The Kobayashi Maru Scenario

By Michael Every of Rabobank

The Kobayashi Maru Scenario

Yesterday’s Global Daily by Ben Picton, ‘The Wrath of Kharg’, couldn’t help but get me thinking about the infamous the futures market continues to price for cheaper energy within a few months. Even with backwardation showing the current physical squeeze, which seems to suggest an inherent view there will be no long-run disruption to the region’s energy flows: and US assets are not tanking more than others on the suggestion this is due to a looming 1956 defeat. Or is that just the normal science fiction of mean-reverting “because markets” thinking? Let’s be clear: it’s very easy to see how things can get far worse. However, there are arguably ways things can also improve as a result.

On one hand, Treasury Secretary Bessent says the US is fine with some Iranian, Chinese, and Indian vessels having successfully made it through Hormuz. Why wouldn’t they be? If Iran starts letting everyone but the US and Israel through –neither of whom use it– then the blockade is effectively over. Yet that argues for Iran not to do so to any great extent.

If true that means blockade is effectively over https://t.co/wHQy1ksNWp pic.twitter.com/spl1c7fVTf

— zerohedge (@zerohedge) March 14, 2026

On the other, the underlying logic is that Trump also needs to reprogram the no-win scenario via further escalation of his own. As an example, Trump has announced his long-awaited looming trip to Beijing is unlikely to happen because of the war: he wants a delay of a month or so. In short, only if the war ends without a US retreat can Trump and Xi discuss the US-China relationship. The messaging is crystal clear. So is that China can get energy from the Western hemisphere to replace Iran and the GCC if needed. So is the US ability to then put a foot on the hosepipe in certain geopolitical circumstances – as it is now doing with Iran at far greater distance, risk, and cost. But that doesn’t mean it isn’t part of a future deal.

For those who can’t join those dots, note that after Trump blocked most oil exports to it after flipping Venezuela by force, the communist Cuban government has just embraced perestroika, allowing Cuban American exiles to return to the island and open private-sector businesses. That’s yet another Russian-Chinese-Iranian ally that seems in the process of being flipped into the US camp. The world is changing radically and rapidly – and it’s not something one just gets to sit out in splendid isolation.

Indeed, while NATO allies and Japan and South Kore (so far) won’t send ships to help reopen Hormuz despite Trump threats to NATO and even key Asian security alliances, the “It’s not our war” crowd must note that the longer this drags on, the more painful it risks getting for them. Moreover, they may also come to see that an angrier nuclear Iran with ballistic missiles, which can happen if the regime survives, would have huge implications for everyone. Japan’s PM Takaichi is reportedly ‘weighing her options’ and could agree to join a Hormuz coalition for freedom of navigation in principle, according to the Japan Times.

By contrast, the EU is saying “Not one molecule!’ and has ruled out relaxing a Russian gas ban, which logically only leaves the US as an LNG supplier. Via a transitive geopolitical process, that also places Europe on the same side as the US vs Iran, a key supporter of Russia vs Ukraine… and then vs China(?) Meanwhile, with Tyler Durden Tue, 03/17/2026 – 09:45

READ MORE