THE MOU IS DEAD. THE BOUNTY IS REAL. WHAT COMES NEXT IS A GRIND BOTH SIDES CLAIM TO WELCOME AND NEITHER CAN ACTUALLY AFFORD.

• A secret US backchannel to the Islamic Revolutionary Guard Corps (IRGC) has been revealed by Axios, and the punchline is that it actually delivered useful intelligence. 4TOI US had secret backchannel with IRGC, learned it supports Iran’s negotiators, report Then-director of National Intelligence Tulsi Gabbard reached out to Kurdistan Regional Government President Nechirvan Barzani in May to ask whether the IRGC would undermine Iran's negotiators. Barzani arranged a call with newly appointed IRGC chief Ahmad Vahidi, who confirmed: "I fully support them and this is also the position of the IRGC." That message went to the White House within days. The revelation matters because it shows the administration knew the IRGC was not a spoiler of talks. The talks collapsed anyway, for structural reasons neither side could resolve. Barzani is now reportedly offering to try to restart direct talks. File that under: the only diplomatic thread still operational runs through Erbil.

• The US SPR has fallen to its lowest level since the 1980s. 7CRD US oil reserves plunge to 40-year low as war on Iran strains energy supplies After the current drawdown of 172 million barrels is completed, roughly 243 million barrels will remain. Before the Russia-Ukraine war in 2022, the reserve held 582 million barrels. Market analysts at Rapidan Energy warn that falling below 170 million barrels risks permanent damage to cavern infrastructure. The Department of Energy disputed that, saying only 70 million barrels must be maintained at minimum. Trump drew the line at $4 per gallon and told Americans not to complain. That line will be tested harder as the midterms approach in October.

• Gulf states are now openly venting about the war, and the language is no longer diplomatic. 13AAM Gulf allies growing frustrated with US over prolonged Iran war: Report "Trump started this war, and we are paying the price," one Gulf official told the Washington Post. Saudi Arabia, the UAE, Qatar, Kuwait, and Bahrain are all, to varying degrees, questioning the value of hosting large US military installations on their territory. A Western diplomat in the region added: US forces were "a necessary evil" before the war. "Now, the necessity of it is being put in question." The White House pushed back, saying Trump has "extraordinary relationships" with Gulf partners. The Gulf officials quoted anonymously in the Washington Post clearly disagree.

• Houthi attacks have now forced the suspension of operations at Mokha port in Yemen, killing seven people and causing around $16 million in losses. 11CNN Yemen suspends Red Sea port operations after Houthi attacks Separately, oil briefly topped $100 a barrel after the Houthis targeted Saudi ships in the Red Sea, threatening to close a second major energy export route at the same moment Hormuz remains blocked 11CNN Yemen suspends Red Sea port operations after Houthi attacks. Two choke points under simultaneous pressure is not a scenario markets were fully pricing until this week.

• Israel killed a senior Hezbollah commander in southern Lebanon on Sunday, a day after Israeli airstrikes killed 11 people including children in the Nabatieh district in the deadliest day since the June ceasefire 11CNN Yemen suspends Red Sea port operations after Houthi attacks. Hezbollah vowed an "appropriate response" and called on Lebanese authorities to stop "offering free gifts to the enemy" via negotiations 10CRD Israel escalates strikes on strategic hill near Nabatieh after attack wounds three soldiers. The June ceasefire framework, like the Iran MoU, is now functioning in name only. Israel's War Minister Israel Katz said "no score on any front will remain unsettled." That is not the language of a government planning to hold a ceasefire line.

The headline to understand is not that Brent is at $88.52. It is that Brent has risen more than six percent in seven trading sessions, RBOB gasoline futures jumped over ten percent in a single week (from $2.985 to $3.184), and heating oil is up nearly ten percent from a week ago [[market snapshot]]. That is energy markets pricing in the formalisation of the deadlock. The $100-a-barrel spike this week when Houthi attacks threatened the Red Sea 11CNN Yemen suspends Red Sea port operations after Houthi attacks is a warning of what happens if a second route closes. Gold at $4,380 remains near record highs. The VIX at 14.25 is genuinely disconnected from everything else on this page, a reminder that US equity markets are still, somehow, pricing a relatively calm world. The shipping ETF (BOAT) and Frontline tanker stock both rose again week-on-week: the money that follows this war keeps flowing toward whoever moves oil around the blockade, not toward anyone expecting it to end.

US pump prices have now reached $4.07 per gallon, a record for mid-August, driven by six months of Hormuz closure and the SPR drawdown that was supposed to suppress them 7CRD US oil reserves plunge to 40-year low as war on Iran strains energy supplies. Trump has publicly said $4 is acceptable. Republican strategists heading into October midterms almost certainly disagree. Heating oil futures are up nearly ten percent from a week ago, and with the MoU now expired and no diplomatic framework to replace it, the prospect of the Hormuz blockade continuing into winter is no longer a tail risk, it is the base case. European consumers face the same energy cost pressure. The Houthi threat to Red Sea routes adds a second vector. The supply chain rerouting that began in February is now a permanent feature of global logistics, and its costs are passing through to consumer prices across the board.