For weeks now we’ve been watching a pantomime over the Strait of Hormuz. Is it open? Is it closed? It’s more Schrödinger’s Strait than it is anything else, i.e. both at the same time.

The ambiguity is the point of the exercise. You can’t write headlines, move oil markets, and maintain cognitive dissonance of those who hate Donald Trump if the Strait is either one state or the other, open or closed.

So, while this ambiguity has strategic value, that value has a time decay function, like an options contract. There are specific strike dates in the future that will rapidly decay the value of the option.

The time function for valuing options is also very much not linear. It’s zero for a long time and then in the last thirty days of the contract the time function becomes more prominent until the value of the contract is essentially zero based on how far from the strike price we’re trading.

The farther from the strike price the more aggressive the time decay function is on the value of your option. (Hint: don’t trade options, most people are really bad at it, including me).

The same basic premise applies to political crises. Both sides lay out their strategy, deploy their propaganda teams, make their case before the public, maneuver their physical assets, apply behind-the-scenes leverage and then see who wins.

But eventually, that bill has to come for a vote, the other side takes their negotiators and goes home, or a blockade forces one side to begin dumping oil on the ground rather than shut in their production.

In the case of Iran v. Trump we’ve watched all three of these things consecutively and concurrently.

Live from Hormuz, it’s the Confusion Game!

So, now let’s talk about Iran’s Schrödinger’s Strait strategy. Because, it isn’t Donald Trump who needs the strait in an ambiguous eigenstate. It is Iran. It’s all they have. Trump can use the ambiguity to his advantage, but he doesn’t need it.

Why? Because he has physical control over the situation. He and the US military earned that in the first few days of March. Since then it has been nothing more than a propaganda war designed to maintain the perception of something that isn’t true… that Iran (or more specifically the IRGC) is in control over the flow of oil around the world.

We’ve seen the numbers. 7 million Saudi bbls/day going to the Red Sea (and not a Houthi missile in sight). Hundreds of tankers heading to the Gulf of America pushing US exports to record levels.

The UAE is out of OPEC, so “Iran” attacks the pipeline terminus at Fujairah in retaliation where another 2+ million bbls/day will be loaded and shipped without their consent or their stupid toll being paid.

Trump announces Operation Freedom to escort tankers through Gulf of Oman waters and ship captains of a particular level of stupidity refuse to take him up on his offer. That’s clearly, like Lloyd’s of London canceling insurance contracts, part of the propaganda war.

Iran is trying to win the propaganda, or intelligence, war while Trump has already won the physical one. Random attacks on ships here or there is not a strategy, folks, it’s just Major Habib Imadumassijad firing off a missile to write a headline.

The headline is breathlessly picked up by the usual suspects in the media and propagates through X at the speed of the algorithm.

We’re never more than 48 hours from some kind of tit-for-tat move to keep the ambiguity game going. Here’s one from this morning:

Two days ago the British Navy said a US Destroyer was hit by an Iranian missile. No video. No pics. Just a ‘believe me’ face from the British media.

For two months we’ve been treated to a rerun of the same tired game that always happens when one of these crises breaks out.

For four years we’ve been assailed with fairy tales about Ukrainian drones, Ghosts of Kiev, and bombing operations on Russian infrastructure, that could only have taken place with the assistance of NATO assets of one nationality or another.

It’s no different really than the stories of Ukrainian drones reaching deep into Russia to hit oil refineries or part of Russia’s nuclear triad. Ukraine isn’t acting strategically to win the war with these moves, they are provocations to hurt Putin politically back home and force him to escalate the war beyond what the conflict is about on the surface, Ukraine’s deplorable treatment of ethnic Russians in the Donbass.

The goal is always the time-worn game of extend and pretend. Confusion and consternation. Escalation over reconciliation. The target proxy of Davos/City of London refuses to negotiate in their people’s best interest. It’s always justified by some appeal to emotion, in these cases punishing the bully.

How many times have we heard this inanity about Ukraine? “All Putin has to do is leave Ukraine and the war can end”

How many times have you seen a variation on, “But the strait was open on February 27th….”

It’s the same flawed logic that reduces real geopolitical concerns and complexity of interests to absurd levels of ignorance. What it is really doing is creating a new category of logical fallacy, appeal to the status quo.

What we’ve watched since the end of the bulk of Operation Epic Fury has been a typical British/Iranian soft power mid-game strategy.

Moves are made where the side with only soft power (Iran, Ukraine) options thinks they’ve scored a point, or traded a rook for a pawn, and then new talks are announced, the same red lines and terms are offered because they’ve gained some advantage they’ve created out of thin air, and then it’s summarily rejected by the side with physical leverage, who is then cast in the role of villain for obstructing peace.

Everyone goes home after a few days of hope, markets are pumped and dumped, someone made a bunch of money to keep their payroll checks from bouncing.

Lather. Rinse. Repeat.

Time Out of Joint

But, as I said at the beginning, there is a time decay function to all of this. Eventually the catering begins to spoil in the heat of the afternoon sun, the band isn’t willing to do a fifth set, and everyone’s ready for the party to be over.

Once one group makes their rounds saying good-byes everyone else begins to get the same idea.

At that point everyone takes the social cue all at once. It’s like an invisible wave passes over the room and everyone starts packing up at the same time.

And there’s precious little the host can do if they want to keep the party going, short of doing something horrible.

Last week the UAE left OPEC and OPEC+. The oil price fixing cartel’s party is over.

In the same week, Iranian Foreign Minister Aragchi was summoned to Beijing and you can bet that he wasn’t there to discuss how to keep China’s future oil flows bottled up behind a bunch of retarded Indian ship captains refusing Donald Trump’s help delivering their oil cargoes.

No, he was told to cut the shit. Begin negotiating for real. The IRGC plant screwing up negotiations was fired. Tr

Trump is preparing his meeting with Xi Jinping next week. He postponed the meeting for a month to execute on his full strategy to end the Iranian oil blackmail gambit.

Iran is now reportedly dumping oil into the Persian Gulf (I stress reportedly) rather than shut in their oil production, which would be damaging to their recovery from this situation for years.

Iran finally ousted Mohammad Bagher Ghalibaf from talks who was the “hardliner” refusing to budge on all the important negotiating points. Do you think this just happens because butterflies flew out of his ass?

No, Ghalibaf was the Davos plant in the room and he’s been removed.

Time is running down. China wants stability of energy flows out of the Middle East. As a goods exporter and energy importer they need good relations with the US to work through their structural imbalances while the US rebuilds.

Trump and Xi meet in a week to discuss these things and possibly (hopefully) hammer out the beginning of a world order that excludes the Old World of Davos. Trump and Putin engineered a 3-day ceasefire over Victory Day in WWII, aligning US and Russian ceremonial schedules, in another major snub to Europe.

Iran and Ukraine are both being told that this is it, cut the shit out once and for all. You are just pawns and the people you are aligned with are losing. Time to make new alliances with the New World that is forming.

Even the EU is trying to float the story that they are open to talking with Putin. That’s how desperate they are. They hit some oil refineries, bloodied Putin’s nose again and think, “Now, we can force him to negotiate.”

There are no talks… just EU people bloviating to write a headline and make Putin’s refusal look unreasonable.

Putin openly threatened Kiev with annihilation if they broke this ceasefire. Trump has positioned an immense arsenal to open up the next round of pain on the IRGC and the Iranian people.

Those options are a long way from their strike price. Tick Tock goes the Hormuz Clock.

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