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As a thanks to my paid subscribers they received this article yesterday. After a day, it opens up for everybody else.

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A drone crashed into an oil tanker at Basra on Thursday morning.

No fire. No damage. Or so they said. Nobody got hurt.

And just because nothing happened, Iraq suspended loading at every export terminal it owns.

Until further notice.

The day before, Washington had reimposed its naval blockade of Iran and during seven hours was blasting the same hangars and inflatable launchers they already “love-tapped” thrice before.

West Texas crude closed twenty-six cents higher.

… Just because.

You are excused if you didn’t know that there’s a frickin’ war going on...

NOTHING makes any sense any longer.
The closer you stand to the actual stuff, the less you believe its price.

And because the strait itself is the running headline, let’s start with that:

Iran says Hormuz is closed until further notice.
Central Command says it isn’t.

IT IS - IT ISN’T - IT IS - … playground squabbles on the world stage.

Who knew Idiocracy would arrive this early?

The answer to “Schrödinger’s Strait” is the billion (maybe even trillion) dollar question. It’s only a fifth of the planet’s oil after all... And the whole artifice of abundant money and debt and derivatives is built on… I don’t know… A working economy??? Which without oil is kinda like … not working, you know?

Oil is back to the 80’s. Pre-war it was around the 70’s. Nothing going on. I assure you.

Well, not me specifically. The price actually says that.

Let’s try to remember what is going on:

There was the MoMU (Memorandum Of MisUnderstanding) where the US read one thing and Iran another. Most importantly for this article that Iran either promised to let vessels pass freely or that Iran retains complete control over the Strait.

I’ll let you decide who’s got the bigger stick to enforce its reading.

Long story short: the US tried to pass a few vessels - under the cover of night, AIS’s turned off, heavy air cover - through the Omani channel. Iran didn’t like their mis-reading of the MoMU and decided to love-tap a few of those.

Trump got all upset and blasted that 1000 missiles would be launched etc etc. Too much text, didn’t read those tweets in full. Short version: “Trump angry, bombs away”.

So Trump got to bombing the already twice-over destroyed the Iranian Navy, the 40 times obliterated peons, and killing fishermen. And to top it all off - because bombing a girl’s school got him bad prezz last time - he chose this time to bomb near a children’s cancer hospital.

That’ll teach them!

Anyway, I digress from the point I want to make.

Attacking civilians during war is - last I checked - still a war crime. So is attacking civilian infrastructure. So anything that is civilian is designated “dual use infrastructure”. Because a nuclear reactor delivers electricity to both civilians and military alike is why it got attacked I guess?

Or that bridge got destroyed? Which Iran retaliated by attacking the King Fahd Causeway (the only way out of Bahrain). Bridge-4-bridge. I’m pretty sure who will cave first.

Now, during the MoMU lull, a lot of oil vessels got out of the Strait. :party: oil troubles resolved; Right?

No1 thought to check: what tankers go in? Not much as far as I can tell.

Well, there was one near Kharg Island that got hit by the US because all the Iranian oil got released as well and because a tanker is just floating storage - extending the now empty storage tanks at said island. Gotta prepare for the inevitable return of the war.

This really deserve their own articles as there’s so much moving parts.

Because the war heated up again, Iran said. THOU SHALL NOT PASS.

Trump angry.

Boats antsy.

No1 passes. Unless they’re paying. Iran. And traveling their corridor.

Trump angrier still.

Trump throws bombs.

Iran throws bombs back.

Several completely unrelated health-accidents happened that necessitated airlifts to Ramstein, but I keep digressing.

As the war is back from never gone, Ansar Allah is starting to move too.

And here I need to sidestep - again.

During the closure of the Strait, oil went through pipelines - about 7% of world energy - through to the Red Sea. So about 20% got blocked, 7% got redirected through pipelines and the leftover got filled by SPR releases and demand destruction.

Now you may - or may not - remember the Houthis, but those sandal-wielding desert nomads got the US Navy running. The Navy tried to keep the Red Sea open last year, but failed completely. Of course Iran had something to do with that, much like NATO has to do with Ukraine. But I digress. AGAIN.

Well, the Houthis are on a hair trigger now that once the US attacks Iranian civilian infrastructure, that they’d commission their own white haired robed dude for Bab el-Mandeb shouting stuff about passing.

They still have a moral compass I reckon. Throw bombs all you want, but target civilians? That’s where they draw the line.

Anyway, you get the picture I guess? No oil out of the Red Sea, no oil out of the Gulf.

I would excuse you for believing that’s bullish on the price of oil.

Quite the opposite actually.

Oil’s pegged at the 80’s.

Because apparently there’s a glut of it?!

Who could have known!

During the largest disruption in history.

I guess I’m too logical to understand these moves.

SPR running dry + largest disruption in history = glut.

Got it.

Oil is just the market with the most fireworks.

But there are others that are running the same experiment, although a bit more quietly.

Silver has been in deficit - consumption of 1.3 billion ounces against production of 860 million - long enough that the largest US dealer started requiring ten-thousand-dollar minimums because demand was too high.

Their words, not mine: too high.

The US Mint mused openly about halting coin sales to reprice them.

In January, silver hit 121 dollars an ounce. An all-time record.
It’s ~55 dollars now.

The deficit hasn’t closed. No new mines have been opened. No silver asteroid has crashed onto earth providing bountiful metals for everyone till the end of time.

I guess it makes sense?

Deficit + increased usage through electrification = lower prices. 🤡

Although there are some other signals: Hecla sold its silver in Q4 at an average of 69 dollars an ounce while Chicago said the market price was 56. 23% above the “price”.

My best guess is that HL went straight to the buyers, bypassing the rigged casino and got a better price.

Which is basically what Keith Neumeyer of First Majestic has been advocating since 2014: stop taking the banks’ price and organise an industry wide cartel finding a good price for what the metal’s worth (oil/OPEC enters the chat).

He’s not wrong in my opinion. But I guess silver mining CEOs never heard about Chavez and what wonders a simple withholding of labour can do.

Yet another metal that skipped the logic entirely and left is copper.

When the industry finally settled the 2026 benchmark (for smelters), it came to zero dollars and zero cents per tonne.

Make that make sense…

The lowest in the history of a benchmark that had been running for decades.

Freeport’s head of commodities sales personally signed the industry’s annual TC/RC benchmark for thirty-five years. In October he walked away from it.

“Never seen anything like this”.

Antofagasta now wants to price off spot indices instead.

The stated reason for this change is the same as the reason the benchmark was created in the first place: protecting the smelters.

And because smelting for free seems not ridiculous enough, the price went negative. So smelters had to pay the miners for the privilege of processing their rock. -100 dollars a tonne in some tenders, one even reported at -220.

“Protecting the smelters”.

There’s a law running underneath all of this, which copper makes clearest: a reference price lasts exactly as long as the side holding the physical still needs it.

Iron ore proved this in 2010, when Vale and BHP and Rio dropped a forty-year annual benchmark the moment Chinese demand handed them the leverage.

No exceptions since.

Which makes it all the more baffling that Neumeyer is still asking miners to do voluntarily what Kazatomprom simply does by existing.

Kazatomprom digs roughly forty percent of the world’s uranium. This year it’s holding back five percent of global supply in the ground. On purpose. No flooded shaft, no missing reagent, nothing broke.

They just don’t feel like it.

At these prices at least.

Someone should probably tell Neumeyer to go and learn Kazakh. Maybe he’ll get more results that way.

The price action is… instructive…

Actual utilities that need that yellow cake to fuel their appliances are signing term contracts near a 150 dollars a pound. Spot - you know, the price for people who will never take delivery - drifted lower all spring and sits now in the mid-eighties.

That 65 dollars is the difference between “delivered” and “owned”.

And no, not done yet… Rare earths are next. Not that they’re really rare, but that’s a story for another day (Or you can read “The weaponisation of the periodic table”).

No, rare earths is where the logical accumulation of events simply gives up.

China turned that whole complex into a licensing tap.

Domestic consumption comes first. MCGA. Sounds a bit like YMCA, but with side-effects.

Defence applications will NEVER, never, ever get their hands on the magnets or anything rare earths related from China. From their point-of-view: understandable of course. From the world’s view: that’s a problem because the whole missile and drone and automaton industry runs on rare earths.

Just three weeks ago ten American companies were cut off, including - and you have to admire the precision - the two miners the US is counting on to build a non-Chinese supply chain. Yttrium exports to America - the material that keeps jet engines from melting - dropped from 333 tonnes over eight months to 17.

Seventeen tonnes. I don’t need to paint a picture that not many engines will be built this way…

I genuinely cannot mock Beijing here, which is annoying. Beijing is the only actor in this entire piece doing what the economics textbook promises everyone does: acting in its own rational interest, allocating scarce strategic materials to its own military first. Perfectly normal. Perfectly ruinous if you’re downstream.

So the sarcasm goes to Washington, which looked at this situation and wrote a ten-year floor price of 110 dollars a kilo into a contract with a domestic miner, injected four hundred million dollars of equity, and became the largest shareholder.

An administered price, decreed by a defence ministry, because the “free” market price - depressed by Chinese overproduction and Wall Street banksters - would have bankrupted the West’s last miner.

We’ve all got lectured that commodity prices couldn’t be manipulated. And now the first gov to formally do so was the one lecturing us.

Sometimes the universe has a wry sense of humour.

I guess that “commodity manipulations” only apply if they go in the inconvenient direction.

And to wrap up this rambling post I’ve got to tie it back together to the oil I started with. Because a by-product of oil is sulfur. Which leads to sulphuric acid.

Which leads to/leaches uranium, strips copper ore, and is one of the base ingredients of fertiliser.

THE most consequential liquid nobody is melting for. (yeah yeah, I had to try didn’t I??)

A fifth of the world’s sulphur ships - or rather: shipped - through the Gulf. China stopped exporting it in spring to protect its own harvest.

Chile alone was taking in 151,000 tonnes of Chinese acid per month last year. February this year: 32,000. By March: zero, rien, nada, nothing...

Kazatomprom says its acid supply is fine for 2026, and I tend to believe them. In 2024 they felt what running dry feels like. They know EXACTLY what it means.

But the war didn’t just sit still on the (now blown up) oil terminals. It affects the molecule that gets everything else moving or out of the ground. That invoice arrives later. Through the mine, the ores, and then later the field, the crops and finally the shelf.

So.

Silver at 55, roughly halved since its all-time high, fundamentals still intact.

Crude at 80 when 20% of the oil stopped moving, with our buffers running on fumes.

Uranium spot drifting south while producers either just sit on the ore or can’t leach it.

Copper smelters paying miners to take the rock.

A rare-earth price so wrong the Pentagon nailed a government floor under it.

And two straits, just one call apart, holding hostage between a quarter and a third of the world’s seaborne energy.

It’s not a big secret… Even our politicians know about all of the above.

But the price does what prices do.
And as I’ve been told - repeatedly - by both David and Sam: The Market Is Always Right.

The right move for producers, and it looks like they’re reaching that same conclusion one by one without anyone coordinating it:

“Ceci n’est pas le prix”
-- Magritte (paraphrased)

They’re starting to find out what their product is ACTUALLY worth the same way Hecla did - by asking. One contract. One curtailed shipment. One export licence quietly not renewed. No press conference needed.

Paper will stand by its promises right up to the day that someone asks it to become metal, at which point that piece of paper discovers that hundreds went before it.

No1 can tell you which day that is.

I’m expecting that one morning we’ll see the quote just frozen.

“Until further notice”.
First in Iraq.
Then everywhere else.
All at once.

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