By Michael Every of Rabobank
The Heat You Feel Isn't Just The Summer Sun
There is a lot of geopolitical heat out there right now; and markets may get burned by it.
The 60-day US-Iran Memorandum of Misunderstanding has lapsed, with Trump and Iran both rejecting any extension while claiming control of Hormuz. In our view, the US is unlikely to restart major military action until after the November midterms. (Note the US just awarded a $23bn contract to Raytheon to accelerate annual Tomahawk missile production to over 1,000 from the current 60 alongside a $59bn Lockheed Martin deal to ramp up Patriot interceptor output from 600 to 2,000.)
Trump’s threat to bomb Oman is public diplomacy matching what Tehran threatens privately to ensure Muscat doesn’t close off the southern Hormuz passage allowing ship-to-ship oil shuttling that, according to the US, is seeing significant flows. The Saudis are now offering to sell oil near Oman; a sign they may be copying the UAE. That doesn’t help with refined products, where the US will announce steps to boost refiners’ throughput: by running at 120% of capacity?
Diesel crack hits record $102. This is absolutely unprecedented.
— zerohedge (@zerohedge) August 17, 2026
Industrial economy either grinds to a halt or consumers about to be hit with the biggest energy pass through in history pic.twitter.com/OtAdgrCvb3
However, as previously argued, relative energy calm incentivises Iran to escalate sooner. Israeli intel claims Tehran has achieved a remarkable recovery in its ballistic
