,000 Kurds and say march and uh and take over.
That’s just not going to happen.
Meanwhile, I think the Iranians are already on top of this and they’re already launching preemptive strikes in the Sullemania and other areas. Uh you know, breaking up these Kurdish groups as they build up.
