Intrigue insight: Iran war, day 31

On the battlefield:

• Yemen’s Iran-backed Houthis have now joined the war by attacking Israel with missiles, though they’re not yet targeting ships in the Red Sea.

• Hundreds of US special forces have arrived in the region as President Trump tells The Financial Times he might seize Iran’s Kharg Island oil hub. He’s also told The Wall Street Journal he could approve a raid to extract ~450kg of Iran’s uranium.

• Meanwhile, Iran’s daily launches and accuracy are both now reportedly up from last week, even scoring a hit on a US E-3 Sentry radar aircraft at a Saudi airbase — valued at ~$500M, it was one of only ~16 such air force units still operational.

Markets

• President Trump now claims Iran will allow 20 oil tankers through Hormuz as a “sign of respect”, though Iran is openly accusing the US president of just wielding optimistic rhetoric as a tool to suppress oil prices (aka jaw-boning).

• Aluminium prices are also up ~6% (near four-year highs) after Iran hit major smelters in the UAE and Bahrain. The Gulf handles roughly 9% of global supply.

Other

• A UK campaign group is warning that Emirati authorities have arrested up to 70 Brits for posting videos of Iranian drone attacks. With ~70% of its GDP now coming from non-oil sectors, the UAE has a lot riding on its reputation for security.

Pain quotidien

As the Houthis now join the fray, and crude pushes back above $110, we'll see more headlines capturing the ripples across every part of our day, starting with that…

• ⏰ Morning alarm

Some workers might now smash the snooze button, with Pakistan and the Philippines moving to a four-day week for bureaucrats — Sri Lanka has gone a step further and declared every Wednesday a full public holiday! It's all an effort to curb fuel use.

Meanwhile, many folks in India need to wake up earlier to pack their own lunch now that several tech giants are winding down their staff cafeterias amid a shortage of LPG (popular cooking fuel).

Anyway, it's time for your…

• 🚗 Work commute

While many like Vietnam and Thailand are now pushing work-from-home, and parents in Pakistan will need it amid mandatory school closures, commuters elsewhere have faced big gas station queues in parts of China (Jiangsu/Suzhou), Indonesia (Yogyakarta), and beyond — it’s a function of panic-buying rather than actual shortages at this stage.

Meanwhile, Beijing is quietly and selectively easing its export ban on refined fuels — the idea was to stabilise prices and curb local discontent, but it was also a curve-ball for neighbours like the Philippines that rely on China for half their refined fuels. We say ‘selectively’ because while Manila is getting China’s fuel again, others like Australia are not.

Anyway, you finally make it into…

• 🏢 The office

As you arrive downtown, you might start to notice some changes: in Bangkok, for example, several buildings are curbing AC and even elevator use. So by the time you hike up 15 floors and stagger to your prime cubicle, you will be schvitzing.

And of course, folks working outside will feel it too, whether it’s Manila’s iconic jeepney drivers seeing their take-home incomes halve amid fewer trips and higher costs, or the million delivery workers on India's dominant Swiggy and Zomato platforms seeing their orders halve amid the LPG shortage hitting restaurants.

Anyway, you've fired off an email and consulted a stakeholder, so it must be time for…

• 🍲 Lunch

Bakeries in Lagos are having to pour extra diesel into their generators amid worsening blackouts — the city's grid problems pre-date Iran, but this Hormuz squeeze is exacerbating it all, and Nigeria's food inflation has now spiked as a result.

But it's not just bakers in Lagos. The fertiliser squeeze we foreshadowed weeks ago is now prompting farmers to delay or reduce usage, whether it's corn belt growers in the US, maize farmers in East Africa, or Bangladeshi rice farmers entering Boro (growing) season. So we're now locking lower yields and higher prices into the year ahead.

Anyway, if you're in Kuwait, your new six-hour workday now means you can head home a little after lunch, but…

• 🌃 Evening plans

If you're in Mauritius, don't expect to gaze upon any fountains or decorative lights on your commute home, nor even enjoy a dip in your heated pool back home — these are now officially non-essential activities banned from the electricity grid.

But if you're in Cairo and plan to grab dinner with friends instead, Egypt has introduced a nationwide curfew for all restaurants, cafes and malls — it's 9pm on weeknights, which only sounds late if you've never been to Egypt, where folks typically start dinner at 9pm.

Anyway, if all these rules are getting on your nerves, buying a ticket elsewhere will get trickier, too: several markets have now seen jet fuel prices double, nudging airlines from Scandinavia to New Zealand to start raising fares and/or cutting routes. Even in the US, United has now shaved 5% off its Q2 and Q3 capacity, the first major US carrier to do so.

And… that's your day, amid an oil crisis that’s barely shaving 10% off global supply!

Intrigue’s Take

Notice any patterns in our little whip-around-the-world above? The biggest we see is income: it’s the developing world now getting hit hardest and earliest, as wealthier nations (where most Intriguers live) can afford to pay a premium to guarantee supply.

We semi-saw that play out during the big 2022 LNG crisis, when a dozen tankers changed course mid-voyage from Asia to Europe after Putin’s invasion — higher spot prices more than made up for any contract-breakage fees. Keep an eye out for similar reports this time (though LNG prices are still barely a third of 2022 peaks).

The other thing that strikes us is all the Covid parallels: work-from-home, restaurant curfews, school closures, grounded flights. In both cases, it’s about authorities deliberately destroying demand to slow a contagion, but this time the enemy is an oil shortage rather than a pathogen.

There are some similarities in the inflation risk, too, but whereas Covid’s inflation came via supply shocks meeting government-stimulated demand, this Iran inflation will not just be classic cost-push, but also a function of price-inelasticity: with a lot of oil use non-optional (at least short-term), those higher prices just mean less disposable income to buy other stuff, curbing broader growth. That’s where the spectre of stagflation comes in.

And eventually, perhaps like Covid, the daily disruption will be less some distant problem we ponder via our screens, and more something rattling those martini glasses at home.

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Meanwhile, elsewhere…

Extra Intrigue

🤣 Your weekly roundup of the world’s lighter news

• Someone has stolen a truck transporting over 12 tons of Formula 1-shaped Kit Kat chocolates from central Italy to Poland.

• Authorities have fined an Australian woman after she stuck big googly eyes on a famous ‘Blue Blob’ sculpture.

• A British woman is now doing jailtime after getting caught ziplining and surfing in Mexico while on disability benefits.

• An Ohio firm has had to recall its alcohol sterilising wipes over possible microbial contamination.

• And Quebec’s legislature has passed a unanimous vote demanding Air Canada’s CEO resign after he failed to speak French in a post-incident video.

Hotel of the day

It’s an open secret Russians love southern Turkey, Antalya specifically.

So the Turks, already known for their glamorous hospitality, built an entire resort on the Mediterranean featuring replicas of the Kremlin, St. Basil's, and the Bolshoi Theatre!

Creatively named the Kremlin Palace Resort, the five-star hotel has actually been around since 2003 but underwent mass renovations post-Ukraine invasion to capitalise on the influx of cashed-up Muscovites no longer welcome elsewhere.

Just don’t expect the full authentic experience — in Turkey’s version of the Kremlin, if you submit a complaint, the hotel will just comp your cocktail rather than, you know, banish you to Siberia.

Today’s poll

Last Thursday’s poll: Do you think Denmark's reality TV format could work well for other democracies?
(memory jogger: Denmark recently convinced all 12 party leaders to go on a pre-election reality TV program, in an effort to close the gap between citizens and government)

👍 Yes, it brings politicians closer to the ground (61%)
🚫 No, it cheapens the democratic process (34%)
✍️ Other (write in!) (5%)

Your two cents:

• 👍 L.D: “Easier for the voters to understand individual ideologies and personalities as well as how the party members interact and work with each other.”

• 🚫 F.G: “I just see a fist fight breaking out in my country’s case every other minute.”

• ✍️ D.A: “It is the worst of all worlds: it takes away from the real issues, puts the focus on personality, and adds nothing to the understanding of government and its proper role. What's next, real housewives of politicians?“