ISRAEL IS PUSHING FOR ROUND TWO AND THE WHITE HOUSE IS LISTENING

• The House war powers vote failed 212-212, one vote short of the simple majority needed to pass 6TOI Trump posts that ‘the military decimation of Iran’ is ‘to be continued’. This is the tightest margin yet, the third such vote this year, and it follows a 49-50 Senate vote Wednesday in which three Republicans, including Lisa Murkowski of Alaska voting against the war for the first time, broke with leadership 14APW Republican resistance to Iran war grows as Murkowski flips. The votes are not winning but they are tightening with each cycle, and Murkowski's flip matters: she told the Senate that troops and warships in the region mean "it doesn't appear that hostilities have ended" 14APW Republican resistance to Iran war grows as Murkowski flips, directly contradicting the White House legal argument for avoiding the 60-day congressional authorisation requirement under the War Powers Resolution of 1973.

• Saudi Arabia has floated a regional non-aggression pact modelled on the 1975 Helsinki Accords 7CRD Saudi Arabia 'raises possibility' of non-aggression pact with Iran to quell regional tensions: Report. The proposal, reported by the Financial Times, has support from several European capitals and would provide Iran with security assurances against future attacks in exchange for a broader regional stability framework. The motivation is not altruistic: Gulf states are worried about a "wounded but more hawkish Iran" on their doorstep once the US military presence inevitably thins out 7CRD Saudi Arabia 'raises possibility' of non-aggression pact with Iran to quell regional tensions: Report. The fact that Riyadh is publicly discussing this, even via unnamed diplomats, signals a clear-eyed acknowledgement that the war has not resolved the underlying problem and that the Gulf cannot rely on Washington to manage the aftermath.

• Iran's Foreign Minister Abbas Araghchi warned the US and Israel at the BRICS foreign ministers' meeting in New Delhi: "Test us again, you will repeat your failures" 11PTV Test us again, you will repeat your failures: Iran FM to adversaries. He framed Iran as having won the war by preventing its enemies from achieving their objectives, said military pressure would never resolve disputes with Tehran, and reiterated that Iran views the US blockade, not Iranian Hormuz controls, as the destabilising act 10PTV May 14: Iranian officials issue defiant messages, vow no surrender to whims of imperial powers. This is the language Iran is using in front of the Global South audience it most wants to cultivate. For Araghchi to deliver it at a BRICS ministerial, days after Saudi Arabia's Helsinki proposal leaked, is deliberate positioning.

• Iran's shadow fleet is conducting oil transfers off Malaysia at scale. Advocacy group United Against Nuclear Iran (UANI) documented 42 ship-to-ship transfers of Iranian crude in international waters near Malaysia's Johor state since February 28 15APW Malaysia's maritime agency rejects claims of allowing Iranian oil transfers. Malaysia's maritime enforcement agency acknowledged the transfers but said they occur in jurisdictional gaps beyond its radar coverage 15APW Malaysia's maritime agency rejects claims of allowing Iranian oil transfers. China buys around 90 percent of Iranian oil, much of it routed through exactly these transfers. This is the mechanism that lets Iran sustain revenues despite the US blockade, and it is operating openly enough that satellite imagery can count it.

• The Lebanon ceasefire talks in Washington produced "productive and positive" language from the State Department but nothing concrete, while fighting continued throughout 5AAM US says Israel-Lebanon talks at State Department ‘productive and positive’. An Israeli soldier, Staff Sgt. Negev Dagan, 20, was killed by a Hezbollah mortar in southern Lebanon Thursday night, the 19th Israeli soldier killed since March 2 and the sixth since Trump announced a ceasefire on April 16 2TOI Soldier killed by Hezbollah mortar shell in south Lebanon; rockets fired at north. The Lebanon ceasefire formally expires May 17. Neither the killing nor the expiry date appear to have accelerated any agreement.

Brent nudged up to $106 and the Oil Volatility Index (OVX) fell further to 68.8, its lowest in weeks. Markets are reading the China-Iran shipping corridor deal as de-escalation. That reading is too optimistic given that Israel and CENTCOM were literally war-gaming a restart this week, but markets are not tracking KAN reporting.

The more notable signal is the 30-year US Treasury bond yield, referenced by Iran's parliament speaker, having climbed above 5 percent for the first time since before the 2008 financial crisis 8PTV Iran parl. speaker warns US theatrics in Hormuz could trigger new global financial crisis. That is the cost of funding a war and a deficit simultaneously at war-driven energy prices. It is also the number that will determine whether the Federal Reserve can hold rates steady while inflation runs hot. Gold at $4,675 is slightly off its peak but still historically elevated. Defence stocks remain well below their April highs: Lockheed Martin at $520 versus $610 a month ago, Rheinmetall at $1,143 versus $1,487. The market continues to price sustained procurement, not imminent escalation. That view may need revising quickly.

New Mexico offers the starkest illustration of what war-driven oil revenue does to domestic politics. The state, which produces more oil than any US state except Texas, is projected to see an $850 million surge in annual government income for the budget year ending June, equivalent to 12 percent of its general fund, purely from the Hormuz-driven price spike 13APW New Mexico politicians grapple with oil windfall from Iran war. Democratic politicians who oppose the war are now campaigning on how to spend the windfall, a position that is politically awkward enough that gubernatorial candidate Deb Haaland described it as "hard for people to think about" given that "children are getting killed on the other side of the world" 13APW New Mexico politicians grapple with oil windfall from Iran war. This is the domestic political economy of the war in miniature: the people most harmed by high energy costs are not the same people collecting the royalties, and the states doing the collecting are finding it difficult to say so loudly.

In Congress, the affordability pressure is translating into war-powers votes. Republican senators from energy-importing states are increasingly willing to break with leadership, and the 212-212 House result shows the war no longer has a comfortable majority even in the chamber where Trump's party has more control 6TOI Trump posts that ‘the military decimation of Iran’ is ‘to be continued’ 14APW Republican resistance to Iran war grows as Murkowski flips.