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Culture War Roundup for the week of August 24, 2026

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Bloomberg: Goldman Says Gulf Oil Flows Two-Thirds of Prewar Level

Oil flows from the Persian Gulf have recovered to around two-thirds of pre-war levels, limiting the Iran war’s impact on global crude prices, according to Goldman Sachs Group Inc.

Total exports of crude and oil products from the region have risen to 15 million to 16 million barrels a day, helped by higher crossings through the Strait of Hormuz, Goldman analysts including Daan Struyven and Yulia Zhestkova Grigsby said in a note. That’s still 7 to 8 million barrels below pre-conflict levels, but well above a trough of 5 million to 6 million barrels a day in March, they said.

A lot of ships are still making the crossing dark with transponders turned off but the trend is clear. Iran’s (supposed) leverage over the strait is basically nullified, oil is passing through despite Iranian proclamations. Independent analysts now agree with what the US government was saying weeks ago, that millions of barrels are passing through the strait under American auspices.

US CENTCOM agrees, putting out this statement that the US has escorted a few thousand ships through the Gulf, carrying through three-quarters of a billion barrels of oil over the past few months.

What changed?

Axios: "That sucker is open": U.S. gains the upper hand in the battle for Hormuz

Zoom in: After the MOU fell apart, the military worked to reopen the strait unilaterally. The effort included several elements:

  • Together with the United Arab Emirates, a U.S. military task force started guiding ships through the southern channel of the strait while giving them air cover and intercepting Iranian drone and cruise missile attacks.

  • A two-week U.S. bombing campaign significantly undercut the IRGC's capacity to attack ships crossing the strait.

  • A mine-sweeping operation involved Navy divers, Navy SEALs, underwater and surface drones, and private contractors to detect and neutralize the mines.

  • A blockade of Iranian ports was restored.

The US has apparently de-mined the Straits of Hormuz, although, interestingly, there don’t seem to have been many mines in the first place!

More than 200 mine-like objects have been swept from the main lane of the strait. U.S. officials say only 11 of them were actual mines and just a few were properly deployed.

It seems as though Iran’s capacities to threaten ship traffic the Strait were severely degraded by US military action, but that Iran was successfully able to convince news reporters and insurance companies that it could target ships.

For instance, Brady Sullivan at CNBC says

As I reported on @CNBC over a month ago, shipowners told me many “mines” we decoys … some were actually just inflated trash bags ostensibly made to seem like Hormuz was swimming with mines.

Meanwhile, Reuters: Pipelines and ports: Iran war spurs Gulf infrastructure investment

DUBAI, Aug 28 (Reuters) - The Iran war's redrawing of the global trade map is forcing Gulf nations to retool their investment play book, ploughing capital into infrastructure, from energy pipelines to ports, to weather the fallout from the conflict.

The war has highlighted the Gulf's overreliance on the Strait of Hormuz, previously a chokepoint for 20% of global oil flows ‌but also subject for decades to Iranian threats of disruption.

Not only has Iran lost control over the Straits, but Gulf states are building new pipelines to reroute oil around the Straits so that Iran can never threaten them again.

And how does it look inside Iran?

WSJ: Labor Protests and Panic Buying Signal Growing Pressure in Iran

Iranians rushed to buy fuel and food this week, signaling mounting economic pressure as the Trump administration’s threat to tighten sanctions sparked fears of deeper shortages and pain.

Small demonstrations by labor unions—which had all but disappeared during the war—are popping up across the country. Oil workers, pensioners and teachers have gathered to complain about the declining currency and rising cost of living.

————

Some might remember Trump’s infamous comments on this subject some months ago:

Q. And what's your backup plan?

The President. Excuse?

Q. What's your backup plan if the—there's no deal to open the Strait?

The President. The—you don't need a backup plan. We have—the military is defeated. Their military is gone. They have—you know, we've degraded just about everything. They have very few missiles. They have very little manufacturing capability. We've hit them hard. Our military is amazing——

The Shakes take: Iran will never toll the straits, Iran will never have nuclear weapons, Trump was right about everything, a lot of people who believed Iranian claims are looking very, increasingly, increasingly!, foolish.

Cool story bro. I hate that you keep putting me on the same side as [the likes of ETA: self-edit, this was too antagonistic] @hanikrummihundursvin and @coffee_enjoyer (I don't buy the "We did this at the behest of our Zionist masters" narrative), but it looks to me like the situation is materially worse for the US than before the war started, and the fact that it's much worse for Iran does nothing for me. I will ask you again: what is the benefit to me, as an American taxpayer? In what way is America now richer and safer? "We won we won we won!" okay, cool, what did we win?

Iran is losing their ability to finance and supply their Houthis who also cause shipping problems all the time. Iran is losing their ability to finance and supply Hezbollah and Hamas, who create instability in the region. Iran is losing their ability to influence US elections.. Iran is losing their ability to fund protests at US colleges.

Is it worth it? Maybe not but I think we'll find all kinds of things Iran was doing we didn't like once they run out of funds. Taking out Iran is about the same as taking out USAID, but with a lot more upfront costs. We're taking a rook off China's chessboard. Attacking Iran will never win politically because we cannot compare it to the counterfactual world.

Is it worth it?

Total global economic disruption from this war is likely to be on the order of $1T by end of the year. I'd grant that this is less than I expected--the world economy absorbed the oil shock surprisingly well--but it's still somewhat significant. It's difficult to get a feel for how valuable the new effective constraints on Iran's illicit activities will be compared to the counterfactual of no war, but I'd want it to be $50B or so annually before calling the war a wash. One can fairly say that there are some tail risks that are likely delayed now (e.g. nuclear war in the Middle East), but I'm not sure we can count that against the counterfactual scenario if we don't also count the tail risks of choosing to go to war (e.g. a broader conflict involving China).

I'd put this $1 trillion number in the same category as "March Madness costs the US economy 75 gazillion dollars" news stories that come out each year. It's overly simplistic.

The logic would seem to imply that any increase in oil price is a loss to the economy. In that case, we should build a monument to the frackers. Before the fracking boom kicked off in 2014, oil was at $100 barrel, which is $139 in today's money. Let's do a rough estimate and say that, thanks to fracking, actual realized oil prices have been about $75/barrel since 2014, inflation adjusted.

At roughly 100 million barrels a day, that's 36.5 billion barrels a year, or 438 billion barrels over the period. With cost savings of $64/barrel that's $28 trillion saved by frackers. Get wrecked, Elon.

Of course, this logic doesn't make sense. For one, the money spent on oil is not simply incinerated. It is heavily taxed, distributed as dividends, and reinvested. And furthermore, higher oil prices can lead to increased fuel efficiency and innovations such as electric vehicles.

Finally, lower oil prices are a disaster for the the environment.

Outside of Iran, the true cost of the Iran War, dealing with all externalities, is a tiny fraction of this $1 trillion headline number. Of course, if we factor in the cost to Iran itself, the cost will be multiple trillion over a several year period.

Total global economic disruption from this war is likely to be on the order of $1T by end of the year.

Well, $1T sure does sound expensive. What fraction of a COVID-19 is that?

If you expect me to defend our COVID response, you're barking up the wrong tree. I'd take a dozen Iran Wars over that.

This is kind of wondering-out-loud. If the populations of the countries most affected suffered more simply because of mass hysteria, then I'm underrating how much wars, which are a far more justified than "scared of the uncommon cold" is, should ideally cost.