Big Oil's $23B Hormuz Exploits; Trump Botches Iran Peace Talks w/ Alex Jacquez, Matt Duss | MR Live

Oil companies like Exxon, Shell, and Chevron are generating billions in windfall profits due to sustained high oil prices, largely influenced by geopolitical tensions such as the conflict involving Iran and the Strait of Hormuz. These companies are not reinvesting these profits into increasing refining or production capacity but are instead returning capital to shareholders through massive stock buybacks. This practice contributes to inflation by keeping supply constrained while demand remains high.

Exxon expects nearly $9 billion in internal profits for Q2 and Q3. Exxon's stock is up 28% year-to-date and 40% year-over-year. Exxon and Chevron are planning a $20 billion buyback, and Shell is doing $3 billion a month in buybacks. The EIA (Energy Information Administration) forecasts crude oil prices will not fall below $80 a barrel until 2027, and gas prices will not return to $3 a gallon in their forecast.

The Abraham Accords, initiated by the Trump administration and embraced by the Biden administration, are critiqued as a fundamentally flawed foreign policy initiative. They were designed to marginalize the Palestinian issue, under the false premise that Arab nations would normalize relations with Israel without movement on Palestinian liberation. The primary beneficiaries were arms sales and the integration of signatory countries into Washington's lobbying ecosystem, rather than genuine peace or regional stability. Saudi Arabia, unlike smaller states like the UAE, maintained its stance that normalization requires progress on the Palestinian issue.

The UAE and Bahrain joined the Accords, having an existing behind-the-scenes relationship with Israel. The main prize for signatories was access to Washington's lobbying coalition and increased arms sales. Saudi Arabia has consistently stated it cannot normalize relations with Israel without tangible movement on the Palestinian issue. The Biden administration's continued pursuit of Saudi-Israel normalization after October 7th is seen as a doubling down on a failed theory.

President Biden's foreign policy approach is characterized as being 'trapped in amber' from the Cold War era, relying on outdated concepts of military alliances and failing to adapt to a changing global landscape. This is evident in his administration's decision to slow-walk and ultimately fail to rejoin the Iran nuclear deal (JCPOA), despite campaign promises, and its continued emphasis on military-to-military relationships as a means to maintain global hegemony and 'box China out' of regions like the Middle East. This approach has led to missed opportunities for de-escalation and contributed to current conflicts.

Biden's reputation as a foreign policy expert is tied to the late 80s/early 90s. He consistently downplayed the Palestinian issue. His administration failed to rejoin the JCPOA, despite his 2020 pledge, leading to a more hardline Iranian government. The 'America is back' slogan and focus on alliances like NATO and AUKUS reflect a Cold War mindset. The effort to 'box China out' of the Middle East is seen as bizarre, given China's lack of interest in replacing the US as a regional security guarantor.

Beyond direct energy costs, high oil prices are fueling broader inflation through increased diesel costs, which impact the transportation of goods and food. This, combined with issues like nitrogen supply affecting fertilizer production, is leading to higher food prices. Furthermore, geopolitical disruptions and natural disasters (like a 'super El Nino') threaten critical supply chains for components like semiconductors and specialized gases, adding further cost pressures and uncertainty to the economy.

Food at home (CPI category) was up past 3% last month and is expected to rise further. 80% of US food is distributed by truck, making diesel costs a direct inflation driver. Fertilizer costs are hitting farmers, predicting another food shock in the fall. The war has disrupted supplies of valuable gases like helium and neon, critical for semiconductor manufacturing. Natural disasters like the 'super El Nino' threaten crops, energy infrastructure, and specific industrial inputs (e.g., a quartz mine in North Carolina for high-end semiconductors).

There is a significant and growing movement within the Democratic party, particularly among younger, leading figures, to challenge and replace the long-standing foreign policy advisors who have shaped recent US policy. These critics argue that the current establishment has demonstrated a lack of moral and strategic clarity, 'whitewashed the truth' about conflicts, and led the country into multi-year disasters, particularly regarding Israel and Palestine. This signals a potential generational shift in Democratic foreign policy thinking.

Ben Rhodes has advocated for turning the page on these advisors. Chris Van Hollen published an editorial explicitly calling for a change in US foreign policy towards Israel and by implication, those who fashioned the existing policy. Brian Schatz tweeted that primary voters won't trust candidates who supported sending bombs to Netanyahu's government or who plan to 'reinlist senior Democratic decision makers who whitewashed the truth.'