Logic, Logistics, And At Least Another 10 Days...

Logic, Logistics, And At Least Another 10 Days...

By Michael Every of Rabobank
Thursday was a rocky day in markets ahead of today’s deadline for the US to shift from bombing Iran’s nuclear, missile, drone, military-industrial, and regime sites to destroying its electricity grid, potentially taking out its power generation for a generation, and unleashing an Iranian response against the broader region’s power, water, and energy infrastructure.
Given that backdrop, some TACO the view it was logical Trump subsequently extended the deadline to 8PM EST on Monday 6 April, because “talks are ongoing, and despite erroneous statements to the contrary from the Fake News Media, and others, they are going very well.” Is this true, is Trump pulling a head-fake ahead of an impending strike, or did he just ramp the markets looking for an off-ramp?
Supporting a ‘deal ahead’ view, Israel is shifting from hitting regime to military-industrial targets and is back to 24-hour attack runs despite the incredible strain it puts on its pilots and fighter jets. Yet there are other logics derived from logistics.
The official Iranian position is that the US proposal to end the war is “one-sided and unfair.” Indeed, Iran’s hardline new leaders are calling for a rapid move to gain a nuclear bomb, and it is already recruiting children as young as 12 to man checkpoints in Tehran, according to Al Arabiya, and is using civilian shields around regime targets. Iran also says Yemen's Houthis may cut off Saudi Oil flowing from its Red Sea back-up pipeline and target the key trade route between Asia and Europe.
The Pentagon is reportedly choosing ‘final blow’ options if talks fail. There are strong suggestions that if the US steps up its attacks, the UAE and Saudi Arabia will move from defence to offence alongside it, which would change the regional dynamic – they, like Israel, are not able to ‘go home’ afterwards if they fail. This morning also sees news the US may send an additional 10,000 ground troops - and most of those forces could only arrive by next weekend, just ahead of the new Monday deadline. (Also note in 1991’s Gulf War 1, the US sent 650,000 troops at its peak, and in 2003’s Gulf War 2, around 450,000.)
However, that decline is part of the logic arguing why the US is acting – both to deal with Iran’s nuclear threat and to keep control of key commodity supply chains while it still can. Indeed, it’s reported US plans may include seizing key Iranian oil assets, either strategic islands in Hormuz or the oil hub of Kharg. Trump floated the US controlling Iranian oil yesterday, as it de facto does Venezuelan. If the US were to take the mouth of the Strait it could lock Iranian oil in, throttling the regime, while letting others’ out, albeit under some fire.
In short, we have an extension of the war until at least April 6 as the financial press say ‘24 days to disaster: Trump’s new deadline won’t change oil shock maths’. Oil already at sea pre-war will have been used up by then, revealing the true supply shock. Meanwhile, Ukrainian attacks have taken 40% of Russian oil export capacity out, there was a strike against a Turkish tanker carrying Russian oil yesterday, and a major cyclone just forced Australian LNG shutdowns. Vietnam and the Philippines are asking Japan to help them from its own oil reserves. Expect more such pleas.
We also have conflating geopolitical shocks that will echo after the war is over. Trump scorched NATO for failing an Iran ‘loyalty test’ and seems to be flirting with dumping the alliance again, despite Secretary General Rutte saying, “NATO is safer under Trump.” Europe still insists, “This isn’t our war.” Trump literally replied, “Ukraine isn’t ours.” Yet that’s as Russia admits it is helping Iran militarily, as Iran helped Russia fight until now…. and as the German Armed Forces Association called to prepare for a war economy.
Potential geoeconomic shocks are also clear beyond those from energy. Though the EU parliament approved the US trade deal yesterday, avoiding the US threat to use LNG exports as an economic weapon, there were caveats. The updated agreement allows for its suspension if: (1) the US undermines the deal's objectives or discriminates against EU economic operators - which implies there cannot be higher tariffs for different sectors, which the US is going to insist on; (2) if the US threatens the territorial integrity of member states - which implies Greenland, which the US is likely to return to after the Diego Garcia debacle with the UK, Spain’s restriction on allowing the Pentagon to use its airbase there, and some EU countries not allowing US planes to overfly them; (3) if the US engages in economic coercion – which is always a risk with economic statecraft.
Notably, and logically, some note a ‘patriots' paradox’, where even Trump's far-right European allies refuse to support his EU trade deal. Indeed, as underlined before, historically this is why neo-mercantilists don’t unite: they all want to win in the zero-sum trade game. Indeed, all political sides are seeing some things the same way in Europe, it seems. Germany is planning how it can hurt the US in a trade war even though they have no escalation dominance as the net exporter; and Chancellor Merz just proposed a new trade deal with China, which is supporting Russia vs Ukraine, though Brussels knocked it back.
Moreover, Canada’s PM Carney is also trying to put together a ‘mega anti-Trump alliance’ to ‘save world trade’. As Politico puts, it “Nearly 40 nations are hatching a plan to save the WTO or, if it can’t be salvaged, to build a new order.” Without the US and China? The EU and UK are deeply reliant on the US (and China); Canada borders the US, and it, Peru, Chile, and Mexico are in Donroe Doctrine territory; Japan is a key, freshly-pledged US ally; Australia and New Zealand are totally reliant on US defence and access to Eurodollar borrowing; and Brunei, Singapore, Vietnam, and Malaysia are in China’s neighborhood. (As China just threatened Mexico with trade reprisals over its new 50% import duties.)
That’s already a lot for markets to try to (in)digest today. Yet it’s also necessary to include that the FT reports the US Treasury market is showing signs of strain as the Iran war sparks tumult – any problems there are problems almost everywhere; more FOMC members are worrying about the potential impact of the war on the US economy, as the OECD suggests inflation could reach as high as 4.2%; the Fed’s Miran argues the central bank could cut its balance sheet by up to $2tn ‘without any market turmoil’; and President Trump’s signature is going to appear on paper dollars, making him the first sitting president to see this happen.
Whether that latter news is good or bad for the dollar, like so much else around us, ultimately pivots around the outcome of this war vs Iran.
Let’s hope for a quiet weekend – we haven’t had one in quite some time.

Tyler Durden
Fri, 03/27/2026 - 10:15