By Sylvia Demarest, Substack, 7/1/26
Introduction
The risk that current wars will expand into a nuclear war continues to grow. While the war on Iran currently consists of sporadic exchanges, it has expanded to more countries. Israel has invaded Southern Lebanon. Iraq, apparently under US pressure, has moved to disarm militias said to be aligned with Iran, perhaps to open a path to a future ground invasion of Iran. Pakistan has moved weapons and military personnel into Saudi Arabia. Israeli leaders have pointed to Türkiye as a potential threat to Israel and former leaders have proclaimed that “Türkiye is the new Iran”. Syria is struggling to avoid being drawn into war in Lebanon.
Meanwhile, the proxy war on Russia continues to intensify. Ukraine, with the help of NATO, the UK, and several EU countries, is both manufacturing weapons for Ukraine, and helping send drone swarms into Russia–oblivious of the risk of Russian retaliation. Meanwhile, President Trump seems supportive as he “escalates to deescalate” the Ukraine war. The “Spirit of Anchorage” is dead since the US refuses to acknowledge or to follow through on the agreements that were reached with Russia back in August of 2025. Diplomacy is now virtually non-existent between Russia the US and NATO. The US does not even have an Ambassador to Russia!
One risk is that Ukraine will turn to terrorism. A recent terror attack on a Ukrainian oligarch in Monaco via a package bomb in a hotel is cited as an example. Two people were injured including a woman who had her legs blown off. This is the first terror attack in Monaco. It may not be the last.
These wars and other events could well signal that the current era of globalization, characterized by the free flow of goods and money, is ending. Asset seizures, tariffs, and increasing nationalism are also incompatible with globalization. The Covid lockdown was one blow, resulting in severe supply chain disruptions, the loss of small businesses, and increased inflation. The closing of the Strait of Hormuz is another with increased pressure on supply chains. Companies whose inputs cross three jurisdictions and transpire in several different currencies, could represent a business model for a world that is slowly coming to an end.
Although the focus of the current crisis has been on oil prices, the supply of other critical products has also been affected from fertilizers to lubricants, to pharmaceuticals to helium. The impact of these shortages have yet to fully hit the global economy.
China and Tank Bottom
Critical to the management of this crisis is the fact that China stopped importing oil. Chinese imports fell by 4.7 million barrels a day helping to prevent shortages across the world. Countries around the world also tapped reserves helping to keep oil prices low. Trump visited China from May 13-15. Was a deal cut at that time?
So far, the Trump Administration and the international energy market have managed this crisis remarkably well. Meanwhile, the oil market is still in a race against the clock as global oil inventories continue to fall. Onshore storage now at its seasonally lowest point in recorded history. Strait inbounds remain far below necessary levels. This means Iran still has leverage with little reason to relinquish control. Once the barrels that remain stuck in the Strait are absorbed the calculus shifts to outbound tankers vs. curtailed production vs. the number of inbound tankers. Meanwhile, price manipulation has worked. Massive shorting of oil, and consistent production in the US, has managed prices which are now under $70 a barrel. Market apathy persists with traders believing every tweet that declares imminent peace. Yet, the clock continues to count down to operational lows and tank bottoms.
The extent of market manipulation is also being revealed–namely, by massive shorting oil on the exchange and through various ETFs. In one ETF it is estimated that a huge percentage of the shares have been borrowed to sell short. At some point these trades will have to be reversed. This could lead to a rapid increase in the price of oil.
The War on Iran
On June 17, 2026, the US and Iran entered the Memorandum of Understanding (MOU) which also extended the cease fire agreement entered on April 8, 2026. The terms of the MOU so heavily favored Iran that many commentators spoke openly of a US defeat. The MOU promised to end the US blockade, lift sanctions on Iran, return to Iran billions of seized funds, create a reconstruction fund of $300 billion to rebuild Iran, end the Israeli invasion of Southern Lebanon, and perhaps even allow Iran to control the Strait of Hormuz. So far, other than lifting the blockade and allowing Iran to export oil, the US has avoided complying with the MOU.
Regarding the MOU cease fire, in the words of former Ambassador Chas Freeman, it is “a ceasefire with Israeli characteristics, you cease, we fire.”
Controversies over the terms of the MOU quickly developed. These included: the US stating that Iran had agreed to open her enrichment programs to full international inspection by IAEA; that instead of returning Iran’s funds to Iran, the funds would be placed in an account controlled by the US and would only be used to purchase US agricultural products and pharmaceuticals; and pressuring Oman to allow non-fee transit along Oman’s part of the Strait under US control. Oman has signed the UN Convention of the Law of the Sea (UNCLOS) Iran has not. But Oman and Iran are still negotiating, see: After U.S.-Iran War, Oman Said to Propose Hormuz Fee Plan (NY Times).
Iran was to immediately receive some $12 billions of her funds held by Qatar–funds that go all the way back to the Biden Administration. So far, none of these funds have been released to Iran.
The MOU also required the parties to “refrain from the threat or use of force against each other” yet Trump persists in threating to “kill the Iranian peace negotiators in Switzerland”, that he may have to “complete the job” — (if he doesn’t get a very good deal) — which, he says, would take “ about a week”
The terms of the MOU also required the permanent termination of all military operations, on all fronts, including Lebanon. Yet, on March 16, 2026, Israel invaded Southern Lebanon. Instead of complying with the MOU and pressuring Israel to withdraw from Lebanon, Secretary of State Marco Rubio negotiated a “Trilateral Framework Between the United States of America, the State of Israel, and the Republic of Lebanon” with the Lebanese president that allows Israel to remain in Lebanon. This agreement is very controversial within Lebanon and its full implementation is in question. This “Trilateral Framework” should be seen as a direct attack on the MOU with Iran. What is going on?
Some are speculating that these two conflicting agreements are reflective of an ongoing conflict in the Trump Administration between Vice President J.D. Vance and Secretary of State Marco Rubio. Vance was involved in negotiating the MOU, some claim Vance was not aware of Rubio’s parallel negotiation of the Trilateral Framework.
Here’s Moon of Alabama: “Via The Cradle we find some interesting speculation how this is an expression of a power struggle within Trump’s White House coterie:”
“The agreement between Lebanon and Israel cannot be understood through bilateral negotiations alone. It also reflects shifting power dynamics in Washington, where US policy toward Lebanon is shaped not only by official institutions, but by competition within the administration and the Republican Party, alongside pressure from pro-Israel lobbying groups, particularly the Zionist lobby and the hardline Lebanese Christian lobby.”
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“[This] is reflected in the quiet contest within the American right, particularly between US Secretary of State Marco Rubio, who represents the traditional pro-Israel Republican establishment, and Vice President JD Vance, whose camp has been more cautious about US involvement in West Asia.”
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“According to sources familiar with the matter, these tensions have extended beyond policy differences. Vance was reportedly angered after learning that Rubio had been planning a tour of the Gulf without consulting him beforehand. He also suspected Rubio of working behind the scenes with US envoys Jared Kushner, and possibly Steve Witkoff, in ways that could undermine Vance’s diplomatic achievements. Those close to Vance increasingly believe that Rubio, Kushner, and Senator Lindsey Graham have formed an informal alliance aimed at sidelining him ahead of the next presidential race.”
“Rubio has long been captured by the Zionist lobby while Vance is creature of tech billionaires. Which side has more firepower if there is a competition?”
US Israeli policy is a complete and inhuman disaster which has allowed Israel to commit genocide in Gaza, appropriate Palestinian land in the West Bank, and invade, displace people, and destroy Southern Lebanon. The fact that this level of depravity persists, with US support, reflects the degree of money and power supporting the State of Israel.
Iran Ships Oil to China
Since the lifting of the blockade much of the oil that has exited the strait has been Iranian oil shipped to China. Iran had millions of barrels of oil in storage and on crude carriers. Part of the strategy behind the US blockade was to use the blockade to force a shutdown of Iranian energy production. This strategy did not succeed, Iranian oil is now exiting the Gulf in bulk. Iran has exported 50 million barrels of oil, mostly to China. This is a rate of around 3.5 million barrels per day versus Iran’s “normal” rate of export of around 1.7 million barrels a day. This means Iran is exporting roughly double the normal amount.
It is estimated that Iran may have another 55 million barrels in onshore oil storage to be exported. If Iran can continue to export at this rate, and this is uncertain since it is unknown if there are buyers other than China, Iranian storage will be emptied in around 2 weeks. After that, it will no longer be advantageous for Iran to keep the blockades lifted–especially in the face of the lack of implementation of the MOU. What happens then? What happens if, by July 15th, the United States still hasn’t released any of Iran’s frozen assets? What is Iran’s incentive to continue with the joint lifting of blockades? At that point could it be advantageous for Iran to reclose the Strait and return to the pre-MOU status but with 105 to 150 million barrels of Iranian oil sold with the proceeds outside the reach of the US?
No recent Assassinations of Iranian Leaders. Why?
Leah Gunn Barret on a You Tube channel called “Transition Protocol” has claimed that a Pakistani Chinese technological breakthrough helped Iran halt the assassination campaign against its leadership after the March 17 killing of Ali Larijani–“Pakistan led Iran to finally find a way to counteract the artificial intelligence-generated killing of their top leadership.” The allegation is that with China’s help, Pakistan cracked the kill chain code and offered the technology to Iran.
In a “division of responsibility” the US allowed Israel to hunt and kill Iranian leaders “using an intelligence apparatus built to assassinate with lethal proficiency.” “Israel has pursued this assignment with ruthless efficiency, killing Iran’s supreme leader in the opening salvo of the war and more than 250 other “senior Iranian officials” since, according to a count maintained by the Israeli military. The latest blow came when Israel said it had killed the naval commander of Iran’s Islamic Revolutionary Guard Corps. “
It was revealed that Pakistani intelligence discovered Israel was planning to assassinate a leading Iranian figure at the signing of the MOU, possibly Parliament Speaker Mohammad Bagher Ghalibaf. It has been alleged that Pakistan informed Israel that if it tried anything, it would hear directly from Pakistan and “it won’t be pleasant.” The MOU was subsequently signed electronically.
It is further alleged that Pakistani military intelligence intercepted another threat from Israel to assassinate Pakistani peace mediator Field Marshal Asim Munir at recent US/Iran talks in Switzerland. Pakistan responded by threatening retaliation if it touched the Pakistani delegation.
As this Substack has discussed, the technology behind Israel’s assassination spree belongs to none other than tech giant Palantir. Here’s a chilling description of how Palantir’s Maven program surveils and kills people.
Who’s Pushing These Wars?
Looking objectively at the world, on wonders why some accommodation short of war could not be found to resolve global tensions–yet these wars persist. Why? There are many theories regarding the forces that, throughout human history, have pushed for and profited from war, including the saying “all wars are bankers wars”. One theory offered by Alex Krainer and the people at Promethean is that “Perfidious Albion” i.e. the UK and the remnants of the British Empire and the City of London are to blame. Below is from Alex Krainer’s Substack.
Here’s Alex Krainer’s Take: “Over the past few years, I came to the conclusion that Great Britain was world’s chief arsonist of peace and suggested that if, the City of London, with its supporting structures in British government, banking, intelligence, secret diplomacy, along with a vast network of think tanks, media organizations, NGOs, charitable organizations and gambling casinos around the world could somehow be quarantined, probably 95% of all the world’s wars and other problems would vanish overnight.”
As proof Krainer points to the heavy British influence in the Russiagate scandal, Britian being instrumental in the creation of Israel, and the continuing British hostility to both Iran and Russia.
Krainer goes on to note: “Chatham House published an article by Sir John Jenkins titled, Lasting Israel–Palestine peace will not be possible without a new policy to neutralize the Iranian threat.”
“Sir John’s article was based on a more extensive policy paper published by The Policy Exchange on 17 July 2023 (thus, before “October 7”), titled “The Iran Question and British Strategy.” Both documents spell out much of what we are observing in the region today and the 2023 document even explains the broader framework behind the need to take down Iran: it is an obstacle for Britain’s “Indo-Pacific Tilt.” In its foreword, the paper says that “Iran’s increasingly appalling human rights record, accelerating nuclear program, sponsorship of proxies throughout the Middle East, extensive assistance to Russia in its brutal war on Ukraine, and sponsorship of terrorism and kidnapping makes it an obvious threat to international stability.””
Finally noting: “The authors shed some light on Britain’s disproportionate power, given its minuscule military and disintegrating economy: “The UK’s diplomatic and military toolkit allow it to make a difference in the Middle East. For historic and strategic regions, the UK has deep and longstanding relationships with almost every country in the Middle East. This fact, alongside its UN Security Council membership and military capacity, give it the ability to have an outsized influence on the course of Middle East affairs.””
What do you think?