The Trump Administration’s Untrustworthy War Messaging Causes Market Chaos

Y esterday, I addressed how the Trump administration has undermined public support for the Iran war, despite its being a worthy cause, by first failing to make the case for the aerial invasion before launching it and then peddling incoherent, internally contradictory messaging in trying to explain and defend the mission.

Suffice it to say, things are not improving.

As I discussed in the post, among the biggest vulnerabilities now is the Strait of Hormuz, through which a fifth of the world’s oil shipments pass. Right now, it is a debacle. Yesterday, the administration made things worse with an astonishing public communications snafu.

Some background. Iran is not only mining the Strait; it has a decentralized Islamic Revolutionary Guard Corps command structure from which drone and missile attacks can launch from unpredictable directions, and quelling one node does not suppress the others. The regime has always known that its capacity to make the Strait a chokepoint was key to its defense and its ability to threaten the West: The Strait is only about 22 miles wide at one point, and the navigable waters for tankers are even narrower.

In just the past few hours, Iran has reportedly attacked at least three cargo ships (details still coming in). While the United States has assembled a historically impressive array of sea and air power for projecting force, it’s not enough to say that this armada is ill-equipped for mine-sweeping and protecting a narrow, well-defended waterway; the math is a gross mismatch in the sense that very inexpensive, slightly submerged mines can do immense damage to a multi-billion-dollar war-fighting vessel (remember how al-Qaeda’s explosive-laden dinghy nearly sank the U.S.S. Cole and killed 17 U.S. naval personnel in October 2000).

If Iran were to sink a U.S. warship on a mission to escort commercial carriers, the effect on oil prices and assessments about the state of the conflict could be devastating. That is why our forces have shunned pleas for escort missions.

Mind you, it’s not that Iran has closed the Strait; in effect, it controls the Strait and is using it to the advantage of not only itself but China. Hundreds of commercial vessels are queued up and can’t get through because the protection and indemnity insurance industry won’t provide coverage in this threat environment. Yet, Iran enables its own dark fleet to get through and thus transport millions of barrels of oil to China. The U.S. is reluctant to interfere with this commerce because it doesn’t want to draw China (heavily dependent on Iranian oil and militarily formidable) into the war. The maddening result is that, according to the Wall Street Journal, Iran is now actually transporting more oil than it was prior to the war, which of course is underwriting its military operations.

Since the commencement of the aerial invasion of Iran by American and Israeli forces twelve days ago, there has been speculation about a 1970s-level oil shock. Some of this chatter is ill-informed because it fails to account for drastic changes in energy markets over the past half century. Nevertheless, an effective shutdown of the Strait could trigger something along those lines.

That is why oil, which was just a bit over $60 per barrel a month ago, surged to $120 per barrel over the weekend heading into Monday. Oil prices dropped again, however, when President Trump signaled that the war could be winding down and threatened that “Death, Fire, and Fury will reign [sic] upon” Iran if it “does anything that stops the flow of Oil within the Strait of Hormuz.”

Thus it was that on Monday afternoon, Energy Secretary Chris Wright breathlessly posted on X that “the U.S. Navy successfully escorted an oil tanker through the Strait of Hormuz to ensure oil remains flowing to global markets.” The WSJ reports that stocks instantly jumped, and futures contracts for oil, diesel, and gasoline slid.

The problem is: What Secretary Wright said wasn’t true.

Obviously, he was not trying to mislead anyone regarding something so easily verifiable. It’s just another messaging screw up. Within minutes, his post was deleted. Both White House Press Secretary Karoline Leavitt and other administration officials acknowledged that the Navy had not escorted a ship through the Strait and that there were no plans to start doing that at this time — no doubt due to the very calculus discussed above. As is its custom, the administration says an unidentified “low-level staffer” was to blame for the error. How does a low-level staffer have access to both up-to-the-minute intelligence on military developments in the Gulf and the United States secretary of energy’s social media platform? We’re not told.

Naturally, the markets jumped wildly in the other direction after Wright’s post was withdrawn. The Dow gave back almost all of what had appeared to be a big day of gains. Oil, which had dipped to less than $77 per barrel, swung back up to over $83. As this is written Wednesday morning, Brent crude has spiked to over $90 per barrel. Moreover, the International Energy Agency is proposing to release 400 million barrels of oil from the IEA member countries’ reserves — more than double the prior record release in 2022 after Russia’s invasion of Ukraine — reflecting growing concerns about energy flows and the apparent lack of an American plan to reestablish the security of trade routes.

There is always the fog of war, and there are always unforced errors. But the messaging from the administration has not been trustworthy. The cumulative effects are becoming impossible to ignore.