Pelagic

A pyrrhic victory for oil bulls who were diligently counting storage levels. Based on everything I've seen and heard Trump and his team say over the last few days, there's basically zero appetite for any escalation with Iran if things don't work out during the 60 days.

Kind of funny, guess ship crews in the Strait are just as confused about whether it's open or not as everyone else.

Iran targeted the E-W pipeline yesterday, after the ceasefire was announced. Strange that perhaps their most significant hit on infrastructure in the region came after the ceasefire announcement.

Something I was thinking about should Iran end up turning the Strait of Hormuz into a tollbooth is how Russia used the Nord Stream pipeline in the months after their invasion of Ukraine before the pipeline was destroyed. At any point they could, and did, throttle gas supply in an attempt to bend Europe (mainly Germany) to their will. Remember the criticism of Germany only sending helmets and blankets as aid early in the war? How much that's attributable to fear of disrupted gas flows vs. broader German handwringing in the first few months is debatable but Russia clearly thought flow through NS was a source of influence. Russia even shut down flow due to "maintenance" as natural gas prices peaked in the summer of 2022. Similarly, Iran with a toll regime in place will use its leverage over the Strait to protect its allies in the region. Say Israel wants to cross into Lebanon to deal with Hezbollah, Iran threatens to close the Strait in response. We're at basically peak political capital for re-opening the Strait right now and the desire from anyone other than the Gulf states to do so seems extremely limited - for good reason. A new US admin takes over in '28 that has no appetite for getting involved in re-opening the Strait and the can gets kicked further down the road. Best case scenario for energy supply if the Strait isn't re-opened by force or through regime change, is Iran re-opens it with a toll in place for a couple years, Saudi Arabia twins or triples the E-W pipeline which brings the toll down and the Strait, and Iran's influence, becomes less relevant. Probably a $10B or so project which is in the ballpark of what Iran stands to collect in toll fees yearly.

Wild times considering how sharply the market reaction has been to Trump's statements of ongoing negotiations. Who knows who to believe, Ghalibaf could be lying in this tweet to save his own skin from hardliners or Trump could have made the whole thing up to calm markets. Honestly impressive if it's the latter and buys the US/Israel a few more days to plan a way to control the Strait.

One of the criticisms I read of the sinking of the Iranian ship by the US sub a week or so ago was that the ship was part of the Iranian navy and not the IRGC's naval forces like some of the other vessels destroyed in the Persian Gulf. The theory being the Iranian navy could be leveraged against the IRGC and that opportunity went out the window with the ship's sinking. How accurate that theory is, and similar theories regarding the regular army, I don't know but it seemed more compelling than some of the other reductionist takes that said the US shouldn't have sunk the ship for vague reasons. There's probably a scenario should this conflict drag on, that in a year or two from now where we look back at the ship's sinking and similarly the destruction of the girl's school like how we see the decision to disband the Iraqi army following the invasion in 2003 today - a totally unforced error. Not that these events have assured a united front from various elements within Iran but they certainly don't help when it comes to having levers to weaken the IRGC.

This adds some color to my post above. The Straits present even more of a challenge than the Red Sea and in the case of the Red Sea it was bypass-able with the main loser being Egypt. Likeliest scenario is Iran implements a toll where nations friendly to it, India and China, get their vessels through for a fee which helps fund the IRGC and keeps oil prices elevated but not astronomical like some are predicting. We saw the Houthis do basically this where they were charging a couple $100k for safe passage at one point.

The Economist article probably understates the difficulty involved. During the Red Sea crisis a lot of the Houthis' success actually sinking ships didn't come from utilizing drones, purpose built USVs, or missiles against shipping, it came from loading ordinary looking fishing boats with explosives and pointing them at passing commercial vessels. They were even putting mannequins in the fishing boats to delay the reaction by security forces aboard those vessels. Given Iran's more conventional options whether it gets to the point of using similar tactics who knows, but they were certainly watching how effective the Houthis were with them and it is a way the Iranian regime can prolong the conflict.

Unfortunately that looks to be the case. One of the better Twitter OSINT accounts did a thread on it that's worth reading

19, while I've seen one and pressed a few keys on one, I don't think I've ever typed anything on a typewriter. The cassette one had me reminiscing about an odd piece of tech my buddy in college had, it was what I can best describe as a digital cassette that fit into a car's cassette player but could then plug into an iPod to play music from the iPod before aux ports or bluetooth were options. Since there wasn't a similar option for CD players I ended up with an even more fascinating piece of tech that plugged into the cigarette lighter and would broadcast a faint FM radio station while connected to your iPod that you could then tune the car radio to. Thinking about it, this was actually a pretty practical way of doing it since you could sync several cars at a tailgate to the same station.

For something like a law firm or medical practice where client/patient confidentiality are paramount and they're mainly handling a lot of documents that are primarily text or images local models make a lot of sense and in their current state are very capable at doing this. I don't know how many firms are racing out to have a local model installed on a cluster of mac-minis or something but price wise for ~$20k or so they'd be able to have Llama 3.1 running internally. Not inexpensive but also not unreasonable for most firms.

I was pleasantly surprised to find The Night Manager was brought back for a second season, almost a decade after its first season aired.

Enjoyed this as a contrarian take on electricity markets. If you're short on time skip to around 25:00 in. New solar construction of around 50GW a year is crushing power prices but more interestingly, all of NVIDIA's yearly production equates to around 10GW of demand and could run in Texas 24/7 for all but 40-50 hours per year (likely the handful of coldest days). Cheaper to pay manufacturing or other high electricity users to just take a couple days off on peak demand days than to go crazy building new generation to meet demand levels that only exist for a handful of days a year.

I don't think he's making a contention that it isn't melting just that the US/Canada already controls the best (shortest) option. If the goal is to get Europe to stop freeriding off US defense spending why does taking Greenland and presumably defending a future trans-Arctic route in 20-60 years when it opens up make sense when European countries are the primary beneficiaries of that route anyways? (NSR - Northern Sea Route north of Europe and Russia, TSR - Transpolar Sea Route) https://www.sciencedirect.com/science/article/abs/pii/S0308597X2030453X

And in any case the NW Passage is more economical anyways. The trans-Arctic route would be perhaps marginally better for Asia-Europe cargo but anything Asia-US East Coast/Gulf would take the NW Passage.