All they need is dignity / a chance to be free / let them out of jail / my people / stop pointing guns at my people. Cat Stevens on a Beirut stage in 2012.
On 8 July 2026, Trump repudiated the MoU with Iran signed on 17 June. When Trump realized that he had signed a surrender document after his murderous 40-day shock and awe campaign, which he began on 28 February 2026, the United States’ self-described “best dealmaker” repudiated the agreement with Iran after just 21 days.
In response, Iran has imposed a de facto embargo on world oil by disrupting the principal oil export routes from the Persian and Arabian Gulfs.
Here is a summary of events expressed as an equation:
MoU collapse + Hormuz closure + Destruction of alternative export pipelines = Maximum global oil supply shock.
Shortfall
Put in numerical form:
Oil Shortfall = 20 million barrels/day* − 5 million barrels/day** − 5 million barrels/day***= 10 million barrels/day short.
- * amount of oil exported Through The Straits of hormuz prior to the 40-day war on Iran
- **Reduction in China’s consumption of oil
- *** Approx amount of oil exported per day by Saudi Arabia and Iran during the 21 days of the MoU
The answers to these questions should explain (in part) the dynamic created by the US war on Iran:
How many barrels of oil per day were leaving the Persian Gulf prior to the shutting of the Straits of Hormuz on the 28th of February 2026? 20 million barrels per day.
How many barrels of Saudi oil were exported after closure of the Straits of Hormuz? Roughly 5 million barrels per day.
How many barrels per day did China reduce its consumption after the closure of the strait of hormuz? Somewhere between 4 and 5 million barrels per day.
What was the total number of barrels per day Iran exported during the period during the MoU? Iran was exporting on the order of 2.3 million barrels per day on average, as it rushed oil onto the market while the blockade was temporarily lifted. – The Wall Street Journal.
If Iran successfully strikes both the Habshan–Fujairah pipeline in the UAE and Saudi Arabia’s East–West Petroline pipeline, the consequences will be far greater than the closure of the Strait of Hormuz alone.
Those pipelines are the principal alternatives for exporting Gulf oil when the Strait is blocked. If they are also disabled, a much larger share of Gulf oil exports will be cut off from world markets. Iran may be imposing a de facto embargo on the uae’s oil economy by taking out revenues from the Habshan–Fujairah pipelines which will be inoperable in the near term and possibly the long term.
When President Trump abandoned the Memorandum of Understanding in the hope of securing a more favourable agreement, the likely consequence was that the world energy market will lose the stability created during the MoU.
Outcome
In that scenario, the disruption to US and China oil supplies will be significantly greater, pushing their economies to the brink of crisis.
However, since China has three times as many oil reserves as the United States and the fact that it lowered its consumption, it puts the United States at greater risk than China.
‘Peak oil‘ has taken on a new dimension. Trump is staring down the barrel of an even greater bankruptcy, only this time it is not his own, it is the world’s. Since Israel’s genocide on Gaza, both Australia and Europe have been backing the wrong horse. We did it in Vietnam we did it in Iraq and Afghanistan when will we ever learn?
As events rapidly unfold, it is important to bear in mind a couple of points:
1. Iran does not have a major crude oil export pipeline to Pakistan. The principal Hormuz-bypass pipeline is the Goreh–Jask pipeline, which terminates on the Gulf of Oman and is now closed.
2. Ansar Allah (aka the Houthis, the de facto government of Yemen) have shut down commercial shipping through the Red Sea via the Bab el-Mandeb Strait.
According to current reporting on the US war on Iran, in response the IRGC has carried out attacks on energy facilities in several Gulf states, the extent of the damage is varied but significant.
Reported targets include:
Saudi Arabia: Iranian strikes or drones have targeted the Jubail petrochemical complex and the Ras Tanura oil refining area. In some cases, Saudi officials said air defenses intercepted the attacks and damage was limited, while other reports indicate disruptions to refinery operations. Al-Monitor
United Arab Emirates: Iran has reportedly struck oil facilities in the UAE during recent escalations, marking a significant expansion of the conflict.
World Oil
Bahrain: Iranian attacks have reportedly damaged industrial and energy infrastructure, including areas associated with oil facilities.
Wikipedia
At the same time, Iran has also focused on shipping in the Strait of Hormuz, attacking or threatening commercial vessels, which has compounded the disruption to Gulf oil exports.
Expert bias
We need to be careful of expert commentary from within US strategic framework.
An American professor goes on a holiday cruise in the Irish Sea and comments on geopolitics from a U.S. naval perspective. Meanwhile, Israel execute 58 more Palestinians in Gaza this week, 1,000 days into Israel’s genocide of the Palestinians.
Under the veil of a disinterested, apolitical position, Salvatore Mercogliano presents a distinctly imperial perspective on global shipping. But he does know more about shipping that he does about geopolitics.
What is the value of having so-called shipping or naval experts comment on geopolitics when they rarely question the use of force against defenceless people (e.g. workers in Latin America)? For example, I cannot find any evidence that Professor Mercogliano has commented on the Monroe Doctrine, which has historically shaped U.S. influence over maritime affairs in Central America and the Panama Canal, and remains relevant to discussions of U.S. maritime strategy.
Why don’t the shipping experts discuss the alliance between Israel and the United States, which is an important part of the geopolitical environment surrounding maritime trade in the region, including the operations of Israel’s ZIM Integrated Shipping Services. Nor does this ‘expert’ analysis examine how the strategic relationships of the United States and its allies influence global shipping. This expert focus is largely on the operational consequences for major carriers such as Maersk, MSC, Hapag-Lloyd, and CMA CGM, rather than the blockades of Palestine and Cuba.
I do not wish to single out any one expert, especially in the midst of such gruesome wars.
We should approach all commentators with skepticism. That includes academics such as Professor John Mearsheimer and Jeffrey Sachs; former military officers who now provide strategic analysis; media personalities such as Piers Morgan, who increasingly presents himself as an authority on international affairs; and specialist commentators on military, intelligence, energy, and shipping issues.
No individual should be treated as infallible. We need to assess arguments on the strength of objective conditions and material evidence, compare multiple sources, and remain alert to the possibility of bias, incomplete information, or error.
In times of war, certainty is often in short supply, and even highly knowledgeable commentators can be remarkably stupid.
Nor is it enough to simply come to an understanding these wars, we must stop them!
Ian Curr
22 July 2026
US Strategic Petroleum Reserve SPR= 300 million barrels × 159 litres/barrel = 47.7 billion litres
Weekly U.S. oil consumption = 22 billion litres
Therefore, the US has 2.17 weeks of oil left in its strategic reserve.
However, that is not its only source of oil.
What are the other sources of U.S oil?
Domestic production, Imports from Canada and Saudi Arabia (BTW Saudi oil is burning) and other countries, and commercial inventories.
Currently, about 2/3 of petroleum consumption comes from U.S production and about 1/3 comes from imports and the SPR is an emergency backup. However, the US military is drawing down on these reserves.
To stop the war, imports must cease, and workers must refuse to deal with US oil. The working class has no country.
Alternatively, like the ploughshares activists, we can just take hammers to their bombers while they’re on the ground.
Either way, it is not enough for Iran to control the Straits of Hormuz. The whole world has to deny the United States oil for war.
Not sure of the latest figures – yes 20 mill barrels per day were coming via the Strait of Hormuz. Yes that was blocked initially and Saudis increase the flow via their pipe line to the Red Sea, I think from 5 to 7 mill Barrels per day.
Iran also has a pipeline to Pakistan, and Oman has a port of the Arabian Sea side. Yes pipelines and export via the Red Sea are vulnerable.
(See main article for fact check. – Editor)
Loss of oil supply globally has not been as significant yet as initially predicted because:
First, China had large oil reserves (extact volumes are not clear), reduced imports and started to draw down on their reserves. Don’t know where this is up to but China had been planning to cope with loss of oil supply for many years, as it recognised it’s economic and internal political stability was way too dependent on oil imports. It strategically has aimed to reduce dependence on imports of many resources as much as possible, diversify supply where necessary, and have vertically integrated manufacture and supply chains internally. This meant extra oil was available for other countries.
Second, International Energy Agency called on members to release 400 million barrells from their reserve stocks (32 member countries) onto the market. This again relieved stress on the wealthy countries import needs mostly.
Third, drawing down reserves (either on land or sea) is time limited if the conflict continues and damaged oil / gas infrastructure can’t be rebuilt. So eventually, the market will get constrained as the conflict continues, prices will go up and poorer countries will suffer first and most.
Forth, other oil producing countries had some spare production capacity that was ramped up to meet some of the loss of oil /gas from the Persian Gulf. This included USA, Argentina and Nigeria for example, as well as Russia, but Ukraine is now taking out Russian oil refineries and ships (not sinking the ships, so as not to create oil spills, just taking out the control systems and crews with drone attacks on ships bridges and transfer pipes on deck used for ship to ship transfers).
Fifth, poorer countries had no choice but to ration oil and gas as prices increased, supply was restricted and they couldn’t afford the extra cost of imports.
Other key materials from Persian Gulf includes fertilisers, sulphur and helium. These also have potentially large economic impacts from loss of supply. Australia is very vulnerable for all these.
International Energy Agency gives regular updates on oil supply – you can subscribe free to their email newsletters
https://www.iea.org/newsletters
Cheers
Trevor