Matt

More market turmoil after Iran launched strikes at one of the world's biggest liquid natural gas plants in Qatar Significant rises in the cost of living are coming * Gas prices have surged by 35% * Oil prices have surged by 10% to $119 a barrel * EDF says that the price cap - which is frozen until July -is set to rise from the current level of £1,641 to more than £1,900 * Economists are warning that inflation will surge back to 4% * The FTSE 100 is down 1.9%

Ossoff: Was it the assessment of the intelligence community that there was an imminent nuclear threat posed by the Iranian regime? Gabbard: The only person who can determine what is and is not an imminent threat is the president. It is not the intelligence community's responsibility to determine what is and is not an imminent threat. Ossoff: It is precisely your responsibility. This is the worldwide threats hearing where, as you noted in your opening testimony quote, you represent the ic's assessment of threats.

Trump: "I knew the Strait would be a weapon. I predicted it a long time ago. I predicted all of this stuff. I predicted Osama bin Laden would knock out the World Trade Center. I wrote it in a book."

Three weeks into the war with Iran, a number of observations as someone who spent years war-gaming this scenario. 1. The U.S. and Israel may have produced regime transition in the worst possible way. Ali Khamenei was 86 and had survived multiple bouts of prostate cancer. His death in the coming years would likely have triggered a real internal reckoning in Iran, potentially opening the door to somewhat more pragmatic leadership, especially after the protests and crackdown last month. Instead, the regime made its most consequential decision under existential external threat giving the hardliners a clear upperhand. Now we appear to have a successor who is 30 years younger, deeply tied to the IRGC, and radicalized by the war itself – including the killing of family members. Disastrous. 2. About seven years ago at CNAS, I helped convene a group of security, energy, and economic experts to walk through scenarios for a U.S.--Iran war and the implications for global oil prices. What we’re seeing now was considered one of the least likely but worst outcomes. The modeling assumed the Strait of Hormuz could close for 4–10 weeks, with 1–3 years required to restore oil production once you factored in infrastructure damage. Prices could spike from around $65 to $175–$200 per barrel, before eventually settling in the $80–$100 range a year later in a new normal. 3. One surprising development: Iran is still moving oil through the Strait of Hormuz while disrupting everyone else. In most war games I participated in, we assumed Iran couldn’t close the Strait and still use it themselves. That would have made the move extremely self-defeating. But Iran appears capable of harassing global shipping while still pushing some of its own exports through. That changes the calculus. 4. The U.S. now finds itself in the naval and air equivalent of the dynamic we faced in Iraq and Afghanistan. It’s a recipe for a quagmire where we win every battle and lose the war. We have overwhelming military dominance and are exacting a tremendous cost. But Iran doesn’t need to win battles. They just need occasional successes. A small boat hitting a tanker. A drone slipping through defenses in the Gulf. A strike on a hotel or oil facility. Each incident creates insecurity and drives costs up while remind everyone that the regime is surviving and fighting. 5. The deeper problem is that U.S. objectives were set far too high. Once “regime change” becomes the implicit or explicit goal, the bar for American success becomes enormous. Iran’s bar is simple: survive and keep causing disruption. 6. The options for ending this war now are all bad. You can try to secure the entire Gulf and Middle East indefinitely – extremely expensive and maybe impossible. You can invade Iran and replace the regime, but nobody is seriously going to do that. Costs are astronomical. You can try to destabilize the regime by supporting separatist groups. It probably won’t work and if it does you’ll most likely spark a civil war producing years of bloody chaos the U.S. will get blamed for. None of these are good outcomes. 7. The other escalatory options being discussed are taking the nuclear material out of Esfahan or taking Kargh Island. Esfahan is not really workable. Huge risk. You’d have been on the ground for a LONG time to safely dig in and get the nuclear material out in the middle of the country giving Iran time to reinforce from all over and over run the American position. 8. Kharg Island can be appealing to Trump. He’d love to take Iran’s ability to export oil off the map and try to coerce them to end the war. It’s much easier because it’s not in the middle of IRan. But it’s still a potentially costly ground operation. And again. Again, the Iranian government only has to survive to win and they can probably do that even without Kargh. 9. The least bad option is the classic diplomatic off-ramp. The U.S. declares that Iran’s military capabilities have been significantly degraded, which is how the Pentagon always saw the purpose of the war. Iran declares victory for surviving and demonstrating it can still threaten regional actors. It would feel unsatisfying. But this is the inevitable outcome anyway. Better to stop now than after five or ten more years of escalating costs. Remember in Afghanistan we turned down a deal very early in the war with the Taliban that looked amazing 20 years later. Don’t need to repeat that kind of mistake. 10. The U.S. and Israel are not perfectly aligned here. Trump just needs a limited win and would see long-term instability as a negative whereas for Netanyahu a weak unstable Iran that bogs the U.S. down in the MIddle East is a fine outcome. If President Trump decided he wanted Israel to stop, he likely has the leverage to push it in that direction just as he pressured Netanyahu to take a deal last fall on Gaza. 11. When this is over, the Gulf states will have to rethink their entire security strategy. They are stuck in the absolute worst place. They didn’t start this war and didn’t want it and now they are taking with some of the worst consequences. Neither doubling down with the U.S. and Israel nor placating the Iranians seems overwhelmingly appealing. 12. One clear geopolitical winner so far: Russia. Oil prices are rising. Sanctions are coming off. Western attention and military resources are shifting away from Ukraine. From Moscow’s perspective, this war is a win win win. 13. At some point China may have a role to play here. It is the world’s largest oil importer, and much of that supply comes from the Middle East. Yes they are still getting oil from Iran. But they also buy from the rest of the Middle East, and a prolonged disruption in the Gulf hits Beijing hard. That gives China a real incentive to help push toward an end to the conflict.

Trump: They make all the windmills, and they sell that garbage to us, round and round it goes, keeps losing money, every time it goes around, it loses $25. That's a lot. And kills a lot of birds. Kills them all. You know, if you shoot a beautiful bald eagle, they put new jail for five years. Windmills kill them by the thousands. Ok? Figure that one out

Turmoil in the markets this morning as oil prices surge: * Oil prices rose by 25% over the weekend and are now above $106 a barrel and climbing. G7 finance leaders to meet to discuss joint release of emergency reserves * The FTSE 100 fell significantly after trading opened * Forget interest rate cuts. Traders are now betting on a *rise* in interest rates later this year from the current level of 3.75% * The cost of government borrowing has risen significantly this morning. Two-year bonds are on track for worst day since Liz Truss's mini-budget