Iran Escalates Attacks on Ships, Threatening Oil Export Recovery

People working in the shipping industry said there were signs that the flow of cargoes through the waterway may be slowing, after rising close to prewar levels earlier this month. Still, there was no clear evidence of change in oil loadings observed from several of the region’s top producer countries, and one shipowner said movements through Hormuz didn’t appear curtailed. (…)

Four tankers were hit by unknown projectiles while transiting the chokepoint in separate incidents on Oct. 11, according to UK Maritime Trade Operations. That’s roughly double the daily average number of attacks observed by the agency in the previous week.

There are growing signs of wariness among vessel operators, with tanker-tracking data compiled by Bloomberg showing more than a dozen supertankers and several Suezmax-class vessels either turning around or reversing course as they approached the key shipping hub of Fujairah in the United Arab Emirates, near the entrance to Hormuz.

Shipbrokers and some owners operating in the region described other signs of a slowdown in traffic, in particular longer waiting times for ship-to-ship transfers. One owner involved in these operations hadn’t experienced a slowdown. (…)

• China Refiners to Refill Oil Stocks From November, Eurasia Says

China’s state-run refiners are set for a months-long effort to replenish oil stockpiles, according to Eurasia Group, after tapping reserves to cushion the impact of elevated prices stemming from the US-Iran war.

Processors are expected to add 400,000 barrels a day to their oil inventories between November and April, according to an Oct. 13 note from the consultancy. Since April, Beijing has centralized crude inventory management and extended the mandatory period required for refiners to replenish stockpiles to three to five months from one to two months, Eurasia said. (…)

• Russia Hits Ukraine Energy Plants in Blow to Trump’s Truce Claim
• Ukraine blindsided by Starlink restrictions and intelligence gaps

Ukrainian troops have been caught off guard by restrictions on Elon Musk’s Starlink satellite internet systems that disrupted frontline operations, while Kyiv received no warning from its partners of a Russian missile attack on its energy facilities for the second day running, according to Ukrainian officials.

Starlink terminals used by Ukrainian drone units began experiencing signal failures at speeds above 160kph, disrupting several missions early on Wednesday morning, according to military personnel and senior Ukrainian officials.

“Logistics at the frontline and middle strikes are badly limited,” one senior Ukrainian official familiar with the situation on the front told the FT. Ukraine’s middle strikes target Russian military supply lines and logistics. The limitations came with “no warning, just in the middle of the night”, the official said.

Ukrainian defence ministry adviser Serhii Beskrestnov said long-range drone operations were also impacted. “It is clear that this action is not coincidental and is related to the current political situation,” he wrote on Telegram. (…)

Trump on Wednesday denied that Washington had cut off intelligence sharing. “No, we haven’t. We help them,” he said. “We are helping them, we are sharing intel. We want the war to end.”

(…) Musk posted messages critical of Ukrainian President Volodymyr Zelenskyy this week. (…)

Polish foreign minister Radosław Sikorski wrote on X, Musk’s social media platform: “Hey, @elonmusk, big man, are you playing politics with your products again? As your European customers, we are watching you.” (…)

Fed’s Williams Currently Sees No Need for Rate Hike in 2027

Federal Reserve Bank of New York President John Williams said he still sees one more interest-rate hike as appropriate this year, but at the moment doesn’t believe it will be necessary for the central bank to increase rates again in 2027.

“I haven’t changed my view that it may be appropriate to have one more rate hike,” Williams said Tuesday in an interview with Bloomberg News at the New York Fed. “I don’t think at this time I have any reason to believe that we would need to do more” after that.

Williams said there are still signs inflation will slow “quite a bit” and approach the Fed’s 2% target next year, as the impacts from tariffs and an energy price shock fade. That, along with other signs that underlying inflation is cooling, should help overcome the price pressures driven by the build-out of infrastructure for artificial intelligence, he said. (…)

“I still believe there’s disinflationary forces at play,” he said. “We definitely had the effects of tariffs and the energy prices, and now with AI. But some of those are, I think, not indicating upward movement in underlying inflation. In fact, these measures of underlying inflation have come down.”

Importantly, he added, there’s no sign that the labor market is out of balance and contributing to inflation.

“This is not an economy that is overheating overall,” he said. “This is not an economy where this added inflationary pressure is beyond these particular shocks that we’re experiencing.”

A number of his colleagues, however — including Cleveland Fed President Beth Hammack and Dallas’ Lorie Logan — have made clear they believe more than one additional move will be required to bring inflation back to 2%.

Investors currently anticipate the Fed will raise rates in December and twice more in 2027, based on pricing in federal funds futures. (…)

The president of the New York Fed holds a permanent vote on monetary policy decisions and acts as vice chair of the Federal Open Market Committee. Together with the chair and vice chair of the Fed’s Board of Governors, the New York Fed chief is traditionally considered part of the central bank’s leadership “troika.”

Surging China Exports Push Trade Surplus Toward Fresh Record

Shipments abroad soared 36% last month from a year earlier and imports jumped 31%, data released by China’s General Administration of Customs showed on Wednesday. As a result, the surplus for September widened to almost $134 billion, exceeding every forecast in a Bloomberg survey of economists. (…)

Shipments of high-tech products soared almost 64% in September, which Bloomberg Economics estimates contributed around half of China’s total export growth.

The year-to-date measure of the difference between what China exports and what it imports is already at $938 billion — almost 8% more than during the first nine months of last year.

Facing higher barriers in the US, Chinese companies have sought out new markets abroad, with the International Monetary Fund estimating that emerging and advanced Asian economies absorbed about half of the diverted trade, followed by the European Union with near one-fifth. Together with the US, China accounts for about 40% of global current-account balances, according to the IMF’s latest World Economic Outlook. (…)

Sales to the US grew 40%, the fastest in more than five years, as it ramps up purchases of capital goods needed for the buildout of AI infrastructure. According to China’s official data, that caused its monthly trade surplus with the world’s biggest economy to swell to $34 billion, the widest since January 2025.

The US reports a substantially smaller deficit. Figures from the Commerce Department showed it at $110 billion in the eight months through August — almost 45% less than compiled by China. US officials like Trade Representative Jamieson Greer have been touting the progress made in narrowing the imbalance under Trump.

If the US follows through on promises to lower tariffs on some Chinese goods, imports could rise even more

Surging prices for chips and commodities like oil and metals have inflated China’s trade figures, with exports and imports rising less in volume terms. Prices at the factory gate exceeded most estimates and jumped 5% in September from a year earlier, reaching their fastest since 2022, according to data published by the National Bureau of Statistics on Wednesday.

After years of exporting disinflation to the rest of the world, higher input costs have led to an abrupt jump in Chinese export prices, with their gains accelerating in August to 15% from a year earlier — the most since 2022.

The prices of imports surged even faster, however, and rose almost 30%, the fastest increase in data going back two decades. (…)

AI CORNER

ASML Rises as Chip-Gear Maker Can’t Keep Up With AI Demand

ASML said its current supply plans mean it won’t be able to fully meet demand in 2027 and 2028. “We are investigating ways to increase capacity for 2028 beyond the 30% increase we previously communicated,” Chief Executive Officer Christophe Fouquet said in a statement Wednesday on its third-quarter results. “Customers are asking us every single day to get more tools,” he said in a separate video.

Strong demand has given ASML leverage in pricing its tools, which can cost as much as $400 million per unit. The company said it completed price negotiations with major clients, with the impact set to become partly visible next year and fully reflected in 2028. (…)

ASML, Europe’s most valuable company, boosted its 2026 sales forecast to between €44 billion ($49 billion) and €45 billion. The low end of the range was previously €43 billion. Gross margin rose to 57.5% last quarter from 54% in the second quarter.

In July, ASML said it plans to boost capacity by 30% next year for its second-most advanced tool, the low NA extreme ultraviolet lithography machine, which would take its annual shipment target to about 85 units.

It will be “extremely hard to get something done that gives you tremendous capacity by 2028, even if we start digging today,” Chief Financial Officer Roger Dassen said on a call with journalists.

Dassen said the company has built Elon Musk’s Terafab project into its capacity plans for 2027 onward. The company is still “kicking the tires on the exact size of that opportunity,” Dassen said. (…)

ASML is the only company that makes the cutting-edge lithography machines used to produce semiconductors for the data centers powering the AI boom. Its outlook offers an indication of investment plans by chipmakers like Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co. and Intel as spending on AI infrastructure surges.

The chip-gear maker’s customers have boosted their equipment demand forecasts based on the “size and duration of AI-related investments,” Fouquet said. Some customers “are expressing an interest in placing orders with us for 2029 and even 2030,” he said. (…)

“So the EUV business grows over 45% this year.” (…)

ASML has never been allowed to ship its most advanced EUV machines to China, due to US-led export controls. US lawmakers have proposed a new bill, the MATCH Act, that threatens to further restrict the supply of chip-making gear to Beijing.

“Limiting immersion technology into China might slow down China, but it’s not going to stop” it from developing homegrown solutions, Dassen said.

• AI demand to exceed supply for 2 more years, says ASML

(…) Fouquet said on Wednesday that its customers, which include Taiwan Semiconductor Manufacturing Company and Intel, were seeing “very, very strong demand” from their own clients, and so were “accelerating their plans” to expand production capacity. (…)

China Is Poised to Spearhead a $5 Trillion Humanoid Robot Market Advanced humanoid hardware is one of the strategic high-tech fields where China has an early lead over the US.

(…) Robotics is one of the strategic high-tech fields where China has seized an early lead over the US. (…) Chinese companies accounted for 97% of global humanoid shipments in the first half of this year.

Thanks to robust government support, vast supply chains and ample mechanical engineers, China is staking its claim to an industry that may help dictate the path of modern economies. Morgan Stanley estimates the market for humanoids could top $5 trillion by 2050, as labor forces shrink and age, and AI adoption swells.

What’s unsettling Washington is not any single breakthrough, but the possibility that Beijing could end up writing the blueprint for how the machines enter daily life.

“China is ahead because they have a national strategy that goes back over a decade where they saw robots and AI as the future,” says Jeff Burnstein, president of the Association for Advancing Automation, a US-based trade body representing more than 1,500 organizations in robotics, AI and related technologies. “The United States never had any national strategy.”

The contest is still in its early days. While Chinese firms demonstrate their hardware prowess, their American rivals are edging ahead on a parallel path to robotic dominance: brains. Startups there are pinning their robotic hopes on AI models aimed at guiding humanoids, boosted by their open access to advanced chips that Chinese firms can only dream of. (…)

Recent releases from US firms like Physical Intelligence and Generalist outperform similar Chinese models, according to Zang Tianyu, a partner at Jinqiu Capital, which holds stakes in Unitree and other Chinese robotics firms. (…)

To catch up, Chinese firms are looking to the country’s tried-and-tested industrial playbook — and the factory floors themselves. China produces some 5 million STEM graduates every year, while its vast manufacturing industry employs and trains tens of millions more.

Beijing has dedicated enormous resources to building large-scale data-collection facilities to train robot brain models, and pushed manufacturers to try out humanoids on assembly lines. The AI systems are rolling out in factories, automotive plants and warehouses as part of a widespread effort to train humanoids. The process is simple: send the machines out into the world, generate more real-world data, and use that to make the robot brains work better. (…)

In Shenzhen, a bustling city of 18 million that has emerged as the world’s robotics hub, Dong’s team moves at “China Speed” and spends money at the “China price,” he says. “The speed and efficiency in this city shock me.” (…)

An analysis by Morgan Stanley shows the cost of Tesla’s Optimus humanoid would nearly triple if Chinese components were excluded from its supply chain. Experts say US dependence is now so great that a move by the Federal Communications Commission to curtail the growth of Chinese humanoid robots and some of their materials has actually hindered development for many startups because they struggle to get the components elsewhere.

Going forward, China’s chokehold over rare earths gives it a unique position to grow this dominance. Beijing currently controls as much as 90% of permanent magnets needed for rotary actuators, according to research by McKinsey. The country also accounts for 40% of precision bearings, 40% of sensors and 30% of all the power electronics used in the components, which act as joints for humanoids. (…)

American robot companies and industry groups are lobbying Washington for a national strategy to better compete with China. (…)

Agility Robotics in June urged the US government to provide something like the support that Beijing extends to its robotics sector, including the formation of an American supply chain, support for companies adopting humanoids and rewards for early adopters.

“Without targeted US government action to support the domestic humanoid robotics industry, it appears likely that the gap between US and China will grow,” says Sam Bresnick, a researcher at Georgetown University.

The cost of all the components in an average Chinese-made humanoid is projected to drop by about half to below $17,000 by the end of the decade, according to a recent report by the Bank of America Institute. That could boost shipments to 10 million by 2035 from last year’s level of 20,000, analysts Lynelle Huskey and Vanessa Cook forecast. By 2060, there could be 3 billion humanoid robots in operation, they estimate, suggesting countries with more of the machines will reap significant economic benefits. (…)

From our China trip last December: Who got a plan?

BlackRock takes profits on stocks as it turns to Treasurys after six years

• Revenge of the Bond Vigilantes: How High Is Too High? Is It Time to Buy?

• Yardeni, who coined the term “bond vigilantes” in 1983, said their influence was suppressed during years of quantitative easing and zero interest rates that kept yields low. They may return for “revenge” as bond markets operate more freely and interest rates get back to normal, demanding higher yields in response to the large government debts.
• He sees several forces pushing yields higher globally, including government deficits, tightening monetary policies, inflation, strong economic growth and the unwinding of the yen carry trade. He’s watching the Bank of Japan’s actions closely as it faces pressure to strengthen the yen by raising interest rates, which in turn impacts bond markets.
• He thinks it would take U.S. 10-year Treasury yields rising over 7% to seriously impact the U.S. economy. (see chart below) With nominal GDP growth at 6.6% in Q2 2026, the 10-year Treasury yield exceeding the economy’s growth rate could make the U.S. government debt burden much harder to manage. But a rapid rise in yields could be “destabilizing” before that, for example if borrowers cannot refinance.
• He argues the U.S. economy is less interest-rate-sensitive than it used to be — baby boomers would be happy to earn higher yields on their investments, and many homeowners have paid off their homes or locked in low mortgage rates.
• He thinks this is a great opportunity to buy bonds, but there’s potential for yields to go higher. He added that U.S. municipal bonds are looking attractive.

• With the U.S. midterm elections coming up, he said gridlock in Congress is “usually bullish”, but it may make it harder to resolve the problem of unsustainable fiscal deficits. In his bearish scenario, which he has assigned a 30% probability to, there could be a conflict between the bond vigilantes and politicians.

• He points to the comeback productivity has made and said it will eventually have a disinflationary impact on the economy, if not a deflationary one. This makes him optimistic that the current inflation problem is cyclical in nature, and not structural.

SMALL BIZ (NFIB)

 

 

 

• “This is the worst business climate I have seen in my 34 years as a business owner. Sales have dropped dramatically this summer. Big corporations have taken most of the sales away from us (Costco, Sprouts, Amazon) … My expenses are way up, and my sales are way down.” – Retail, FL
• PPI trade services, a leading indicator of underlying retail sales growth, has slowed sharply, signaling further weakness in consumer spending, according to Pantheon Macroeconomics. (The Daily Shot)

Source: Pantheon Macroeconomics

Chip stocks slide in wake of ‘casino’ comment by Broadcom boss

A global sell-off in semiconductor shares deepened on Tuesday as comments from Broadcom’s chief executive about the casino-like nature of AI investing knocked investor confidence in high-flying stocks ahead of the start of Wall Street’s earnings season.

Shares in Samsung Electronics and SK Hynix, the world’s two largest memory-chip makers that together account for about half of Korea’s Kospi index, fell 7.4 per cent and 10 per cent respectively. Futures tracking Wall Street’s Nasdaq 100 tech index were 0.4 per cent lower after a fall in semiconductor stocks dragged the index down 0.7 per cent on Monday.

Concern about the sector was fuelled by Broadcom boss Hock Tan’s warning about the gambling-like characteristics of the AI trade. “A lot of investors have no clue what they are investing in,” the head of the US chipmaker told an event in Singapore on Monday in comments reported by Bloomberg. They “set very extreme expectations only to find out that it’s almost like they are in a casino”, he added. (…)

Adding to investor nerves, Chinese DRam producer CXMT claimed that it had made progress in producing cutting-edge DRam technology that Korean memory giants SK Hynix and Samsung have also been developing. The reports reignited fears about low-cost alternatives upending the leading AI companies.

The Hefei-based chipmaker said it would release a new server memory chip based on the design, which involves fitting more cells on to a single chip. The announcement by CXMT President Cao Kanyu at an industry conference over the weekend, with little technical detail to accompany it, would mean, if confirmed, that the company has beaten larger rivals to a significant breakthrough despite not having access to the leading manufacturing equipment from Dutch supplier ASML. (…)

Broadcom’s Hock Tan directed his skepticism at investors backing frontier large language models, where, in his view, enthusiasm has outpaced any grasp of the underlying economics.

He questioned whether the AI industry is generating enough economic value to justify the enormous sums being invested.

Tan said many businesses have adopted AI but have yet to find applications that meaningfully improve productivity or deliver a worthwhile return on investment. “People are just wasting money, spending tokens, trying to understand (AI)”.

He compared businesses using AI without clear results to a child spending arcade tokens without learning anything. His concern is that companies may be consuming large amounts of AI computing services simply to experiment, rather than to make their businesses more profitable.

Tan also argued that access to capital could become the biggest bottleneck for AI expansion, as developers need enormous amounts of financing to build computing infrastructure and train increasingly powerful models. “The biggest constraint is capital,” he said.

He also suggested that the current hardware boom cannot sustain itself indefinitely if AI model developers fail to create valuable products and services. Chipmakers can profit from selling the infrastructure, but ultimately their customers need profitable businesses of their own.

Tan remained optimistic about near-term demand for computing capacity, while acknowledging that the longer-term outlook depends on adoption, technological progress and continued revenue growth.

Broadcom itself guides to roughly $58 billion in AI semiconductor revenue this fiscal year, doubling to $115 billion in fiscal 2027 and again to $230 billion in fiscal 2028, projections Tan reaffirmed as recently as September. He also said demand for compute infrastructure still exceeds supply, an imbalance he expects could persist through 2029 and into 2030.

Intel CEO Lip-Bu Tan, on the same panel said:

• The biggest challenge is “capital and the cost of capital, and then the other part is in the longer run, people want to see the ROI”.
• He doesn’t expect a major slowdown in the next two to three years, because more people are using AI and demand for computing stays strong.
• AI will have an even bigger impact than the Internet, with AI agents making work more efficient.
• Chinese AI models such as DeepSeek, Kimi and GLM cost less to run and are “good enough,” and that people are adopting them “very fast”.
• “I’m a strong believer of open source, that’s the best way to drive efficiency.”

In case you missed my October 8 post: AI Capital Crunch?

So far, AI racers have been willing to pay the rising costs to participate. For some of them (e.g. Anthropic, OpenAI) this is an existential race.

They are also willing to pay the increasing cost of capital but, much like for the physical issues, capital is not infinite, particularly when its cost keeps rising. Lenders will eventually balk when they start questioning the safety of their capital given the ever rising borrowers’ liabilities.

If capital gets scarce at the top of the chain, the whole chain slows down.

• Meta Says New Muse Model Hits AI Frontier After Aggressive Push

Meta Platforms Inc. released a long-awaited artificial intelligence model on Monday, a milestone that will test whether its multibillion-dollar push to rebuild its AI organization has improved its technology enough to compete among leaders.

Known as Muse Wonder, the new model is the company’s most capable since Meta Chief Executive Officer Mark Zuckerberg overhauled his AI operation through an aggressive hiring push that put new talent at the helm. The company claims the model, dubbed “Watermelon” internally, is a big leap over its own predecessors, with “frontier capabilities” that its leadership say put it on par with OpenAI’s ChatGPT and Anthropic PBC’s Claude when it comes to coding, or working through financial or legal questions. (…)

Wang and his Meta Superintelligence Labs team are already looking beyond Muse Wonder. He said MSL has begun work on “larger and more scaled models.” (…)

Putin Ignores That Energy ‘Cease-Fire’ Trump announces a truce between Russia and Ukraine. Russia immediately violates it.

The WSJ Editorial Board:

President Trump announced the truce Sunday on Truth Social, along with the warning “do not break it!” Within hours Vladimir Putin did. (…)

Ukraine refrained from striking Russian refineries overnight, Mr. Zelensky said Monday, and “we are ready to adhere to any energy truce, if Russia is willing to do the same.” Mr. Putin has repeatedly refused.

The Russian dictator is multiplying his aerial attacks on Ukrainian cities and civilians as he has run into difficulties on the battlefield in eastern Ukraine. The Russians have made “near-zero gains since March 2026” (…).

So Mr. Putin’s plan now is to “make civilian life in Ukraine unbearable such that Ukraine will capitulate to Russia’s demands,” ISW said this month. Mr. Putin is taking advantage of Ukraine’s shortage of Patriot missiles and functioning F-16 jets to hammer energy plants ahead of a long winter.

Mr. Trump is scapegoating Ukraine for rising diesel prices, and on Saturday he said Kyiv “better damn well stop” its strikes on Russian refineries. But is Ukraine supposed to sit back and take the Russian blitz? Oil and gas exports fund Mr. Putin’s military, and Russian energy production is a legitimate war target.

Mr. Trump made a major concession Friday with a pause on diesel sanctions that will allow Russian energy companies to rake in some $4.5 billion. Yet Mr. Putin is giving him nothing we can see in return. The Russian refusal to accept an energy cease-fire is the latest evidence that Mr. Trump’s courtship isn’t working.

Trump yesterday: “I think actually Putin wants to make a deal more than Zelensky.”

Starving Ukraine of military equipment, blaming Ukraine for US diesel prices, unilaterally announcing a cease-fire, funding Russia’s war: the art of the deal!

The FT:

(…) On the day that Trump announced the Russia deal, his son-in-law Jared Kushner and chief envoy Steve Witkoff held talks with Ukrainians in Florida. They threatened to block weapons sales and end US intelligence sharing if Ukraine continued to strike Russian refineries.

This would deprive Zelenskyy of the last useful bit of US support against Russia’s escalating assault.

In the week before Trump’s diesel deal, more than 100 Ukrainians, including at least 20 children, were killed by Russian missiles. Another US president would be pressuring Russia to stop killing innocents. Trump is instead giving them the means to kill more.

He is also giving Russia a green light to keep helping Iran, which it has been supplying with satellite and tracking data to target US bases and allied installations in the region. In a very real sense, therefore, Trump is assisting attacks on America. (…)

• If the Saudis Will Fight the Houthis, the U.S. Can Help

The same Editorial Board:

(…) Now comes the test for U.S. policy.

Asked Saturday about joining Saudi strikes against the Houthis, President Trump said, “We may. We’re going to look at it.” Yet the last thing he seems to want before midterm elections is a military escalation. That hesitation may be what Iran and its Houthi militia proxies, whom it arms and finances, are counting on. (…)

The region is watching what Washington will do when the cornerstone of its Gulf alliance system is under attack. (…)

Under direct attack, Riyadh now has to decide if it has the will to fight back. If it doesn’t, all the modernizing ambitions of Crown PrinceMohammed bin Salman (MBS) will suffer. Few will want to invest in an easy, repeat target.

MBS’s new Mecca pact partners, Turkey and Pakistan, don’t seem eager to help despite their large militaries. That leaves an appeal to the U.S. as usual. U.S. support doesn’t mean standing in for Saudi Arabia but helping it lead. Pushing MBS into another deal with the Houthis instead would lock in the militia’s gains in preparation for the next war.

The Houthi challenge may seem obscure, but the stakes are high for the Saudis, the Middle East and the U.S. It is now tied to Mr. Trump’s campaign against Iran and his hope for an expansion of the Abraham Accords between Israel and the Arab states that someday includes Saudi Arabia.

As it stands now, the Houthis have the upper hand.

“Test for US policy”? What policy?

Just “a little excursion” he said 7 months ago.

• Why the Houthis Are So Hard to Defeat

(…) Announcing the start of a full-scale military campaign against the Houthis, the Saudi-led force said on social media on Oct. 4 that the goal is to “eliminate” the group.

It’s an ambitious aim. Once dismissed as a ragtag band fighting in sandals from pickup trucks, the Houthis have demonstrated staying power and reach. Having taken over the capital Sanaa in 2014, the Houthis now control land containing most of Yemen’s population. (…)

While the Houthis have long received military assistance from Iran, they have found other ways to arm themselves and shown growing military sophistication. (…)

The Houthis coordinate closely with Iran and largely share its strategic objectives, but they make their own decisions. Iran is an important source of weapons for the Houthis, but not the only one. (…)

The Saudi government has sought help from allies to counter the Houthis. The response has been tepid, suggesting a lack of enthusiasm to invest seriously in a fight against such a resilient foe. (…)

Meanwhile:

Supertankers Turn From Gulf Oil Transfer Hub Amid Iran’s Attacks

A growing number of empty supertankers have been turning away from the Persian Gulf as escalating Iranian attacks threaten a critical transfer hub for wartime oil shipments.

At least 10 very large crude carriers and several Suezmax vessels approaching the port of Fujairah in the United Arab Emirates have stopped or reversed course in recent days, according to tanker-tracking data compiled by Bloomberg.

While other vessels are still continuing on their journeys into the region, the retreat of these tankers amid near-daily attacks around the Strait of Hormuz — some near Fujairah itself — raises fresh concerns over the sustainability of oil flows through the waterway.

Fujairah is commonly signaled as an interim destination by vessels ultimately sailing to the Gulf of Oman — where they can collect cargoes via ship-to-ship transfer — or onward into the Persian Gulf. That makes the number of ships heading toward the port a broader indicator of tanker operators’ appetite for approaching the waterway.

The shift threatens a key workaround that has helped Persian Gulf oil exports recover to near prewar levels. Large crude carriers can wait off Fujairah and in Omani waters outside Hormuz while shuttle tankers make the riskier transit through the strait, bringing out crude and transferring it for onward shipment to buyers.

The system depends on a steady supply of receiving tankers, so a significant retreat from the region by empty VLCCs could slow the flow of crude, tying up the shuttle vessels for longer when tanker availability is already tight. (…)

• Kpler Suspects Gulf Producers Are Paying Iran for Safe Passage

(…) Iran could be quietly collecting tolls from ships transiting through the Strait of Hormuz, with exporters passing on these costs to consumers. According to Michelle Brohard, head of policy and geopolitical risk at Kpler, certain Gulf nations could have quietly struck deals with Iran to keep their oil flowing on fears that they cannot rely indefinitely on Washington to keep Tehran at bay.

“I suspect there is a toll that’s being paid, which is giving these ships safe passage,” Brohard said in an interview with energy analyst Rory Johnston last week. “I also suspect that these countries know that this is unsustainable from a perspective of [the] US escorting [ships], and also unsustainable from them paying Iran 10 percent of their cargo, or 20 percent of their cargo. So you’re starting to see like what I would call like a race to get out as much as possible, as quickly as possible before the war restarts,” she added.

Brohard’s claims remain unverified, although she is not the only analyst raising the possibility of undisclosed payments. “Everything appears to be happening under the radar in the Middle East, from the US convoying ships to Iran quietly charging tolls,” Chris Beauchamp, chief market analyst at IG Group, told Al Jazeera.

The possibility of secret payments would carry serious consequences if confirmed. The Trump administration has warned Tehran against imposing tolls, while Saudi Arabia, the UAE, Bahrain, Qatar and Kuwait have opposed Iranian demands for transit charges. (…)

Last month, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Iranian cryptocurrency exchange BitBank, saying the Hormuz Safe Marine Services Authority had used the exchange since June to transfer payments it received to the Iranian regime. Treasury said BitBank is controlled by Iranian financier Babak Zanjani, whose network used the exchange to transfer hundreds of millions of dollars in Bitcoin to the Islamic Revolutionary Guard Corps (IRGC). Zanjani was sentenced to death in Iran in 2016 for embezzling state oil funds, but his sentence was commuted in 2024 and he later re-emerged as a backer of regime-linked economic projects. (…)

The Mystery of the Unknown Sailor Who Inspired Trump to Shake Up the Navy A chance encounter pushed the president to revamp the carrier fleet—and sent Pentagon officials on a hunt for the elusive ‘Bill Jones’

Also in today’s WSJ. You can’t make up stories like this.

(…) Jones convinced Trump the old technology was superior to modern methods of launching jets, the president said.

The incident sent Navy leaders searching for Jones to figure out what he said that prompted the president to demand an overhaul of one of the most expensive weapons programs in history. They never found him, according to defense officials. (…)

More problematic: “Steam catapults have been out of production for decades—no one makes them anymore,” said Hunter Stires, the maritime strategist to former Navy Secretary Carlos Del Toro. (…)

Shipbuilding experts worry putting steam back on a carrier would put the Navy technologically behind China.

Acting Navy Secretary Hung Cao has warned officials not to question the president’s decision. (…)

“This could ultimately be a multibillion-dollar change that was resulting from largely this one sailor’s interaction with the president,” said Bryan Clark, a naval expert with the Hudson Institute, a Washington think tank. (…)

Trump has gotten personally involved in several other projects, from the new Air Force One and a class of high-tech battleships to a futuristic military drone port on the top of the White House. (…)

Not to mention the Reflective Pool!