Originally published at: https://peakprosperity.com/iran-threatens-red-sea-as-bessent-slams-china-for-protecting-itself-russia-offers-energy-lifeline/
Geopolitics
Treasury Secretary Scott Bessent described China as an unreliable global partner for the third time in five years, citing COVID healthcare hoarding, rare earth export restrictions that disrupted US supply chains such as Ford shutdowns, and current crude stockpiling amid the Hormuz closure. China holds reserves matching the International Energy Agency’s total but has bought tankers, restricted exports, and ignored release calls. Bessent has reportedly contacted Chinese officials, and a Trump-Xi meeting remains set for mid-May. Chinese state media have argued that U.S. actions justify the stockpiling as self-protection.
Speaking of blowback, Iran announced a potential Red Sea blockade threat, adding to shutdowns of the Gulf and Sea of Oman. The move would halt Suez Canal traffic between the Mediterranean and Asia. It would also counter Saudi pipeline shifts to Red Sea exports of four to five million barrels daily to South Korea, Japan, and Taiwan. Houthi actions have previously deterred shipping via drone and missile threats, spiking insurance rates and seizing routes without barriers. Saudi Arabia has reportedly urged the U.S. to lift the Hormuz blockade to avert retaliation.
Meanwhile, Russia warned that US-Iran peace talks mask an imminent strike. A Security Council official called negotiations a distraction for broader operations. The US has deployed 10,000 additional troops to the Middle East, including 6,000 with the USS George H.W. Bush carrier group, lifting the regional total past 60,000 ahead of the April 22 ceasefire deadline. Officially, U.S. State Department officials expressed optimism about the prospects for a deal.
Lastly, Germany’s Bundestag budget committee approved a Defense Ministry contract with Rheinmetall for loitering munitions, initially worth $345 million and capped at $1.2 billion pending milestones. The drones target the brigade in Lithuania, with potential wider use. This follows February purchases worth $637 million from Helsing and STARK. Conflicts in Ukraine and with the US-Iran have reportedly accelerated European drone procurement. Critics have cited a leaked report questioning the effectiveness of Rheinmetall’s prototypes.
Economy
Lubricant supplies reportedly face major disruption from the Strait of Hormuz closure. Iranian base oil exports have collapsed, pushing Group I buyers into the Group II market and overwhelming its capacity. Group III production is strained by damage to Qatar’s gas-to-liquids facilities and South Korean feedstock shortages. Additives are hit by sulfur and naphtha shortages, with ethylene and propylene prices up 74%. Five to eight weeks after closure, refinery buffers are depleting, Gulf refineries have scaled back, spot prices have risen, and blenders are drawing on pre-crisis stocks. A recent report on LinkedIn makes the following predictions:
- May-June: Blender inventories are expected to be exhausted, leading to allocation, extended lead times, and additive tightening.
- July-August: Shortages of gear, engine, and hydraulic oils could halt mining, transport, and manufacturing.
Recovery could take two to four months, even if resolved, due to reserve refills and Qatar repairs estimated at $26 billion. Some reports note sufficient short-term stocks and stable prices thanks to 2-6 month inventories. Suggested actions include auditing inventory for criticality, extending drains via oil analysis and contamination control, consolidating SKUs, communicating with suppliers, pre-purchasing critical items, documenting substitutes, and trialing non-petrochemical additives.
Meanwhile, the International Monetary Fund warned of sudden repricing risks in the US Treasury market. Debt issuance has surged, with deficits averaging 6 percent of GDP for three years and projected through the decade, compressing Treasuries’ safety premium. AAA corporate spreads narrowed to 35 basis points from over 55 at the start of 2019. Reliance on short-dated T-bills heightens rollover exposure to market shifts. Hedge funds’ cash-futures basis trades risk rapid unwinds amid volatility. The IMF stated these factors could invite self-reinforcing pressures where yield demands validate concerns. The Iran conflict adds fiscal strain, potentially raising global debt-at-risk by 4 percentage points in prolonged scenarios. US yields transmit near one-for-one to foreign bonds.
Lastly, the Pentagon met with General Motors CEO Mary Barra and Ford CEO Jim Farley to discuss shifting auto factories to munitions production. GE Aerospace and Oshkosh joined the talks. The Iran war has depleted Tomahawks at nine times the annual procurement rate, exhausted PrSM inventory, and drained Patriot interceptors, according to reports. Peacetime defense industry production cannot scale for sustained conflict, reports indicate. A $1.5 trillion defense budget targets munitions and drones.
Energy
Russian Foreign Minister Sergey Lavrov pledged to fill China’s energy gap from the Hormuz blockade during a Beijing meeting with President Xi Jinping. Russia, China’s top supplier, stands ready to boost volumes on equal terms. Xi urged deepened cooperation leveraging proximity. Lavrov noted that bilateral ties stabilize global chaos. The visit precedes a Xi-Putin summit after Trump’s May 14-15 China trip. China sources 20 percent of oil via Hormuz but holds stockpiles, a coal-based grid, and Russian pipelines, insulating it better than Asian peers like Japan, which is 95 percent Middle East-dependent. Reports indicate China’s oil reserves could cover over six months of Hormuz closure.
In another coincidental blow to energy supply, a fire at an Australian refinery has intensified the fuel supply crunch amid the Iran war. Viva Energy is one of Australia’s only two remaining refineries, providing 10% of Australia’s energy and a full 50% of Victoria’s (the second-most populous state in Australia). However, Viva Energy stated demand would be met through imports, with diesel and jet fuel production unaffected.
In other news, Europe’s push toward renewables is running into serious grid bottlenecks. In the Netherlands, which leads in offshore wind and solar per capita, structural congestion is severe, with up to 15,000 companies waiting for grid connections. Industries are stalling, and residential projects are halting, as renewables outpace transmission infrastructure, leading to curtailment or scarcity. Connection queues are growing across the continent due to permitting delays, investment shortfalls, and the decade-long timelines needed to build new lines. The EU estimates it needs €1.2 trillion for grid upgrades by 2040. In 2025, the bloc generated 48 percent of its electricity from renewables, surpassing fossil fuels for the first time.
Privacy & Surveillance
President Donald Trump urged Republicans to pass a clean extension of FISA Section 702 through the House Rules Committee. Trump stated he is willing to risk his rights and privileges as a citizen for the military and the country. This position differs from his 2024 Truth Social post, in which he called to end FISA and claimed it was illegally used against him. House Speaker Mike Johnson advanced H.R. 8035, which would renew the provision for 18 months through late 2027, without allowing amendments for privacy reforms. Rep. Thomas Massie proposed requiring warrants for FBI searches of American communications in the Section 702 database. The FBI conducted over 3.3 million queries in 2021, including 278,000 improper ones reportedly targeting crime victims, January 6 suspects, protesters, and donors. Queries increased 35 percent in 2025. The FISA Court described compliance issues as persistent and widespread. The Department of Justice restored congressional access to FISA courts by lifting restrictions from the Biden administration on attendance, note-taking, and information sharing among cleared lawmakers. Sen. Chuck Grassley cited this as compliance with 2024 reforms and a reason to support the clean bill. The Congressional Progressive Caucus pledged to oppose it. Privacy advocates have called for warrants to query Americans’ private messages, while others have warned lawmakers against allowing Section 702 to lapse, describing opposition as “national security roulette” amid ongoing threats.
Sources
Trump’s Flip: Willing to “Risk” Your Rights for FISA Spying Powers
Trump says he’s willing to ‘risk’ your rights for his surveillance powers
Lubricant Crunch Ahead: Timeline to Shortage and 7 Steps to Survive
The shortages haven’t arrived yet. But they’re coming.
Source | Submitted by Audience
Germany Fast-Tracks Kamikaze Drone Arsenal with $1.2B Rheinmetall Deal
Germany Accelerates Kamikaze Drone Stockpiling With Rheinmetall Deal
Europe’s Electrification Push Hits Gridlock
Europe’s Electrification Dream Is Hitting a Wall
Bessent’s China Unreliability Tally Hits Three Amid Oil Hoarding
China has been an unreliable global partner three times in the past five years
IMF Warns of Sudden Repricing Risk in US Treasury Market from Debt Surge and Bill Overreliance
IMF Warns US Treasury Market Prone To “Sudden Repricing” Due To Soaring Debt, Overreliance On Bills
Russia Pledges to Fill China’s Energy Gap as Hormuz Blockade Bites
Russia can certainly fill the resource gap that has arisen in China and other countries interested in working with us on an equal and mutually beneficial basis.
House Eyes Warrantless FISA 702 Extension as Reforms Stall
The bipartisan push to extend it without a single privacy reform is now accelerating
Pentagon to GM and Ford: Make Missiles, Not Cars—WWII Redux
The Pentagon just asked GM and Ford to start making weapons.
Iran’s Triple Blockade: Red Sea Joins Gulf and Oman in Shutdown Threat
The Iranians are adding another sea blockade—making it the third in the area, the country announced last night.
Russia Warns: US-Iran Peace Talks Mask Imminent Strike as 10K Troops Deploy
Russia says the US-Iran peace talks are a cover for a massive military strike.
Australian Refinery Fire Fuels Supply Crunch Amid Iran War
Australia refinery fire worsens fuel supply crunch amid Iran war
In addition to sources submitted by community members, the following were also used in the creation of this report: WSJ, CAT Magazine, Precision Lubrication blog, Berliner Zeitung, Frensel Lobo, China Daily, South China Morning Post, RT_India, Shaiel Ben-Ephraim, State Dept, SunContract, Mind Israel, Deep Value, Reuters, and Viva Energy.
