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How China by not buying oil can keep oil prices low. China's reserves are full and even during April to June 18 during closure of Hormuz did not use oil stocks. It appears that China simply cut the use of oil, increased renewable energy and used coal supplies. This has relieved pressure on oil prices. The US by increasing supplies and countries like China, India, Germany reducing their oil use will help prices of oil remain low in July 2026 compared to the surge to $125 during the first time Hormuz was closed in April-May 2026.

LyrArc Article Gist
After UAE leaves OPEC and US increases oil production (Venezuela+), China reducing imports keeps oil prices low and keeps Hormuz closure from affecting oil prices. This has major impact on all countries that are affected by the shortage of oil as this puts more oil into the market (about 4 million barrels a day that China imported through Hormuz), and by lowering oil prices helps China as it pays less for oil it imports from other sources outside Hormuz. It also helps poor countries such as India and China, Pakistan, Philippines, Indonesia, rest of Asia, Africa and Latin America. By keeping oil prices low China also help climate change action by accelerating its renewable energy production. India and EU, US, also increase renewable energy production as a consequence of Hormuz, leading to strong climate change action. These are some of the positive side of Hormuz as the world with China leading the way learns that it is best to do without Hormuz. Though China does not say this publicly China does not want to see more nuclear weapons capable countries in volatile regions. This is true also of India, Indonesia, and EU. China  (And India) also consider it a high priority for its economy to maintain trade relations with the US. This is rarely stated in the Media today. What this means is that oil prices can be kept low as the largest nations together EU, US, China, India, Japan join together to keep oil prices low not repeating the situation during an earlier naval blockade April 13 to June 18 2026 of prices going to $125 a barrel. China has some of the largest coal reserves and oil strategic reserves in the world which make it possible for China to do this. ...

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Iran wants to suspend the Oman US route in Hormuz channel to control navigation- the US wants to keep it open for open seas navigation July 7 2026. 30-50 ships make it through Hormuz. US revokes Iran's oil shipment out of Hormuz as a result, and makes strikes on Iranian  missile launching facilities used to disrupt open seas navigation on the Omani side protected by the US. US tries to set back channels to IRGC military that controls Iran, but IRGC does not carry out regular ongoing talks, talking only at the pressure of the president of Iran working with Pakistan, Turkey and Qatar to convince IRGC authorites. China has reduced its need for the barrels coming out of Hormuz, may not go back to getting Hormuz barrels. UAE has found alternative routes to ship and increased supplies, Saudis doing the same. India and Japan looking for alternative sources of oil including US and Venezuelan supplies. Most of the buyers of Hormuz oil reluctant to go back to getting Hormuz barrels. In this sense the situation has changed, from when the war began. Oil prices could rise from $70 to $76 , and a bit more, but the old situation of Iran threatening oil supplies of the poorer developing countries of the world including China, India, Indonesia, Philippines, Sri Lanka, most of Asia and Latin America, African countries, countries that cannot afford oil prices of $100 is something the world does not need. And the tide is shifting to alternative supplies, conservation that adds enough barrels of oil as China and India, Japan, Germany, are doing, and the US also to some extent. By 2027 alternative supplies will have increased to pull the world out of this place called Hormuz, to where it becomes an insignificant source of unreliable supplies. ...

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Oil prices expected to drop from $70 per barrel to $60 per barrel in July 2026 easing oil crisis in advanced and developing nations. A drawdown of inventories by 163 million barrels happened to OECD countries in the 4 months of the Hormuz crisis. Advanced European nations will replenish their inventories starting in the 4th quarter, the US next year in 2027, China with a billion barrels in inventory is not in a hurry to replenish at this time. Factors improving the situation are that the UAE has increased production and sends it though Fujairah that is separate from Hormuz after it left the OPEC oil organization (which sets production quotas for members to control prices). Kuwait is doing the same. Saudis have also increased production routing it away from Hormuz. The advanced countries have learned from the Hormuz crisis. China has changed its oil consumption policy to use it more efficiently one of the big changes from the Hormuz crisis. Instead of importing 10 million barrels a day oil China now imports 6 million barrels a day. China was always a prolific user of oil and as long as oil was plentiful China did not pay enough attention on how to use oil as efficiently as some European nations and Japan are doing. During the crisis the rest of the world including India had time to figure out ways of running their economies using less oil and will continue to do so knowing that Hormuz had allowed one country (Iran) to put the whole family of developing nations in Africa and Asia, Latin America at risk. Hormuz channel itself has opened and about 40-60 ships are making their way through each day. There are risks that Iran will try to close Hormuz again or that the war will restart and this means all nations advanced and developing nations are finding and securing alternative oil supplies. US is also increasing production through its oil base and oil base of its allies, and American plus European oil companies will act to increase supplies and new sources of oil to prevent the world being threatened again in the way it was at Hormuz in 2026. ...

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Iranian response to Memorandum of Understanding shows reality of 2 factions in Iran, the IRGC military faction, and the elected president Pezeshkian plus Turkey /Pakistan/Egypt and Qatar as the second faction. With IRGC military rejecting the Memorandum on opening Hormuz and discontinuing nuclear weapons programs. This was true at the time Vance conducted negotiations and the Memorandum appears to have been accepted by IRGC only under great pressure from Turkey, Pakistan, Egypt, and Qatar, and the faction under Iranian elected president Pezeshkian. Where IRGC thinking could have been to give  agreement to the Memorandum that they had no intention of keeping, as its policy on nuclear weapons remains unchanged, and its goal is to use Hormuz for leverage and extend its control of Hormuz channel. The cost of sanctions and not being able to export oil, the effect on its economy, on cost of living with rampant inflation, may be of little concern to the people who run the IRGC military who suppressed all dissent and protests in 2026. Protests across different parts of society to the deteriorating economy. How could the US respond? The US used the time of the ceasefire to create a new status quo by using open navigation of the seas as the principle behind opening and protecting the Omani side of the Hormuz for oil shipment. This is a principle accepted by all countries. There is a backup plan of the US, China, India, Japan and other countries and this is to prepare rapidly to do without Hormuz so that the economies of these nations are not affected. The US also supported efforts by Saudis and Kuwait, UAE, to increase oil exports through channels outside of Hormuz, UAE's decision to increase oil supplies and lower prices by leaving OPEC, and US creating alternative supplies for India through Venezuela. Most important is China's decision that it no longer needs the 5 million barrels of oil from Hormuz for its economy to operate using alternative supplies and increasing efficient use of its oil resources. The world is also building up oil supplies and inventories so that Iran cannot threaten a cutoff from Hormuz because all nations have made other arrangements. Attacks by Iran on oil shipping on the Omani side protected by the US breaking the principle of open navigation of the seas, can then be considered Iran disrupting an open seas navigation route which it no longer is allowed to do under international law. This is something the world public opinion would support. The NYT has been critical of the DJT action in Iran, the WSJ and other media had joined in criticism. The situation in July 2026 is that the criticism of the US by NYT and other media, and from Europe and other countries in Asia will now be muted, because the US has tried all the options and is now finding ways to be able to bypass Hormuz altogether, and a backup plan or strategy to minimize the impact on oil prices. So that oil price of $70 may be kept at level around 10-20% higher not much more as Iran's military IRGC continues to disrupt the Hormuz supplies.  ...

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Vice President Vance's attempted thaw in relations with Iran (the Memorandum) and the Iranian response in missile strikes to interrupt open navigation in Hormuz on Omani side route breaking ceasefire happens on July 8, 2026. Early on in the US strikes the focus was on Iranian underground nuclear sites with preparations for nuclear weapons. When Iran shut down the Hormuz channel to navigation the US extended this to a naval blockade. As the US bombing of military targets in Iran continued in May and June the WSJ and other media were critical of the US. DJT turned to JD Vance to get the Iranians to negotiate a ceasfire with a Memorandum of points they agreed to included a plan to have talks on nuclear issue, open up the Hormuz channel, lift American naval blockade and American sanctions to Iranian oil exports. This WSJ Editorial Board commentary says Iran has not acted on as it said it would - no talks on nuclear issue are started, and Iran launched missiles against shipping in Hormuz.  This WSJ editorial says Iran does not intend to open Hormuz or discontinue its nuclear weapons efforts. In this situation the only options for the US are to find alternative sources for oil for India and Japan, and China in tacit cooperation with the US to find alternative sources as well as make more efficient use of oil. China is now doing without the 4 million barrels it was getting from Hormuz and has decided to do without these supplies altogether. For the UAE and Saudis to find alternative routes to get most of the oil out, UAE to increase output outside of OPEC to reduce prices. All of these actions are taking place and the ceasefire offered a breather for that to get established creating a new situation where if Hormuz remains unopened the rest of the world will be able to go on as before without being seriously affected. Better management of overall oil supplies is already taking place, inventories are building up, so that at some point Hormuz does not affect oil prices significantly. This is the best and most realistic option and the US, China, India, Japan, the EU, are going ahead with it. ...

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Hormuz channel on July 13, 2026 -Iran Memorandum with US is meaningless as IRGC military in Iran and elected Iran government are in a power struggle. Every time the elected president confirms a ceasefire and opening of Hormuz by Iran to all shipping without tolls, the IRGC makes a show of agreeing under pressure from Pakistan, Turkey, Qatar and Egypt, then next day IRGC asserts that Hormuz is closed and all shipping take place on the Iranian side only with tolls. This means Iran is shutting down the Omani side of Hormuz channel which was opened by the US. This is against international law and open navigation of the seas for shipping. The result is that the US government and DJT have lost any confidence in negotiating with the IRGC who make the decisions. The US response is to restart the naval blockade, to be paid for by tolls at 20% to pay all costs of US to ensure safety of oil tankers. The news media is taking the Iranian side which is against the poor countries freely accessing energy and oil supplies at reasonable prices (Egypt, Indonesia, Philippines, Bangladesh, Pakistan, Sri Lanka, India and China a population of close to 4 billion people). Media does this by putting titles like "Iran is playing the long game," because of the opposition to the DJT administration by Democrats. The opposition Democrats fail to address the question about Iran having a nuclear weapon and the resulting danger to the region. DJT administration response is also to find alternative supplies to Hormuz so that India, China and other countries can meet their oil needs outside of Hormuz. As shown in Lyrarc this has already take place and China, India, Japan, cutting back its fuel use after prolific use of oil, and replacing it with renewable energy, more efficient use of energy. ...

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China's export dependent economy with 4% decline in fixed investment Jan-May 2026 and 27% jump in exports.1 million car exports per month in June. Exports make up 20% of China's GDP. China is challenging German companies in their home markets in Europe. Domestic sales of cars are down 16% in June. What this means is that China's growth now depends on exports alone, with construction slowdown, and weak consumer spending. How does this tie into China's posture in trade with the US? It negotiated from a position of strength on rare earths not to give in to DJT tariffs yet knows the importance of trade for the Chinese economic model, importance of US and EU markets, markets worldwide. China's strategy is to shift some of the lost US sales due to tariffs to other countries in Latin America and Asia. A top priority is to keep trade with the US and European Union on a good footing, so that its exports can be absorbed. How does it affect Hormuz? For China Hormuz as an oil source is much lower in importance and China can do without Iran, it absolutely cannot do without the US and European Union to take a big part of its exports. It also does not openly say this but it also shares concerns similar to the US, on nuclear weapons in Iran. India, Japan and the EU have similar concerns. As shown in the articles on this page China has large unused oil in reserves and coal supplies, has lower oil demand at 4% growth, and is accelerating renewable energy, so that it is now importing 8.5 million barrels a day down from 12.5 million barrels a day. By doing this China puts this oil back into the world supply leading to lower oil prices. This means the world can do without the supplies from Hormuz, keep lower oil prices, and go on as before if Hormuz remains closed. The US can focus on domestic issues and its involvement in the Middle East can be limited to naval blockade which the US Navy is capable of doing. This is good for China, good for the US, and good for the World. Local governments in China, provincial authorites, pushed growth in building road, bridges, factories during the 30 year growth phase 1990-2020. In 2026 local governments with debt loads and lack of good projects for investment are a bottleneck to growth. This is the first time fixed investment is in decline, except for the years in 1961 and in 1967. The year 1961 is a result of many mistakes made by chairman of CCP, Mao, by shifting 2 million in farm labour to work in iron foundries, and the shift from private farm plots to soviet style commune farms, coupled with floods leading to 43-46 million famine deaths (1994, Chen Yizi, top advisor to CCP General Secretary Zhao Zhiyang). 1967 is the chaotic situation of the Great Proletarian Cultural Revolution launched by Mao. What it shows is that the China Miracle like the Japan Miracle and the German Miracle of recovery after World War II, is based on certain conditions and will enter a phase of lower growth closer to 3% like other industrialized nations over time. India and Indonesia are larger than China and will be the next growth story, which is also shown on these pages this week, with the address to the Indonesian parliament by Modi, and Indonesian president Prabovo's saying that he has studied Modi's economic changes and is copying them as there is no copyright. ...

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US can working with all countries find replacement for Hormuz supplies. The meetings with Iraqi prime minister Zaidi at the White House are one part of an extended effort that includes China, India, UAE, EU, Venezuela, other oil producers and oil consuming countries and regions with expanding shift to renewable energy (India, China, EU). Chevron and other companies plan to invest $60 billion in oil projects in Iraq including Kirkuk to Baniyas pipeline. The plan is to ramp up Iraqi oil production to the 4.5 million barrels a day Iraqi production by rebuilding or putting  new pipeline from Iraq to the Syrian coast on the Mediterranean. This is activity from the White House to replace Hormuz as this will keep the US out of a prolonged conflict. The media has not covered the replacement of Hormuz as a viable option to bypass the conflict, leaving a naval blockade in place, and continuing focus on domestic priorities with China, India, EU and other major nations all working together in this direction. China's economy is weak, India's needs trade and technology infusion, EU needs US cooperation and trade, all 3 powers keenly interested in a different path than one put forward by Iran of prolonged and unneeded conflicts for 4 billion people in these largest economies and the 4 billion people in Africa other Asia, and Latin America. That is 8 billion people's interests vs 45 million in Iran (if IRGC has only half the population's support in rural Iran, small towns). Can 5% of the world's population determine the direction of the 95%? Can culture wars in the US which heavily determine the distortions appearing in the NYT,  and the ideological wars on capitalism vs socialism in the WSJ, Republican vs Democrats midterms and other election politics distorted presentation, be allowed to obscure this fact that 95% of the world's people including Americans are interested in fixing drug cartels and fentanyl, fixing dilapidated infrastructure, in building new housing, in tackling oil prices, not the bombing of targets in the Middle East (limiting such action to nuclear weapons facilities not using force in Hormuz). China adds 4 million barrels a day by finding alternatives sources. UAE and Saudis are increasing production outside Hormuz, UAE outside of OPEC. Iraq can add 3 million barrels a day from 1.5 million barrels a day in June 2026 to 4.5 million barrels a day. Because Venezuela's current production is about 1 million barrels a day it can ramp this up to 3.5 adding 2.5 million barrels a day. The chart below shows how Hormuz can be replaced and the task ahead for nations and regions representing 8 billion people in the world. UAE 2 million barrels a day via pipelines, Saudi add 2 million barrels a day via pipelines, Iraq 3 million barrels a day via pipelines, China 4 million barrels a day by alternative sources, India 2 million barrels a day from alternative sources and renewable energy target upgrade, Venezuela 2.5 million barrels a day,  US  1 million barrels a day, Other - Guyana, Canada, Brazil. Shown alongside is a report from Goldman Sachs analysis which come to a similar conclusion and with facts on each specific region's ramp up of oil supplies to replace Hormuz in a race against time.So that Hormuz will be left behind, so that the world and the US of 8 billion people can pursue other priorities of peaceful cooperation, to achieve "life, liberty and the pursuit of happiness" as the Founders aspirations and the world's aspirations.     ...

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NYT gives this perspective of Mikhail Zygar on the difficult economic situation in Russia in January 2026 before the Iran War. Putin considering bringing Igor Sechin, head of Rosneft, as negotiator for Russia with Ukraine, to replace Kirill Dimitriev. Dimitriev is seen in Russia as an insubstantial figure and with no real mandate, on the point of being dismissed by Putin. This would being new life to Ukraine negotiations to end the war. This report says if Russia was to end the war it would have to change the structure of power and that included bringing in a new administration to rebuild the economy, to replace prime minister Mikhail Mishustin. He says oil was sold to India in January for $22 per barrel about one third of the market price. The economy was getting severely affected by the war and the conditions it had created for inflation, oil revenues under sanctions, and by financial and human cost of the Ukraine war, a credit crunch and a wave of bankruptcies that were expected in January 2026. Some of this is confirmed by the perspective offered on the same day this article appeared in NYT by an NYT article from the Foreign Minister of Sweden, Maria Malmer Stenegard. Stengard says Swedish analysis shows central bank interest rates set at 21% in 2024 when interest rates were 10%, suggest inflation was much higher than the 5% official figures. The minister also points out that instead of growing by 13% as official figures reported Russian economy had declined by 8% over 2020 to 2024. British government estimate is that the losses from the Ukraine war are $450 billion. Official growth estimate for 2026 is 0.4%. even with higher oil prices. All this changed with the Iran war by February and the jump in oil prices and Putin has decided not to make the changes he thought necessary and wind up the war, considering that some of the objectives had been achieved and to avoid an economic downward spiral. It is now Putin's decision says this report.  In the past Putin has always given the economy and living standards the priority. Yet the elites in Russia says this report are concerned about the fragile nature of the economy as present oil prices may come down in a short period. ...

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Saudi East West 750 mile Pipeline from east coast fields to west coast at Yanbu port- capacity 7 million barrels a day with average 4-5 million loading each day in April 2026. About half of this goes to India and China. It is critical supply point for the Saudis now that Straits Hormuz is restricted. The UAE has pipeline to Fujairah which it seeks to double capacity by 2027 from 1.8 million barrels a day to 3.6 million barrels a day. UAE has left the OPEC cartel that limits supplies and sets prices, which makes this critical for the US to ensure oil prices remain at levels that are moderate. UAE now favors lower oil prices while the Saudis objective is to keep prices high.

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Big changes are expected in energy markets after 2026 following the end of the war with Iran, the naval blockade and the Hormuz straits closure. Even when the Shipping returns to Hormuz there will be continued uncertainty and prospect of conflict. As a result China, India, Japan and the US and EU will look for new sources of supply in Latin America for oil and gas including in Guyana, Brazil, Argentina, and in Venezuela. This NYT Analysis  confirms the shift to renewables will accelerate after 2026 with 2-3 years return on investment for renewables, and in 2026 wind+solar+nuclear now generating more electricity worldwide than gas. OPEC stranglehold on oil prices is weakening with UAE's exit from OPEC, and the US+ Venezuela+UAE expanding production. This will benefit poorer countries in the world in Asia, Africa and Latin America, Middle Income countries like China and India, as well as US and EU through lower prices for the new overall energy mix, with a higher component of renewables from every year 2027-2030. Lower priced component for oil possibly at $50 a barrel holding steady to 2030. From this perspective Hormuz's importance will decline over this period to the point that the world's wealth sucked up for far too long in the Middle East through the twin mechanisms of  high oil prices and decades of wars will be shifted back to infrastructure in the EU, US, India and China, Brazil and Indonesia. For the poor countries like Pakistan, India, Indonesia, China and others this is a big deal because instead of the wealth going to princes in the Persian Gulf  it will benefit people in Egypt, Arab countries such as Morocco and Tunisia,Turkey, Pakistan and India, China. Long delayed infrastructure rebuilding in US and European Union can now take place.The shift and trend to renewable energy as a major component of the energy mix of over 50%-60% in India could be expected by 2030 and have a major impact on climate change. (India has already crossed 50% of its energy from renewable sources). China will have installed half of the new renewable energy capacity added by 2030 and this too will add to the fight against climate change. Overall this combination of events and changes underway are overwhelmingly constructive and are not anticipated in this way by most of the world's media including the NY, which see slower growth when the opposite is now the case with accelerating and steady growth expected 2027-2030, and 2030-2035. For the US and EU it could not come at a more opportune time with the determination to invest at home and reindustrialize, build new infrastructure, for India to build a modern country by 2040, and for China or Japan not to get stuck in middle income status with continued modernization to 2040. For the poorest countries to work with these major nations to improve standards of living. For the US it also means the end of the border migrations flows that happened in 2025 taken to the next stage in 2026 and 2027 ending all drug flows across its borders with Mexico- as more lives are lost to fentanyl and other illegal drugs substances (1.25 million since 1999) than were lost in the Korean War (36,000 deaths), Vietnam  War (58,000 deaths) and World War 1 (116,000 deaths) World War II (418,000) all 4 wars combined. Issues of unfair trade deindustrialized the US. This coupled with drugs destroyed small towns and communities (that were based on manufacturing and lost factories) across the US for over 3 decades. The tackling of these issues will also add to the general sense of well being of the people in the US- and also in the European Union. The modernization underway in China and India+Indonesia+Brazil is also part of these changes, promise a rising tide that will lift all boats if we continue together to carefully select the right path ahead and chart the course clear eyed and clear on purpose. ...

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It reduces oil prices a little bit so why not let India buy Russian oil for 30 days- Scott Bessent announcement March 5 2025. Bessent said for the US- "India is an essential partner of the United States, and we fully anticipate that New Delhi will ramp up purchases of US oil. This stop-gap measure will alleviate pressure caused by Iran's attempt to take global energy hostage."

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MBZ Mohamed Bin Zayed's leadership in UAE, the exit from OPEC and recognition of Israel, that is changing the Middle East. India has close relations with UAE and there are 9 million Indians working in the Gulf region. MBZ and Saudi leader Salman were close until both leaders differed on oil prices. Saudis wanted to keep oil prices high to finance its ambitious projects which contrasted with the UAE interest in increasing production. Saudis have a less diversified economy whereas the UAE has tourism and finance as other business sectors. UAE has capacity to produce 5 million barrels a day, but is only allowed by OPEC to produce 3.5 million barrels a day. US president DJT says UAE's exit from OPEC should lead to lower oil prices. About 250,000 British nationals live in UAE and millions of Indians. Even though the Abu Dhabi and Dubai region of UAE is small it has a large population of 12 million with about 10 million expatriates from India. It is also amore advanced economy with the help of the British and India, and now Israel. Saudi population is about 35 million and Saudis were poised to recognize Israel in 2024-2025. Egypt, the largest Arab nation, has shifted policy to be part of a Middle East that seeks modernization and economic development after decades of war and has close relations with UAE, so does Morocco, another Arab country with close ties to Europe and India.    ...

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By taking action in Venezuela in a way that benefits the Venezuelan people (and similar action in the long run interests of the Iranian people to dedicate most of the resources for development and increase share of oil revenues without discounting and removing sanctions ill effects on economy and quality of life) major new changes can improve quality of life in the world.  Venezuelan production which was 3 million barrels a day has declined to 900,000 without US investment and technological upgrades. With US investment this can be increased to put additional oil supplies on the market lost in the war with Iran and smaller traffic through the Straits of Hormuz. Venezuelan crude is best suited to US refineries which frees up shale oil for export to meet needs of India and Europe. China which had hyper growth through massive oil consumption would reduce its growth rate and its impact on climate change as it adjusts to the loss of 3 million barrels a day it no longer gets from Iran. Slower growth rate in China is good for the climate as it is the hyper growth of China that put the most pressure on climate even as Europe and the US had cut  fossil fuels consumption over the last decade. China made 2 coal plants a week and 95% of all new global coal construction in 2023. India needs additional oil supplies as it increases its growth rate from a much lower point of development (and electricity poverty) than China. By simply settling for normal development compared to hyper development targets( China has reached a point of Oil Fairness Percentage where each country gets to use the same percentage of oil as its population is as a percentage of world population- the number being about 17% for China for both, with the number being 18% for India and it having a shortfall of 12% based on its oil consumption being only 6% of the world total). China can reduce oil and coal consumption reducing pressure on oil prices and absorbing most of the impact from the loss of Iranian oil. China and Russia + (old Soviet territory) Canada, Australia, Brazil, Argentina, make up about 40% of the world's territorial landmass, would be large beneficiaries with improved climatic conditions from burning less coal. They are now highly developed countries and do not need hyper growth which requires China to build 2 coal plants a week and consume excessive amounts of crude oil and coal based on artificially set targets that make no sense by destroying the climate when no child in China lacks electricity to read. Marathon Philipps Valero with over half a million barrels of refining capacity for heavy Venezuelan crude can now put this to use using the imports by US of lower priced (by $9 to Brent crude) Venezuelan crude oil. In a few months of 2025 US has imported 280,000 barrels a day of Venezuelan crude in February 2026 alone some of it going to the large Valero refinery in Port Arthur, Texas. American oil refiners make larger margins using the Venezuelan crude than they make on light crude from shale oil producers in the US. What this does is to increase the supply of crude and refined oil products on the market as the light crude get shipped overseas to India and Europe- including countries like Spain which took in 100,000 barrels a day of shale crude from US in February 2026. ...

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US trade deficit of $46 billion with India and DJT call to buy oil and gas from the US, to shift away from purchases of $50 billion of oil from Russia, of 2 million barrels a day. India only imported $1 billion of oil from Russia in 2020 and this is a call from the US to India to stop financing Russia's increasing air attacks on Ukraine in August 2025. For India this oil came at $70 a barrel when prices were around $90-$100 a barrel in 2022-2024. In 2025 oil prices are at $60 a barrel, and even if prices increase to $70 a barrel India can make the shift. US and Germany, the EU, Britain which seek negotiated end to the war in Ukraine will continue to pressure India in 2025. Russia could shift some of the oil to other places but the huge demand from a country India's size will not then be seen as a factor in prolonging the war. India needs to think ahead for the next 20 years and its goal of modernization by 2047 like China has done in 2000-2020. And not get into a nationalistic mode that may not be in the best interests of the Indian people seeing that this may serve the interests of all nations including Russia to phase out this European war. ...

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More than a retreat it gives the US, EU, India, China and the nations in Asia and Africa, Latin America most affected by higher oil prices and lower economic growth a time to pause and rethink dependence on the Gulf region for oil supplies. It is not mentioned in the media yet there has to be a link between the US president's visit to Beijing and Beijing's support for a normalized US China relationship, and offering its support for a settlement. This gives EU, China, India, Japan, and poorer nations in Africa, Asia, such as Pakistan, Turkey, Indonesia and Brazil, some relief from reduced access to oil supplies. US is also planning a supply from Venezuela to India to take pressure off oil supplies in Asia by offering Venezuela as an alternative source. China is in many ways joining the US to bring about a denuclearized Middle East, doing it in a quieter way with Iranian public opinion making a shift to put its economic development ahead of missile development. As the two sides have different interpretations and it is still only a Memorandum of Understanding it is not a situation where the US is sending billions of dollars to support the military in Iran as Obama had done. Attention will shift to the Iranian economy over the next 12 months.  US conveys that it has nothing to gain from wrecking the Iranian economy or nation as the Iranian people if avote were held today would clearly choose putting the economy first by huge margins considering the widespread protests in Iran in 2025 that started this crisis. The US naval blockade was effective and is always an option, with US and partners having greater experience in the situation presented by the narrow straits in Hormuz. Arab partners also acted with restraint and is itself an opportunity for Iran to change direction. China's making cuts of 3 million barrels a day in oil supplies from Hormuz is itself along with acceleration of renewable energy in both China and India is one of the dividends of this crisi. Another is the gradual shift to alternative supplies from other regions of the world so that Hromuz region can no longer dictate oil prices in the world. Accelerating Venezuelan and UAE, US, other oil and gas  supply growth will also put increase supply and renewables reduce  demand growth as a result of the crisis to break the hold on oil prices of the oil cartels of Qatar, and Saudis. As a transition fuel oil can be be kept below $50 a barrel, not at prices at the whims of the princes in the Middle East at the expense of the people of the Arab world from Egypt the most populous and Tunisia, Morocco, to the Muslim nations such as Turkey and Pakistan,Iran itself which bore the brunt of this Hormuz crisis. The US has several priorities including in its relations with oil cartels dominated Mexico that  brings drugs and people across US borders, with other nations in EU and Asia that have benefitted through deindustrialization in the US leaving it poorer across a vast part of America. Advancing objectives in one area such as denuclearization does not mean not addressing priorities at home and in relations with other regions. China shares American interest in denuclearization of the Middle East this should now be put to the test. It is an entirely different situation in 2026 than what weak leaders from Bush to Obama allowed to happen by  wars in the Middle East - the US naval blockades of 2025/2026 are entirely different in cost in terms of men and dollar investment and used to convey America's determination not to waste vital resources of the Nation. The best policy is not to pursue policy for absolute wins but make intelligent choices and in some situations pause to reflect on the best course of action and other ways to reach goals. By getting China and the US as world powers for denuclearization even though this is not vocally said, both gain and both will come up with solutions. ...

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“The world needs more energy. The world needs more resources, and U.A.E. wanted to be unconstrained by any groups” says UAE energy minister, Suhail Al Mazrouei. On May 1, 2026 UAE with 12% of OPEC cartel production (3.6 million barrels a day) will leave OPEC. It is a change in strategy of where and how to sell oil production in the future. UAE including Abu Dhabhi oil company says it is time for it to pursue its own national interests. As its economy is diversified including tourism and other sourcesd of revenue, UAE puts volume before price support. Saudis are not diversified and seek to maintain price support and keep fossil fuels way into the future. Qatar and Ecuador have already left the cartel. Since the old days of OPEC US has emerged as the largest producer, Venezuela is coming back as a major producer, changing the situaiton now that UAE is  also not betting on and supporting efforts for keeping prices high. This is good news for India and China, Japan, major buyers of oil and with large populations increasing demand. It also helps the US because of its diversified economy. ...

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US naval base at Bahrain and the damage from missiles in the war  June 2026 as shown by the WSJ. Bahrain is located only 150 miles from the Iranian coastline and was targeted along with other sites including Kuwait and UAE. A new route along the Omani coastline protected by US naval power in the region that then goes along the UAE coastline is now the route opened up by the US for shipping oil through Hormuz. This route is key to reducing oil prices and the recent visit by Marco Rubio of the US to the Gulf Cooperation Council being held in Bahrain June 25,  and the meetings held there, affirmed the open navigation of the seas on international waterways as being under international law. This has led to the fall of oil prices to prewar levels of around $70 per barrel. The US will redo the naval forces and bases in the region with less in Saudi Arabia and Kuwait, smaller footprint in Bahrain, and move some naval forces to the west closer to or inside Israel. The administration has asked Congress for $40 billion for the naval and military effort to restore open navigation of the seas for the world's energy of which $5 billion will go to repair of damaged naval facilities. One of the effects of the war that is constructive is ther is now an awareness to manage oil consumption in India, China and Japan major users of oil coming through Hormuz. China has figured out ways to do without the 3 million barrels a day from Hormuz, India has setup alternative oil supplies from Venezuela, and Japan is both cutting oil use and looking at alternative sources. Oil companies are also working on alternative supplies in other regions of the world. Both China, India, and European Union are accelerating their renewable energy sources to meet energy requirements. This means after 2026 the world may not be dependent on Hormuz for energy supplies, Hormuz becoming one of multiple sources and alternative supplies than in the past. This will also keep oil prices in the $50-$70 range that is consistent with cost of living and economic growth. ...

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As the media in the US and world cover this issue the focus is on the war and Hormuz. In the background a different situation is playing out. US Iran peace talks with Pakistan/ Qatar mediation June 13 2026- different factions in Iran RGC and Foreign Ministry+mediators with different positions  put out conflicting reports throughout May and June. The mediators Pakistan, Turkey and also Qatar/Saudis which also have a keen interest in limiting the damage to their economies, are taking one position working with the Foreign Ministry and elected Iranian president Pezeshkian who won 16 million votes 55% in the 2024 election. Inside Iran the RGC under new leaders is pursuing its own interests that does not put the economy first in conflict with Pezeshkian and public opinion in Iran for putting the economy first.  Pakistan faces grave risks with its large population, the risks to the economy from oil prices at $125 a barrel to its balance of payments crisis. Turkey also faces risks to its economy with high inflation. Saudis and Qatar see their economic prospects as limited and need to cut economic projects as oil revenues decline. In this situation the US goal of getting nuclear material out of the country is now put into a phased process based on conditions for every step of the way by the US negotiators, yet with memorandum of understanding to accomodate a changing situation. This policy may also be now agreed on between China and the US, and to some extent Russia. This can be seen as playing out and media does not talk about it. China openly greets DJT in Beijing and US and China agree to work things out in May 2026. China cuts its oil use by 3 million barrels a day as shown in a WSJ report this week. This is a major step. UAE leaves OPEC and calls for cuts in oil prices. Next Delsy Rodriguez of Venezuela visits New Delhi, India, and meets to set up economic relationships that include large purchases of Iranian oil to replace supplies lost in Hormuz and what India can offer in exchange for these purchases to Venezuela, including infrastructure building support. This points to a Win-Win for the US, China, India, as oil needs are met from places other than Hormuz for major users of energy. China may have realized that its prolific use of oil for 25 years of rapid development may have led to wasteful use of oil- some of that wasteful use can now be cut- 3 million barrels of oil use cut accepting some slower growth for quality growth. Germany and Japan are using less energy per unit of GDP and China will be looking at their model of energy use as an example to follow. This has huge potential for limiting climate change, as without China and India becoming more efficient in energy use, nothing the US could do was going to make a big difference for climate change. This may be one of the unintended benefits of the Hormuz situation in 2026 - ways to cut energy use for climate change action. And ways to move away from Hormuz and Persian Gulf for supplies so that poorer countries and advanced economies have to pay less for oil helping the poorer countries (Pakistan, Turkey) survive and grow, helping middle economic status rapidly modernizing economies  continue rapid growth (China and India), and helping advanced economies with cost of living hurting the majority of their people (US and EU).  With less money Russia, Iran and other countries will face serious constraints for more military expenditures as for the first time alternative supplies (other than Hormuz) and lower oil prices are being brought about in a newly unfolding plan of the US, China, India and other nations, that is not discussed in today's world media headlines. This means when seen objectively there is room for optimism based on the one thing going for the US, China, India, EU, a host of poorer nations in Asia /Africa/ LatinAmerica, the  5 largest development blocs and population blocs today, which is that the US and China can agree on being custodians for peaceful development accepting their responsibilities for guaranteeing this world order- as DJT and Xi Jinping stated in Beijing in May 2026- with the US aim of nuclear free Iran also accepted by China, Russia, India, and large sections of the Iranian population that put the economy first. ...

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Instead of a jinx much to the contrary the US economy outlook for 2030 in Feb 2026- a surge in investment spending in 2026-2030, new manufacturing investments and lower energy costs, moderating inflation, are likely to propel the US economy ahead to 2030.The effect of tariffs as a policy making tool has been muted because of exemptions, reversal of tariff rates once key objectives were secure for tariffs as a way to get action on foreign policy as with Indian purchases of Russian oil, deals with Japan, South Korea and China, India, UK and the EU. Some sources such as the Philadelphia Fed see price rises reaching 3% in some inflation guages more than the moderate 2.5% in the consumer price index for January 2026. These sources see the hiring slowing down just as layoffs begin to happen in the latter part of the year which is a possibility but less likely. At this point in Feb 2026 there is a tendency not to layoff and to hang onto employees, and hiring has been slow in 2025. January's report of 130,000 jobs added is the first sign of strengthening of the jobs market. Overall a cautious view would be to call it a soft landing after the inflation surge of the covid period. Another way of looking at is is more in line with the strategic direction of the US economy- freeing up the economy with investments in energy,  reducing the key costs of production, tax policy of Bessent's complete one shot depreciation of equipment increasing business investment, tariff policy making the world trading system fairer and now more attuned to US interests, all creating an investment and jobs surge in 2026-2027. There is an added benefit from US efforts to free up the world trading system from the stranglehold placed on it by China with its control over world manufacturing. A dominance and unwise concentration gained from the serious mistakes of the Bush-Clinton period of not putting in safeguards for US factories and jobs (that form the backbone for families in neighborhoods towns and regions across the US), and US business interests growing indifference to the very communities they were based in by outshoring to China destroying whole regions in America. Even where it is criticized or seen as negative there are huge benefits when the US acted. Tariff increase on India is a clear example- it built Indian resilient attitude in June-Feb 2026, and during this period it cut funding Russia's war in Ukraine by sourcing energy from other sources, the US policy led to India and EU+ Germany signing trade agreements to double their effort and double trade and scientific cooperation ( a goal secured for the US as it reduces concentration in China), was followed by US signing its own trade agreement with India within days, and increases world trade of US and EU and Germany in ways that will bring 2.5 billion people into a strong partnership that overshadows anything that happened in China in the Clinton-Bush-Obama years of failure. ...

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Prof. Patrice Geoffron of Universite Paris-Dauphine writes in Le Monde what is on everyone's minds- on how oil geopolitics and fossil fuel price volatility and price uncertainty what he calls fossil fuel chaos, is creating a new demand for renewable energy in Europe in 2027 to 2031. Business and industry in Europe see the value of renewable energy not in comparison with low fossil fuel prices anymore but with a fossil fuel price that can jump at any time to the $100 a barrel for some geopolitical event. Compared to this fossil chaos European business and industry can depend on a known price and known conditions for solar energy. The same thinking will be going on in business in Asia- in China and established leader in solar, in India an aspiring solar power, and in Japan. Modular nuclear reactors are also a new way to go. This means even under DJT with his skepticism for renewables the technology and production of renewables will continue and pick up pace. People will also ask whether its worth all the trouble to get fossil fuel supplies at levels that make no sense through waters of Hormuz straits- China and Jpan getting a makes no sense 90% of their imports from Hormuz, and India nearly 50%. Their are moral considerations also whether a morally conscious China, Japan and India, South Korea with much of the industrial base in the world can justify missile attacks on the scale of tens of thousands in the region and bombing just to clear Hormuz. ...

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  US reaches agreement that would restore oil supplies and bring down oil prices. The supply chains may have to be reconstituted for replacing much of the 20% of the oil that flows through Hormuz if the US, Europe,China and India, Japan, rest of the world are to gain from this experience. The only way to understand the change of mind of the DJT US government and the Saudis/UAE/Qatar for bringing an end to the war without immediately fulfilling required nuclear conditions is from the Saudi point of view it has sought to avoid damage to its oil facilities from Iranian drone and missile attacks. From the US point of view it may see that the US + ramped up Venezuelan production by 2027-2028 with increased push for supplies in other parts of the world with better security than Hormuz, could make up for most of the loss in supply from Hormuz. For the remainder acceleration of the renewal energy in Europe and in China, India could reduce dependence on oil from Saudis/Iran.  US Energy Information Administration forecast is for oil prices currently $103 for Brent crude oil to stabilize at $89 at the end of 2026 and $79 in 2027. The year started in 2026 at $60 per barrel. The UAE oil agency ADNOC says it would take 4 months to get 80% of production back on stream and full flows by 1st quarter 2027. Rystad Energy estimates repair and restoration at oil facilities to cost $58 billion. The MAGA base which opposed wars by Bush and Obama in the region would then look at it this way. The billions that Obama poured into Iran for Iran to rebuild its nuclear program would not happen again, as the US would continue its sanctions till all nuclear materials are removed from Iran. Iran would stall in negotiations that are now put off with only a Memorandum to show for commitment of Iran- though an agreement would only be a piece of paper that Iran may not implement as the failed Obama agreement showed- but yet not have the billions of dollars to support its nuclear program. It would give the US, Israel, and the world 10-15 years in which to respond to another nuclear program by Iran. Iran will need $270 billion to repair the damage to industrial facilities, which shows the cost of the war for the Iranian people just to get a nuclear weapon is prohibitive, considering that the Iranian economy was already in trouble before the war. Inflation and the overall economy will be in difficult shape for many years. Public sentiment in Iran may change the future course of Iran away from the course currently pursued. The entire Middle East  region has not benefitted from its dependence on oil. For the rest of the world finding alternative sources of supply is the best way and EU, China, India should accelerate renewable technologies and goals for energy independence shortening the transition from fossil fuels. ...

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EIA says half of the benefit of higher fuel efficiency standards for Automobiles 2010-2020 in US was lost because of SUV's and the incentivizing of SUV's in the 2006 CAFE standards have made things worse. The first SUV's came in the 1980's. By 2004 SUV's made up half of car sales and by 2025 outsold cars 2 to 1. What if we took all SUV's and large cars off the roads, or even some of these SUV's by deincentivizing of SUV's in the US CAFE corporate fuel efficiency standards? What would be the savings in crude oil and in carbon footprint? Would it be about the same as releasing an additional 400 million barrels of oil into the markets in addition to the 400 million barrels that are now released through EIA and member countries? This New Yorker essay touches on this idea. During the Iran war the volatile Middle East as a source of oil supplies is a major problem for countries. Some are rationing supplies and in one country 40 million children are not going to school for 2 weeks starting this week because of the sources of oil are so precarious, government offices will only have half of the employees, the rest working from home (almost like Covid pandemic). Many other countries face that situation. The International Energy Agency recently reported that, if “SUVs were an individual country, they would rank sixth in the world for absolute emissions in 2021, emitting over 900 million tonnes of CO2.” The agency says governments must redesign their CAFE standards and their policies so that it would reduce S.U.V. sales, tax gas guzzling vehicles. EIA cites governments in the EU doing this- “Some governments have already started introducing relevant measures, such as France and Germany, which have put a tax on large and high-emissions cars.” Within SUV's also there is an opportunity to reduce the size and make more efficient space utilization designs. Small savings also add up. One has to realize that the current freedom to use energy freely in places like the US with self sufficiency in oil comes with a sense of responsibility for using it wisely so that it can be exported to cut the trade deficit, precisely what the president is doing with India, to cut a trade deficit of $58 billion before it gets to $100 billion. Section 301 is already in place for investigations by the US of 18 countries for a new basis to use tariffs after the Supreme Court decision. A similar approach is taken with EU for hundreds of billions of reductions in trade deficit that will only strengthen the US dollar and the US economy in the long run , and be good for stock markets and jobs as it reduces oil prices and increases the manufacturing capacity/cost for the Nation. Europe, India and China can do the same. Remember that in 2010 SUV's made up 17% of total world sales, and by 2025 SUV's made up 46% of world vehicle sales. This would create another 400 million barrels for the oil markets, which would triple what was released through EIA  this week to 1.2 billion barrels and this would create 120 days of supply replacement for the 10 million b/d lost from Straits of Hormuz, and effectively end the Iran War as it would be clear that prices can be kept low even in the $50's. Essentially buying time till the SU can get more production in Venezuela and other parts of the world to replace much of the Middle Eastern oil that is ending up in a quagmire. This is the best way for the US and Europe, India, China to ensure jobs growth, economic growth with low cost crude oil in the $50 range and ensure much of the poorer countries like Egypt and Indonesia, Vietnam, Sri Lanka, Pakistan, Bangladesh, have access to oil at prices they can afford and eliminate poverty. ...

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It might not all make sense that the Pakistan/China mediated ceasefire conditions (including US and Israeli condition of no nuclear weapons development and ballistic missile development) are really not known even in the media today, only known to the Iranian government and the US government. In these conditions Iran's government gets to show that it had achieved its goals, even with enormous reconstruction costs of the damage done during the war. DJT had pointed to a sort of regime change in Iran after most of the earlier leadership has been removed, and new leaders in place who are keen on setting up conditions for their own administration replacing the old one.  Over the period 2027-2030 the prospect is real that China, India and Japan may shift their oil supplies sources to other regions, increase conservation per unit of GDP, and increase supplies of renewable energy, steps already taken by Germany over the last decade. Most media looks only what happens today and in 2026. This may be the last of the Middle East Wars before Europe and the US, and India, China, Japan shift away from the Middle East to get supplies of fossil fuels, and it may bring new renewables technologies that reduce the dependence on fossil fuels to the point of making a true transition to renewable energy. It may also be the last of the Middle East Wars in the sense that people of European nations and the US insist on no involvement in MIddle East as a sort of quagmire for squandering American, European and Asian vital resources of people and capital, ample example being given over the last 40 years. Considering the costs of the war and the moral cost of destroying infrastructure such as power plants that hurt the local population more than the regime in power, China, Japan, the US, and EU, India may find it is easier to race each other in coming up with alternative supplies and shifting to renewable energy faster than planned, making Middle Eastern oil supplies  and volatility in prices redundant, which would be a good thing after the hugely negative and costly experience of the last 50 years of dependence.     ...