I didn’t think Trump would be this foolish, but here we are.
Geopolitical Risk Surges
Trump said an interim peace deal signed between the two last month is over.
Oil prices spiked 8 percent, stocks are down, and bond yields surged.
Trump Calls Iran Scum
Rational Last Month, Scum Today
The Wall Street Journal reports Trump Says Ceasefire With Iran Is Over After Latest Attacks
President Trump said he believed his ceasefire deal with Iran was over and that the U.S. would likely carry out more strikes soon, following another round of Iranian attacks on ships in the Strait of Hormuz that snarled efforts to reopen the strategic waterway.
“We hit them very hard last night…we’ll probably hit them hard again tonight,” Trump told reporters at a NATO summit in Ankara on Wednesday. “I’ll give them a little warning, we’re going to hit them hard tonight. But we’ll see how it all works out.”
The president’s remarks were the starkest sign yet that diplomacy with Iran has stalled under the preliminary peace agreement he signed in mid-June. “If we make a deal with Iran, I’m not sure that will stick,” Trump said, during an appearance with Ukrainian President Volodymyr Zelensky. He said he was considering reimposing a naval blockade on Iran to ramp up economic pressure, and raised the prospect of targeting civilian infrastructure such as electricity and desalination plants, “if we have to.”
During earlier comments to reporters, sitting next to North Atlantic Treaty Organization Secretary-General Mark Rutte, Trump stopped short of saying the U.S. would restart the war, however, and said he would let talks continue if the parties were willing.
“To me, I think it’s over. I don’t want to deal with them anymore,” Trump said.
Water Desalinization
- Qatar: ~61% desalination (22% groundwater, 18% rainwater); >99% of drinking water from desalination.
- Bahrain: ~59% desalination (32% groundwater, 11% rainwater); >90% of drinking water.
- Kuwait: ~47% desalination (51% groundwater); ~90% of drinking/municipal water.
- UAE: ~41% desalination (46% groundwater + treated wastewater/rainwater); ~42% of drinking water.
- Oman: ~23% desalination (69% groundwater); ~86% of drinking/municipal water.
- Saudi Arabia: ~18% desalination (79% groundwater); ~70% of drinking/municipal water. Saudi produces the largest volume in the world (about 3 billion m³ in 2023).
- Israel: Highly advanced system. Desalination (seawater + brackish) supplies ~80–86% of potable/drinking water. Strong wastewater reuse for agriculture. Israel is a global leader in water technology and efficiency.
Iran Desalinization
Iran has more diverse natural resources than the Gulf states
- Surface water (rivers like Karun, etc.): ~41% of total withdrawals (~41 BCM out of ~100 BCM annual total).
- Groundwater (wells, qanats/aquifers): ~59% (~58.8 BCM) — heavily overexploited.
- Desalination: Negligible overall — only ~0.2 BCM/year (~0.2% of total withdrawals), mostly for coastal petrochemical plants or small southern facilities. Some sources approximate it at around 3%.
Beyond Stupid Threat
For starters, targeting targeting Iran’s civilian infrastructure such as electricity and desalination plants would be a war crime, not that Trump ever gives a damn about such things.
Iran would immediately hit back targeting all the desalinization plants in the region. Any successful strike would cripple that country immediately.
Expect a TACO
Expect an immediate TACO on the threat. The Mideast countries with the exception of Israel are undoubtedly on the phone already telling Trump not to do it.
Trump already gave himself a TACO out. He threatens infrastructure strikes “if we have to.”
Resolution Unchanged
The resolution of this war is unchanged. Iran is going to control the strait in the absence of US ground troops.
The clueless Wall Street Journal still has not figured this not, nor have the neocon US Senators.
The WSJ editorial board sounds offs with nonsense again, No More Oil Sanctions Waiver for Iran
The regime lost that privilege by firing on the Strait of Hormuz.
The MOU says “Iran will make arrangements using its best efforts for the safe passage of commercial vessels.” The regime is making arrangements all right—maneuvering to conquer the Strait—but firing unprovoked on civilian tankers is as clear a violation as it gets.
The MOU negotiated by Vice President JD Vance & co. was light on nuclear commitments and heavy on sanctions relief up-front. Its redeeming feature was supposed to be re-establishing freedom of navigation in the Strait while nuclear talks proceeded. Instead the Strait is under fire and nuclear talks are barely underway.
Iran never agreed for freedom of passage without tolls. Indeed, it explicitly denied that.
Ships attempting to violate Iran’s statements were the ones hit. Trump broke the ceasefire not Iran.
Of course, the WSJ board offered no solution. It never does. All it says is “The regime lost that privilege by firing on the Strait of Hormuz.”
The WSJ clowns don’t say how the US is supposed to enforce that because they have no idea.
Market Reaction
- , $75.71, +$5.27, +7.48%
- , $80.09, +$5.93, +8.00%
- , 5.086 percent, +0.042 percentage points
- , 4.591 percent, +0.062 percentage points
Stocks are down modestly, by about a percent. The oil and bond reactions are more telling.
The US Lost the War
The ultimate resolution has not changed.
Trump started a stupid war and lost it. Iran will control the strait, perhaps with Oman.
Oman would be wise to get in on the deal, speak in support of Iran to get something out of it. By doing so, Oman also would eliminate the threat of getting hit in the region’s crossfire.
Trump is doing nothing but making matters worse with his latest foolish actions.
Expect another humiliating TACO or more Mideast infrastructure is going to get blown up for nothing.
My base case is unchanged. Trump will back down and Iran will collect fees. As an added insult, Trump will look more stupid in the process.
