FILE PHOTO: U.S. President Donald Trump attends the signing ceremony for an execituve order on mail ballots, in the Oval Office of the White House in Washington, D.C., March 31, 2026. REUTERS/Evan Vucci/
During a primetime address last night, the president provided an “update” on the state of his war against Iran. Oil prices fell and stock rose on the expectation that the conflict will end.
It’s not going to.
Yes, I know what Donald Trump says.
In an interview, he said, “we're going to be out pretty quickly." He said Iran “won't have a nuclear weapon because they are incapable of that now.” He said “we have had full regime change.” He said there’s “a very good chance that we'll make a deal.”
In fact, there is no regime change. Hardliners now have complete control. There won’t be a deal. Iran has shown no interest in one. It has denied Trump’s repeated claims of ongoing talks. US forces won’t leave, because they are entrenched in the region. The war will continue to rage no matter what the president says tonight.
Trump might declare victory, according to a Rapidan Energy Group brief (which I found via Carl Quintanilla), but he “will struggle.” Iran still controls the Strait of Hormuz. It still controls highly enriched uranium. Israel will still continue its attacks. Iran will still retaliate against Israel and the surrounding Gulf states. “A clean US disengagement [is] structurally difficult,” it said.
As for nukes, the problem doesn’t end with Iran. Trump has opened a new chapter of nuclear proliferation, as small nations like Poland, South Korea and Saudi Arabia can no longer trust the US to act as a deterrent against Russia, North Korea and Iran.
The markets might be misreading the president, badly. This morning, I interviewed a career intelligence analyst who goes by the Bluesky handle Shipwreck. He thinks it’s unlikely that Trump will announce the war’s end. Instead, he thinks it’s more likely he will announce its escalation. The goal, he said, might be placing ground troops on islands in the strait to reopen it to shipping.
How long and bloody would that be? I asked.
“The operation wouldn’t be as bad as the holding period, where Iran would likely fire short-range ballistic missiles and drones at our forces.”
Sitting ducks? I asked.
“Kind of,” he said, “we would have air cover and would pound any sites that fired, but yeah, not good.”
Whatever happens, Shipwreck said, there is no walking away.
“We won’t walk and can’t,” he said. “It amazes me how bad the markets can be at reading some geopolitical things. The Iranian Revolutionary Guard Corps runs the show. They are fanatics and don’t care about repercussions. They were founded and based on maximalist ideals. They will fight to the death and will not surrender. Even if Trump said ‘mission accomplished’ tonight and it’s over, which I doubt, Iran and Israel are not stopping.”
Here’s the rest of my interview with Shipwreck.
Is the Rapidan report right?
If we leave without control of the Strait of Hormuz, Iran will make it painful for everyone. And yes Israel will likely continue actions against Iran with or without the US.
How painful?
Painful, as in painful cost. They will charge a fee and restrict movement to try to keep oil at a high rate, largely with the intent of recouping some funds back from the war. They will likely only allow “friendly countries” to move. Iran’s whole goal is to enact an economic cost, because they can’t do it militarily.
For how long? How motivated are they?
Very motivated, as long as needed. To keep pressure on the Strait of Hormuz, a few drone hits on ships or small boat swarms will keep insurance high and likely keep ships away. Without being under pressure of attack by the US or Israel, they could keep it up for as long as they see fit. They would avoid angering China or other major exporters and just keep harassing US and western ships. Look at how the Houthis effectively closed the Bab al-Mandab Strait for months by just the threat and a few hits.
I imagine a situation where a strait that isn’t open and safe will slow traffic and raise prices. The insurance issue is a big one. Even a partially open strait causes problems. See the Houthis in the Red Sea. I don’t see energy prices coming down any time soon, so likely a long tail of pain even when this thing enters a calmer phase. The key is “phase.” The length of those will vary. Markets don’t like the unknown and we are heading for that.
Will Trump declare victory tonight? If so, is it a victory?
I don’t think he will declare victory. I’m leaning towards him announcing actions with US ground forces in the strait. It seems like two to three weeks more at minimum based on force movements. There will be no victory. The hardliners now run Iran. We are set up for years of periods of hostility with breaks for calm. Think pre-October 7 in Israel with the proxies.
To be clear, you think he's going to announce an invasion?
Maybe, but more likely he will announce the next phase, which could include ground operations. Again, I have no insight, just basing it on assessments and force movements. He is very difficult to judge. I brief every morning and it’s always an adventure in trying to understand US policy and actions.
What would the next phase look like?
US strikes followed by Iranian counter-action against Israel and the Gulf states, with sporadic closures of the strait. Then periods of calm with hybrid actions. Possibly proxy actions, depending on how long it takes Iran to get them running again. Honestly, the end state for Iran is developing a nuke and following the North Korean model. They know a nuke at this point is the only deterrent. They will do everything they can to achieve it.
The ground invasion will more likely occur in the strait, taking islands but not in Iran proper. It’s too risky but not impossible to carry out actions deep in Iran. We tried it once and it failed miserably, see Operation Eagle Claw. The ground invasion is the wildcard, but if it occurs, it will be to open the strait.
The markets seem to be expecting Trump to walk away.
We won’t walk and can’t. It amazes me how bad the markets can be at reading some geopolitical things, especially in Iran. The Iranian Revolutionary Guard Corps runs the show. They are fanatics and don’t care about repercussions. They were founded and based on maximalist ideals. They will fight to the death and will not surrender. Even if he said “mission accomplished” tonight and it’s over, which I doubt, Iran and Israel are not stopping.
What about allies? Are the Gulf states going to keep trusting Trump given that Iran is going to throttle the strait?
The Gulf states were initially hesitant, but now they have hardened and are fully backing the destruction of the Iranian regime. They are another piece of all of this, and why we can’t just walk away. The Gulf states really have no choice but to stay with the US. They lack the military to do anything significant.
What about allies in Europe and Asia? Trump has triggered what looks to be a global recession. Are they going to continue trusting Trump to take care of Iran? Seems unlikely.
Europe clearly wants no part of this. They are likely trying to straddle the fence in order to be able to get oil out of the strait if Trump decides to bail. No one trusts Trump, but everyone needs the US over the long term. They’re walking a fine line.
It seems like nuclear proliferation is going to restart. Trump wants out of NATO. Iran is going to seek a bomb. Small countries can't trust the US to deter big countries. Even Poland is talking about making nukes. Is this Pandora's box opening?
Yes, and add Saudi Arabia to the list if Iran gets a nuke. Others in the region may also try. It’s the second- and third-order impacts that people fail to grasp in these large geopolitical events.