4/30/26: Trump Orders Indefinite Blockade, US Tries To Collapse Iran Economy, Trump Delusional Oil Bet

21:27Rory Johnston:Well, in that logic, which, again, no excuse, but they backed themselves into, that led them to the decision for Pearl Harbor. I think this is honestly very similar. Like they do not want to be at the total mercy of the United States Navy for a long period of time. That is death on a long enough timeline. And they know that. They're not stupid. So they have a few things left in their arsenal, which is basically asymmetric war and horizontal escalation to try and capitulate and force the world to force the U.S.'s hand and to tank our markets and to make gas intolerable here in America. If there is a short wave of strikes, that is almost certainly what is going to happen.

22:05Rory Johnston:And I don't think that the guns stop firing. We're lucky that the guns stop firing at all. It was very, very unlikely that it were to actually happen. This time around, I just don't think so. I could be wrong, of course, but I really do think this time it will also humiliate Goluboff and Arachi and Peshko, all of the people, so-called moderates in their government who, let's be honest, they have been pressing hard for a ceasefire. They have a lot to lose, too. They're all very rich. They control a nice country-ish. They've got decent positions and nice homes and IRGC. But like, you know, we're not we're getting pretty close to a point where that voice.

22:44Rory Johnston:Think about it, you know, very think about it logically. Like if in a government, if you push a ceasefire and the ceasefire is broken, which it already has been. And you're under an act of war and you get struck again. Why would that person continue to have any leverage inside your government? It's like Chamberlain and his government losing power after 1940. They're like, look, you don't have the you know, you don't have the necessary analytical decision making to lead our country through this crisis. You don't have the stomach for this. Yeah, you just don't. So we have to go in with somebody else.

23:13Rory Johnston:That's very, I mean, it's not democratic, but it's logical in terms of who is running the country right now. It never happens at a good time. The pipe bursts at midnight. The heater quits on the coldest night. Suddenly, you're overwhelmed. That's when HomeServe is here. For$4.99 a month, you're never alone. Just call their 24-7 hotline and the local pro is on the way. Trusted by millions, HomeServe delivers peace of mind when you need it most. For plans starting at just$4.99 a month, go to homeserve.com. That's homeserve.com. Not available everywhere. Most plans range between$4.99 to$11.99 a month your first year.

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24:57Even this framing from Axios of like, oh, Trump rejected this, you know, offer from Iran. The idea that there was an offer from Iran was a manufactured, you know, Barak Ravid Axios report before the markets open. What they're really and this is based on Scahill's reporting. What there really was is they were saying, look, we're not talking about anything with you until the war stops, including the blockade. We figure out this Strait of Hormuz thing. And by figure it out, they don't mean we're just going to it's going to be wide open and go back to what it was. they mean we're establishing a new reality where we charge tolls and we basically are in control.

25:34And then at that point, then maybe we can talk about, you know, the nuclear file. But they framed that as like, oh, a new offer from Iran. What it actually was, was a it was a it was a worse position from from the U.S. perspective vis-a-vis Iran. So in other words, they they strengthened their terms and said, we're not even going to talk about this stuff until we deal with a new reality in the Strait of Hormuz, but that was framed because they needed it for the market opening as like, oh, a new offer on the table. And so now no surprise that Trump says, well, I don't like this offer because it was never really an offer to begin with.

26:10In any case, we've got this from the Wall Street Journal. Trump tells aides to prepare for an extended blockade of Iran. We're looking at now months and months. Trump originally thought that this would be four days. He apparently told, I think it was the French that Trita Parsi was talking about. He told them like, listen, if you wait a week, it's going to be too late to help us out here. No, it was the UK. If you wait a week, it's going to be too late here because it's all going to be said and done. Here we are already two months later. And now he's telling his aides and the US military, let's prepare for a lengthy blockade.

26:47And as much as yes, the blockade is very painful for Iran. I mean, it also requires an incredible expenditure of U.S. military assets to maintain this blockade as well. We've got three carrier groups in the region already. I mean, it's just a massive amount. We got some sense from Pete Hegseth, although he downplayed the number there, of just how expensive this all is, how much taxpayer dollars is going to this every single day. And at the same time, you also have voices in Trump's ear that he is considering strongly, apparently, that say, hey, we need to do, you know, we need to strike their capabilities around the street of Hormuz.

27:24And that'll be what changes the negotiating dynamics and brings them to the table and forces them to capitulate as if another bombing campaign, like we already bombed them a lot along with Israel. You know, we had all sorts of targets that we hit. You can listen to Pete Hegseth brag about how many things we hit and how much of their infrastructure we took out, how much of their military assets, blah, blah, blah. You think one war bombing campaign is really going to change the dynamic? That's foolish. I think in a lot of ways, the Iranians are looking for an excuse to go back to war because of the dynamics that you're talking about here.

27:58They seem to be sensitive to being the first aggressors, the ones that are seen as the first aggressors. They seem to really want to try to maintain that moral high ground. And you can question whether or not that is the right strategy or not, but that does seem to be their approach. So I think they would be happy to have some strike from the U.S. to give them justification to continue on that horizontal escalation path that they were pursuing previously.

28:25Rory Johnston:Yeah, I mean, you just keep looking at this. This seems unsustainable to me. I just do not believe that the Iranians could withstand three months of blockade without a resumption of hostilities. First of all, I mean, let's remember what blockade even means. Blockade doesn't just mean stopping ships. It means boarding the ones and seizing them where potential fire, drone attacks. I mean, look, if you're a carrier and you're heading out and you know you may be seized, what are you going to do? What would the United States do? Well, you can start putting guns on board, maybe bombs. Maybe you would even set it up as some sort of a sabotage attack.

28:57Rory Johnston:I'm not like leaking secrets to the enemy. This has all happened before in the history of blockades. It's just you can see the logical pattern this would go and also the cost to the United States. because you're talking about carrier strike groups. It's not just that. Everybody at the Pentagon getting paid overtime and all the spy satellites and the level of attention. And I mean, this is a crisis across the globe. I was just, you know, I was just tweeted about this yesterday. Japan Airlines, get this, is now charging a surcharge of$350 per ticket for aviation. $350 per ticket. Any flight, North America and Europe.

29:36Rory Johnston:That's more than double what it was before. South Korean airlines are all doing the same. And they were originally just going to do it for June, and now they're doing it for May. By the time June and July hits, there will be no surcharge because there will be no flight. Like that's what we're trying to articulate for the rest of the world. You know, I was reading again, like Japanese citizens, 70 % of them want the government to institute energy conservation because they can see the writing on the wall. And their prime minister is like, oh, don't worry about it. We have enough oil. Like, no, you don't.

30:04Rory Johnston:You actually don't. You have maybe enough oil for 200 days, but you're burning through it like already. And a lot of it is trying to keep the pressure down. China is also, you know, there, you know, we talk about grand strategy. The Chinese originally had an oil export ban. Well, they just took it off. And now the Australians are bowing down at their feet saying thank you because they're getting a bunch of jet fuel from them. And so the Chinese are using this as a major piece of leverage selling oil to whoever they can. The Russians, I mean, that goes without saying the amount of, you know, influence that they've They're doing backflips in the Kremlin over this entire exercise.

30:39Rory Johnston:$120 a barrel. We just gave them enough in a year probably to fund the Russian war machine for five more years in the war in Ukraine. Like it has been a disaster. And so the last thing there in terms of costs, I just love this. It's a good transition for economy. Here is Ro Khanna versus Pete Hegseth on the cost of Americans' food and gas as a result of the war. And Pete Hegseth's response, let's take a listen. Do you know how much it will cost Americans in terms of their increased cost in gas and food over the next year because of the Iran war? I would simply ask you what the cost is of an Iranian nuclear bomb.

31:18I'm going to give you that. I would simply ask you what the. You're playing gotcha questions about domestic things. I'm not. You're asking. You're saying it's a gotcha question to ask what it's going to be in terms of the increased. Why won't you answer what it costs to prevent Iran from getting a nuclear bomb? I give you that, sir. But let me. What would it cost? What would you pay to ensure Iran doesn't get a nuclear bomb? What would you pay? I reclaim my time. Do you not know you had no one do the analysis of what the increased cost of gas and food on the American people are going to be? What is the cost of Iran holding that straight at issue with nuclear weapons?

31:49It's six hundred and thirty one billion dollars, which means it's an increase of five thousand dollars a year for American households. Now, let me give you this point. You're saying that your operation is preventing a nuclear run. Will you acknowledge that there is an economic cost to the American people for doing what you believe is necessary to make Iran denuclear? Will you acknowledge the economic cost? We have an incredible economic team that's managing this better than what the previous administration did for our economy. What the previous administration did for the inflation. You don't even know what the previous administration did with COVID.

32:27And you're going to elect for this administration about the economy? You know what is upsetting? Incredible. You didn't even do the analysis on how much it's costing the American people. It's one thing if you said, OK, it cost the American people$5 ,000, but we think it's worth it. That's what we've done in World War II and other wars. Here's what it costs. You got to pay for it. You don't even know what the average American is paying. You don't know what we paid in terms of the missiles that hit the Iranian school. You don't know what we're paying in terms of gas. You don't know what we're paying in terms of food.

32:55Your$25 billion number is totally off. It's the incompetence. imagine calling the like queries about gas and food prices a gotcha question like imagine and all he has is like oh it's it's worth it like how much would you pay to keep iran from pursuing a nuclear weapon which again is like hey i thought y 'all said you obliterated this nuclear program and you know what we didn't have to pay anything because we had a deal called the jcpoa that you all got out of in the first trump administration and then this time around there were negotiations for an even better from a U.S. perspective deal that you destroyed because you decided you wanted to bomb them instead.

33:36So they create this false narrative that it was necessary to pay$5 per gallon gasoline with no end in sight in order to achieve some sort of blow against the Iranis' nuclear ambitions. You have made it more likely they pursue a nuclear weapon. We're paying at the pump and food prices are going to go up and the economy is going to be hit and we're going to lose jobs and all and we're risking a global depression to end up in a worse situation with the strait of hormones closed and then more likely to pursue a nuclear weapon so congratulations new

34:11Rory Johnston:analysis just came out today uh half of the estimated tax refund has already been gone as a result of gas so okay half of the estimated increased tax refund by the way the majority of that refund went to boomers so you know you're the people uh who work who got the refund and now you're paying more for gas. So there's that. There's also this point about the nuclear, how much would you pay to prevent Iran from getting a nuclear weapon? I can virtually guarantee you that outside of Washington and like Tehrangelis, that there was nobody on February 27th who was like, I cannot sleep at night because of the nuclear ambitions, the fake nuclear ambitions of the Ayatollah Khomeini.

34:50Rory Johnston:Nobody, the vast majority of people who went to bed on February 27th and woke up like somebody else did at, I think, 4.30 a.m. on February 28th, checked their phone and was like, oh, here we go. It had nothing to do with whether we were going to go to or whether Iran was going to get a nuclear weapon. It came out of nowhere. And even when the war was happening, not that many people were dying. Yeah, some stuff was blowing up. We have vague awareness. But again, the 99 % of people, they're not watching our show or any other news. They're just going to the pump and they're like, huh, that's up. Trump says it'll be over soon.

35:22Rory Johnston:Okay. Now it's starting to set in. Now is when people, and I think the normies are all starting to be like, oh, wow, wait, wait, wait. He said it was going to be over in a few weeks. He said there will be a three. It's actually$4.50 now a gallon. Right now, I think the price of gas today is$4.30. It will be$4.50 probably by the end of the month, and it'll be five within two months if nothing changes as a result. It could be even$6 a gallon if this continues for a long period of time. And then the shock effects from there are crazy. I mean, I was looking yesterday. The price of oil, Brent crude oil, is up 99 % year to date.

35:59Rory Johnston:I mean, that is a crisis. And nobody, nobody on February 27th said that that was worth it in order to be in this war. They might retroactively, a lot of the propagandists maybe, but the vast majority of people say that this is complete bullshit. So yeah, if that's what you got, good luck to you. Seriously. Let's get to the economy. $30 concert tickets are on sale now. It's Summer of Live, presented by Live Nation. $30 tickets to over 4 ,000 shows now through May 5th. Tickets are going fast, so don't miss your chance to see Kesha, Kid Cudi, Luke Bryan, MGK, the Pussycat Dolls, and so many more.

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37:55Rory Johnston:Turning now to the economy. We've mentioned it quite a bit. And the theory that President Trump laid out is who's going to cry uncle first. So this was elucidated, I think, very well in an interesting exchange between Congressman Seth Moulton and Secretary Hegseth. Let's take a listen. How much has Iran profited from your administration lifting the sanctions on Iran when you started this war? I can tell you Iran is financially devastated right now. Okay, well, they've heard about$14 billion. Operation Economic Fury. They're at a point where between the blockade and what we've done to them militarily, remember, they don't have a Navy.

38:30They can't contest the blockade. OK. Between what we've done to the military and financially, they're at a place where they have very few options. How many Chinese missiles can they buy for$14 billion? Does that sound like winning? They're not. We're insuring and they're not buying Chinese missiles.

38:46Rory Johnston:They're not buying missiles. I'm not so sure about that, but it actually highlights a good point, which is, remember, during the war, Iran made more from oil export than it ever had in modern history. By removing sanctions and more, the estimate is in the tens of billions of dollars. Now, obviously, they are feeling the pain right now, but as Trump said, somebody has to cry, uncle, first. First, let's start with the Iranian economy. How is it? It's kind of hard to know. Let's put the next one up here on the screen from the Wall Street Journal. Take it with a grain of salt. They say Iranians feel the pain as their economy descends into a death spiral.

39:22Rory Johnston:So what they point out is that businesses are closing, unemployment is soaring, and food is increasingly unaffordable. War has imposed a heavy cost. More than a million people are out of work. Soaring food prices and a prolonged Internet shutdown has slammed online businesses. Talks between the two have stalled. There is a big question right now, not only about the Iranian employment rate, but it's really about oil, which is the backbone of their entire society. Nearly a million people and another million people indirectly have been said to be out of work and are looking for work in a significant portion of the 25 million people who are normally employed in Iran.

39:59Rory Johnston:And the cost of living has reached some 67 percent in the month through the mid-April. So obviously that is a disaster. However, let's point a few things in the government's favor. However, usually governments who are under attack have civilian populations which are willing to take immense cost, even if it means that they have to continue a war, which is not even that popular. Now, let's say and take Ukraine, for example. One of the projections here in the United States was we can cripple Iranian GDP by 10 percent. Ukraine was able to mount a sufficient fighting force, yes, with a huge amount of U.S.

40:33Rory Johnston:support, et cetera, with a 20 percent reduction in GDP. a 20 % reduction, and they still are able to continue the fight to this day. Yes, they're basically backstopped by the United States and by NATO and all these other countries, but it's not like Iran doesn't have its own lifelines that it can call if it needs to. So just the idea that a 10 % reduction will lead to immediate capitulation has almost no bearing in history whenever the stakes are completely existential. Now, on the other hand, you're going to have the North Vietnamese strategy, which they would often say out loud. They go, look, you may have killed a million of our soldiers.

41:09Rory Johnston:We don't care. We will keep fighting until our country is no longer under attack and the North and South are unified. You have all these domestic problems at home. You are not going to nearly be able to keep up the fight as long as we are. And if that's the total war mindset of Iran, I have no doubt that they will outlast a lot of the consternation and really like, you know, a social explosion here in the United States for what will come for a prolonged period. Because, you know, I was talking about this with a friend recently about gas because they were like, Sagar, if your theory was correct, why didn't people revolt over Biden when gas was$5 a gallon?

41:47Rory Johnston:I was like, well, they kind of did. They voted in half of office to the vice president. So there's that. But two, people, hardcore Democrats, especially at the time, they actually bought that bullshit about Putin's price hike, remember, in that whole campaign. And at the very least, what people could appreciate is it's not 100 percent Biden's fault. Like it was indirectly his fault, but it wasn't 100 percent. It's not like he didn't launch. Exactly. Rush is the ones that invaded. And you also had part of it was also COVID. Yeah, COVID. Which are, you know, contributed to it as well. It's multifactorial.

42:21Yeah.

42:22Rory Johnston:This is 100 percent your fault. That is a very different political landscape. Like, we all know gas was 290 on the day of February 27th. Now it's 430. So whose fault is it? And he's taking credit. He's that, I'm proud to do it. I'm happy to do it. That stuff will roll over and over again. So to choose this is actually very different than being thrust by the forces of history and mismanaging a crisis as opposed to entering a crisis at your total behest with the knowledge that this may happen. Like the actual effect on the population level of that is going to be radically different whenever it comes to crying uncle because we're like, hey, man, we didn't want this.

43:02Rory Johnston:We didn't want you to do it. Then you did it and we said no. And then you kept it going and we keep saying no. It's a very, very different democratic. Well, and to your point, there actually was a revolt and not just here, but around the world. I mean, almost every incumbent party got thrown out in the entire world because of inflation. So whether people were directly attributing it to the Ukraine war and our role in deciding to continue that and blow up any sort of a peace deal or not, they blamed leaders for inflation when there were more historical forces at play. Whereas here, you know, and you also have, you know, people are still pissed off about the tariffs and thought that was insane.

43:39So the negative impacts of on the economy have come directly from Trump. And he is quick to to, you know, take credit for it all the way around. You know, the other interesting thing in this article from The Wall Street Journal about Iran's economy is they talk about how the Iranian government has put in place a variety of supports. Both they've increased wages. They've also provided more in terms of food assistance, which also speaks to the fact that they did earn some money during this war so that they're able to offer those sorts of social supports to help to ease the burden here. But there's no doubt that, of course, they're going to suffer if the blockade continues longer.

44:20But if you just think about it logically, we've been doing the maximum pressure campaign for years at this point. We've been trying to crush Iran for literally decades. Think about Cuba. Same thing for decades and decades. We've been trying to squeeze them and make life so miserable and cut them off from the world that eventually their quote unquote regime will fall. It has not worked. It has not worked. So why you think this time around, maybe if we just do it a little harder, that's going to be the key. There really is no historical precedent for that ultimately working out. And then, you know, Iran has some flexibility in the way that they respond.

44:59And much like Russia, you know, had thought through, OK, if the sanctions, full sanctions are levied against us, they planned and prepared for how they would be able to maneuver and how they would be able to handle that. Well, Iran has been contemplating this for years as well. And they do have some options. We can put B2B here up on the screen. This is what I was referring to earlier about how they have a variety of land routes. You know, they are not just on the water. They're also countries that they border with, that they have reasonable relationships with as well. Pakistan in particular appears to be working together with them.

45:37They say Iranian container ships are now docking in Karachi and other ports to transship cargo overland into Iran. This analyst says, for reason number 342, Trump's blockade won't work. Iran is a continental state with plenty of alternate transit routes. So they will pursue that now that it's going to completely make up for the fact that this blockade is in place, but it does give them some other options. At the same time, you've had yesterday a significant decision here from the Fed chair, Jerome Powell, speaking about how he's concerned about inflation. And so Trump has been thirsting after this interest rate cut, which previously I actually would have supported.

46:17Now I think that that rationale is evaporating as we increasingly push towards likely higher inflation due to the cost of fuel and the way that will ripple throughout the entire economy. So in any case, rates are staying exactly where they are. Let's go ahead and take a listen to Fed Chair Jerome Powell justifying that decision. Inflation has moved up and is elevated, in part reflecting the recent increase in global energy prices. Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2 % inflation goals.

46:56Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook, and we will remain attentive to risks to both sides of our dual mandate. There you go. He ties the decision directly to the war in Iran and the way that could impact inflation.

47:13Rory Johnston:Yeah, exactly. And let's continue kind of down this theory. I was just reminded, I had to look up the book. I had to read it when I was in graduate school. And it was about, it's called The Great Illusion. And it was this very Pollyannish theory in 1909 where we can't have war because it'll cost too much money. It was right before the Great War. And actually, there was a theory in the opening days of the Guns of August where they were like, guys, the war will be over soon because we're all going to go broke. There's no way that we could sustain this. What ended up happening? They're like, OK, we're going to nationalize all industry.

47:44Rory Johnston:Currency will be completely, you know, de-pegged from gold and we're going all in. We'll take as many loans as possible. Whenever things get existential, all the previous rules go out the window. And at this point, look, you're forgiven for thinking that in the year 1909. In the year 2026, saying, oh, maximum pressure is going to work. I mean, how long we've had sanctions on Iran? 2009? So it's been almost 15 years of crushing sanctions on the country with a brief break during the JCPOA. This country is more sanction-proofed and ready and able to survive it than any probably other in the world except for maybe China and Russia now as a result of what happened to them.

48:22Rory Johnston:Their population, at the very least, they came close to a revolt. And even then, the revolt was put down, yes, violently, but that happens sometimes. And it didn't succeed. And if they were going to revolt, they would have in the opening days of the war. Instead, we've seen this massive surge in nationalism. Continuing on our front, for why I think there'll be a revolt here, put B4 up here on the screen. April, consumer sentiment just came in at the lowest on record. Quote,

49:20Rory Johnston:whenever gas was at$5 a gallon. So now imagine when gas does hit$5 a gallon or$6 a gallon, and you're seeing more of these churning forces in our economy. Now you may ask then, Sagar, if that's true, then why is the S &P 500 up? It's actually a very simple story. Let's put this one up here. I was just reading all about it this morning, is that Amazon, Google, Microsoft, and Meta are now collectively spending more than the Manhattan Project did every single month, and more than 12 times a Manhattan Project every year on AI. The total number is three quarters of a trillion dollars just this year with an allocated$450 billion the year before.

50:02Rory Johnston:So if you add that up, that's what, like$1.3 trillion, which is, I don't know, one-fifteenth of the entire U.S. economy, GDP, and just spent on AI development by these big four companies in the last two years. That's why the markets are up. That's why Google stock is going sky high. Their profits are really high and they're spending a ton of money. Metastock is down 6%. Oh, boohoo. It's actually still up very, very much in the last few years, all based on AI sentiment. Open AI, NVIDIA, all these other companies are booming, all these chip makers. That's the reason why the markets are up. And I will remind you all that while the Biden years were the worst years, I think, in modern American history at an economic individual level, that the S &P, if you look at it over the four-year period was up by 60%.

50:48Rory Johnston:Are you 60 % better off? Yes, if you own the stock. No, if you had, I don't know, had to spend gas or buy a house or buy health insurance, any of these other basic staples of life. That is the core problem. So don't just look at markets to reflect your reality. You've had way too much evidence now in modern years to know that this is not the case. Yeah. And in fact, I think they're increasingly a counter indicator as with AI being the main investment vehicle and being mostly what is propping up our economy. Because, I mean, when Google is massively spending to build out their AI infrastructure, is that benefiting you?

51:26No, actually, it's probably going to destroy a lot of jobs if it is successful. That is the goal. And also, you know, what it looks like is like data centers in your community, which at best have, you know, they have short term, you create construction jobs, but over the long term, they create basically no job, like very few long term jobs and investments in communities. So, you know, there's another number that just came out this morning that also indicates the way that the economy has come apart. So the fortunes of, you know, the top corporations and also the wealthiest individuals are completely divorced from the reality that most people experience.

52:02So you had annualized GDP growth of 2 percent, which is not great, but it's not like, you know, it's not devastating. It's not negative. And what they point to is this major Your AI investment is what is propping that up alongside you have the top third of income earners who continue to spend at effectively the same rates. And that's what's propping up the entire economy. So if you aren't in those, you know, top consumer in the top income percentile, if you aren't benefiting from the massive data center Manhattan Project a month, AI spend, and you're in the rest of the, you know, two thirds to 80 percent of the nation, you are getting screwed.

52:44Your reality is coming apart from the rest. And so, you know, it creates actually real problem for like a democracy problem because that pressure that would come and what Trump watches most closely is the markets, that pressure that should come, that should push him towards getting out of this thing in some sort of way is mitigated very much by the unequal nature of society. At the same time, I do want to point out one area that is not looking so hot and that he does also closely watch is the bond market. So we can put B6 up on the screen. This is from Kobisi's letter. This is the U.S. Treasury market.

53:21Incredibly important because why? This is how expensive is it for us to finance our debt? That's what the bottom line here is. And they write the bond market is collapsing again. Ten-year note yield is now silently back above 4.4 percent. That's the exact same level that has led to multiple market interventions by President Trump. Simply put, the U.S. economy cannot afford the 10-year note yield rising substantially above current levels. As we saw in April 2025 and March 2026, President Trump is highly attentive to the 4.5 percent level on the 10-year note yield, which we previously labeled as our policy pivot point.

53:57At the current pace, we could see 4.5 percent within a matter of days. Meanwhile, U.S. oil prices are above$108 a barrel. gas prices are up another 5 % today. 30-year mortgage rates are at 6.5%. Bond market will soon become the center of attention. And the 30-year note yield has actually hit 5 % at this point, which is a significant marker. And these may seem like small movements, but this is something the president has paid close attention to and for good reason. And what it means is that we have to pay people more to hold our debt. It is a sign, by the way, of a lack of confidence in our country and in our economy.

54:38And that's part of why it's so significant when there are even small movements in the bond market.

54:42Rory Johnston:Yes, exactly. And look, overall, I think you can look at our consumer sentiment. You can look at the gas price of where we are today. It's$4.30 a gallon. I just checked. It just crossed$6 a gallon statewide in California, which is the highest in the nation. Our producer Griffin says in Los Angeles, it's not uncommon to see$7 a gallon. And let's put it into context. So I believe California is the most populous state. I think like 14 million people, something like that. A lot of people live there. So 14 million people are paying$6 a gallon. That means the vast majority of Americans between California, Texas, New York, and Florida, the most populous states, only one of those has gas that's less than$4 a gallon and are spending orders of magnitude, like billions of dollars.

55:26Rory Johnston:The average current estimate is it's currently costing$70 a month in additional dollars per household. I mean, it doesn't sound like a lot, but 70 times 12, that's over$500 whenever it comes to an entire year, which is basically the savings for the average household. I wish it were more. It's not. So you can easily see how this can spiral completely out of control. And that's just at$430. So Trump thinks that they'll cry uncle. I'm pretty skeptical. I think America is already crying uncle and will continue and frankly should. They should continue to do so. OK, we've got our friend Roy Johnson standing by.

56:02Rory Johnston:He's going to talk about the oil markets and what's happening. Let's get to it. $30 concert tickets are on sale now. It's Summer of Live, presented by Live Nation. $30 tickets to over 4 ,000 shows now through May 5th. Tickets are going fast, so don't miss your chance to see Kesha, Kid Cudi, Luke Bryan, MGK, the Pussycat Dolls, and so many more. Make it a summer of live music. $30 concert tickets this week only. Go to LiveNation.com slash Summer of Live.

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57:41Rory Johnston:Joining us now is our great friend of the show, Rory Johnson. He is the founder and editor of Commodity Context on Substack, which we'll have a link down in the description. Thank you so much for joining us, Rory. We appreciate it. Thanks for having me. Good morning, guys. Good morning. So, Rory, big news yesterday. Let's put it up here on the screen from the Financial Times. Oil topped some$120 as Trump signaled an extended Hormuz standoff. As I understand it, that is down more this morning, more as a result of contracts expiring. But these two things still put oil at a very, very high price relative to where they were obviously before the war started, but even where the ceasefire is.

58:19Rory Johnston:What are we seeing right now in the oil markets and what can the world begin to expect? Yeah. So before that sell-off you mentioned this morning, and again, on the last day of Brent's contract expiry, so these are the monthly contracts that roll off at the end of every month, you get a lot of volatility in the last day of the contract, and today's that day. So we're getting a lot of that volatility, the downside, because we got a lot of it to the upside yesterday. Overnight, we saw Brent prompt futures contracts rise to above$125 a barrel. And I think even more importantly, that was for June. Even more importantly, July rose above$113.

58:53And I think it's actually that July contract that's about to become the front of the curve and is even more important. I think this, you know, what's going on? The same thing that's been going on for two months. The Strait of Hormuz remains closed. We are now down more than 600 million barrels of unproduced oil to date. At this stage, guaranteeing at least a 1 billion barrel hit to global supply for the year. And I think the price is just finally beginning to reflect that. I think, as you noted there, in addition to this, there have been comments and reporting on the White House's thinking that maybe just another two months of blockade on Iran would weaken their position and make them more amenable to compromise.

59:29But, you know, sure, it might make Iran more compliant. It's going to make the rest of the world far more desperate as well. Can we put C3 up on the screen? This was your analysis from yesterday that I want you to explain to us. You said, there she goes. U.S. commercial petroleum inventories fell by a headline. 17 million barrels plus another 7.1 million barrels of SPR crude draws. 13 of what is that? MMBBL. What is that? Million barrels. Okay. Million barrels, total crude draw. Anyway, explain to us why this was significant to you, what you're seeing in these numbers. Yeah. So one of the things that's been weird about the crisis so far, and I think it has stunted the oil market's ability or kind of willingness to bid these prices higher is that U.S.

1:00:17inventories, which are the most visible inventories in the oil market, released every week by the Energy Information Administration from the Department of Energy, those actually showed inventories pretty high, not just for all products, but for crude specifically. And what we had been anticipating, so this goes back to Trump's new fascination with these tanker maps of all of these tankers steaming towards the U.S. Gulf Coast to pick up crude for a Hormuz-starved market, eventually those tankers were going to spike imports, which they're doing, and it's going to start drawing down domestic US inventories.

1:00:49I think that is the signal the market needs to say, oh, wow, this scarcity is here. In total, you had a 23 or 24 million barrel draw in total petroleum stocks. And that's normally, you normally get a build of, let's say, plus or minus 5 million. That's kind of a normal range. So this is much, much larger and I think indicates that what we expected to be coming is starting, which is basically the rest of the world sending tankers in order to try and buy oil from North America because the rest of the world is currently willing to pay more for oil than is North America. And this is going to be the result is our inventories are going to draw down here until we bid our prices up high enough to keep those barrels at home.

1:01:29Rory Johnston:OK, so then let's run through that scenario. So what does that look like? So one of the reasons, again, as a layman, I'm looking at it, is when we draw the inventory low, could we run out of oil? Or is it going to be that the price goes so high that all of us are paying$650 a gallon for gas? Let's take the White House at its word currently. Who knows what it is? Two more months. This will continue. All of these – isn't the journey time? It's like a month or so already in terms of the tanker. So what does that start to look like in terms of the price physically for everybody with, as you have very well educated us, it's about the refined products for the things that we actually use?

1:02:08Yeah, so that's exactly right. So I don't think the United States is going to run out of oil. And again, people are like, oh, Rory, well, where's zero on that chart that you showed? Zero is not really a relevant number because if we got to zero, we and the rest of the oil market is already basically dead. So we basically need to stop inventories from drawing down too much because you have operational minimums. The whole idea of the oil market is it's this giant flowing chemistry set. And the flowing aspect is important. It needs to keep flowing every day at roughly the same rate. These stocks are there to basically even out the natural imbalances between production and consumption.

1:02:45When you don't have them, you get into much tighter, spikier markets, which, you know, the deeper we go, it's basically a lack of liquidity in kind of the pricing for those barrels so my expectation is that we're going to keep drawing down north american barrels until prices rise but given that north america is wealthy and has a relatively low price sensitivity for our demand for petroleum products i have no doubt that north americans will be able to pay the prices that will keep those barrels there but i think really i think this is kind of a narrative check the president had become obsessed with this idea that U.S.

1:03:19energy dominance, the United States was going to be a net beneficiary of hormones being closed and the spike in energy prices. And he only saw it through the lens of export increases, which again, we know that Trump is obsessed with terms of trade. So that is his first pass at this. But the only way that you get a spike at exports is by, you know, it puts upward pressure on prices. So yes, it's going to help. Maybe it's going to help on an offset on GDP for the shock. But the vast majority of voters do not produce oil. They consume oil. And again, very important to remember that this is an election year.

1:03:52Yeah. Yeah. Great point. Yeah. If you're an oil executive, the landscape may look pretty good. If you're someone who's just trying to fill up your tank at the pump or pay prices at the grocery store, the landscape is very, very different. Put C2 up on the screen. What can we say, Rory, about the Iranian oil industry? Because the whole bet here is that, you know, very quickly Iran is going to run out of storage. They're going to have to shut down some of their oil production that is going to be damaging to those oil wells. That is the calculus that Trump is engaged in here to think that they are going to, this is going to be devastating to them, that it's going to cause them to capitulate, going to cause them to cave imminently within weeks is what the White House has been floating.

1:04:32What do we actually know here about the realities for Iran? Yeah, so I think it's important to kind of walk through the causal chain here. So up until the blockade, Iran was still basically exporting its oil at full tilt and benefiting from the gangbuster kind of rise in oil prices. So it was getting windfall profits. So that was obviously not great from the perspective of trying to build pressure on Iran. So the first step was to blockade their exports. So now they're not going to be earning money on those exports. But they're still able to produce crude into inventory domestically, so they don't need to shut in the wells yet.

1:05:03The question is, how long do they have? How much inventory space do they have, both between onshore tanks and basically empty tankers floating around that they can keep filling? After that, and the timeline is kind of in the ballpark of 10 to 20 or 30 days, depending on which source you're using. And that, I think, is a big source of the debate right now in the policy sphere. But after that, then Iran has to shut in production. Now, that could be damaging to Iran's long-term production capacity. Producers don't like to shut in production. It could damage reservoir pressure and other things like that.

1:05:34But again, important in this context, this blockade only started on like week six or seven of the war. After already the rest of the Gulf had been forced to shut in 13 million barrels a day of production, more than kind of six or seven fold what Iran would need to shut in. And that's been shut in for at this stage almost two months. So there's a little bit of a timing mismatch here as well. like maybe this would have been more effective if the Trump administration had started the blockade immediately. But at this stage, if we're thinking about, you know, how much patience Iran could have with this kind of economic harm, the rest of the Gulf has been dealing with it much, much longer.

1:06:10I think there's an important issue here on scale as well. And again, it's important to remember that Iran has, you know, the most sanctioned country in history for decades and decades now. They're used to economic pressure like this. In fact, the IRGC often relishes in that kind of like rally around the flag and kind of look at look at the great Satan, what they're doing to us. But the United States, the rest of the global economy is not going to be as comfortable with kind of another two months of this, because if we get through to, you know, summer driving season, we get through to June and Hormuz is still not open.

1:06:41We're going to have inventories at deeply precarious levels. And my fair value models are showing that we could be upwards of$180,$200 a barrel by the end of June if Hormuz remains closed and we don't get additional policy actions like, let's say, yet more SPR releases or strategic petroleum releases, which I think would be my base case if this lasted that long.

1:07:01Rory Johnston:Right. That's a great point. All right. C5 as well. This was Galaboff from Iran. He might be reading your own feed. He says, three days in, no wells have exploded. We could extend to 30 and live stream the well here. That was the kind of junk advice the U.S. admin gets from people like Bessent who pushed the blockade theory and cranked oil up to 120. Next stop, 140. The issue isn't the theory. It's the mindset. So they seem very tapped in to this logic, Rory. And they are denying exactly what the U.S. is claiming and really, I think, showing some of the analysis that you just laid out about their ability to survive this.

1:07:37Rory Johnston:So do you believe Gobbin, some of its propaganda? How much of this are we supposed to believe? Yeah, I mean, certainly. uh you know galliboff's uh kind of comments here are bravado are kind of you know extraordinarily online bravado i should know which is i think an ongoing meme of this war um but i think he's like there's there's a kernel of truth here again i think that the trump administration is over confident on this point they basically got this idea in their head that combined between the quote 500 million dollars a day that iran's losing from the blockade and now they're gonna be you know all of their wells are going to explode if they if they can't get the oil out like this is all pretty junk science and i think that um the longer this goes on i think the more that's going to be exposed i think at this stage it's very clear that the trump administration has no good options and as of yet clearly trump is just choosing not to make a decision this is just the status quo extended out at the same time you're hearing reports that cencom is preparing plans for another you know sharp, short series of bombings and strikes on Iran.

1:08:41Like the signals are all over the place. And it's very clear that the Trump administration doesn't really know what to do here because again, there aren't any good choices unless they're willing to concede on major things that Trump in particular is not willing to concede on like the nuclear program. Well, your comments about the super online war sets us up for our next segment quite perfectly. So thank you for that segue and for your analysis. As always, Roy, great to see you. Appreciate it, man. Thanks a lot, guys.

1:09:21And now, The Laundry Hero, brought to you by Grand Appliance. Oh, really? Okay, I'm on it. Uh-oh, what's up? Yeah, laundry's piled up and my washer just died. That's a bummer. Check out grandappliance.com. My brother got a great deal on a Maytag washer. Grand Appliance? My parents shopped there. Mine too. Whole family. I'm on the site. Wow,$5.97 with next day delivery? Problem solved. Shop Grand Appliance. Appliance experts since 1930. On the Look Back at It podcast. 1979, that was a big moment for me. 84 was big to me. I'm Sam Jay. And I'm Alex English.

1:09:59Rory Johnston:Each episode, we pick a year, unpack what went down, and try to make sense of how we survived it. With our friends, fellow comedians, and favorite authors. Like Mark Lamont Hill on the 80s. 84 was a wild, I mean, it was a wild year. It was a wild year. I don't think there's a more important year for black people. Listen to Look Back At It on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. When a group of women discover they've all dated the same prolific con artist, they take matters into their own hands. I vowed I will be his last target. He is not going to get away with this.

1:10:35He's going to get what he deserves. We always say that, trust your girlfriends. Listen to the girlfriends. Trust me, babe. On the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

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