“Acting on instructions from President Vladimir Putin, Sergey Lavrov notified the US side that the
Armed Forces of Russia, acting in response to the Kiev’s regime continued terrorist attacks on civilians
and civilian facilities in the Russian territory are launching systematic and sustained strikes on facilities
serving the needs of the Armed Forces of Ukraine in Kiev, as well as relevant decision-making centers.
Sergey Lavrov drew his counterpart’s attention to the Foreign Ministry statement of 25th May, which
advised that the United States and other countries with representative offices in Kiev ensure the
evacuation of the diplomatic personnel and other citizens from the Capital of Ukraine. Russian Foreign
Ministry, 25th May 2026
“The strikes are described by Moscow as a response to the Kiev’s regime’s continued attacks against
civilian population and infrastructure in Russia – especially citing a recent deadly attack on a school
dormitory in the Russian town of Starobilsk which killed at least 21 people mostly teenage girls, which
Moscow described as ‘the last straw.’ Larry Johnson, 26th May 2026
“An agreement has been largely negotiated subject to finalization between the United States of
America, the Islamic Republic of Iran and the various other countries”. President Trump 24th May 2026
“It – the Abraham Accords – should start with the immediate signing by Saudi Arabia and Qatar, and
everyone else should follow suit. If they don’t, they should not be part of the Deal in that it shows bad
intention. In speaking to numerous of the Great Leaders mentioned above – Gulf Rulers – they would be
honored, as soon as our document is signed, to have the Islamic Republic of Iran as part of the
Abraham Accords.” President Donald J Trump, 25th May 2026
Summary
• Despite the PR and statements from the White House there will be no deal with Iran and no early opening of the Strait of Hormoz.
• Russia has signaled that her patience with Ukraine and NATO has finally run out. Putin has warned America and NATO that attacks will be made on all military bases in Ukraine and perhaps those also supplying equipment and intelligence that make the drone attacks possible.
• This is a ‘Transformation Point’ in the war with Ukraine and NATO.
• President Trump is caught between a rock and a hard place in how to complete his disintegration of Iran. Withdrawal will be an admission of defeat; and more attacks on Iran have an uncertain conclusion.
• The negotiations are going nowhere despite the apparent optimism in some quarters.
• Another attack is likely within a few weeks with a view to destroying Iran’s infrastructure. By so doing the president can exit with his forces saying our task has been accomplished.
• When the war has finally ended, there will be new architecture for the Gulf States. This will include amongst others Iran being brought back into the Gulf States fold; Iran and Oman operating a form of toll booth; America being asked to take their forces and equipment out of the region; and these countries’ security umbrella being provided by China and Russia through Pakistan having the air and military power on the ground.
• The global economic and financial consequences of the Strait of Hormoz remaining closed for more weeks if not months will be immense as it will for the supply and demand for copper.
Introduction
In recent months our focus on the war in Europe and the Middle East rather than on macro-economics and copper has been deliberate because what emerges will have a significant influence on the world’s economy and the supply of and demand for copper.
The determinant on whether the world has a mild recession or something worse depends on how long the Strait of Hormoz will remain closed. Remarks coming out of the White House that the opening of the Strait of Hormoz is close at hand and that an agreement will be signed soon to end the war has been assumed by markets to be correct though comments by Iranian officials have been less assured.
Our doubts remain after listening to, talking with and reading what our group of knowledgeable experts have said. We conclude that the Strait of Hormoz will remain closed for some weeks if not months; that President Trump is caught between a rock and a hard place. If he withdraws his military hardware and troops, it would be seen as an admission of defeat by most countries; and if he decides on a new attack he risks being pushed back by the IRCG as they have replenished and strengthened their defenses since the last attack.
‘Whether my analysis is right or not, it seems that Iran will defer to the US to escalate the war. If it does, it would play to Iran’s advantage. It would last a long time, and a long war would not only hurt Trump domestically but also hurt the world economically…It is not clear to me what Trump will decide, but every decision carries danger and political and economic risk.’
What is happening in Europe (Ukraine) and the Middle East (Iran) is part of a realignment of nations that will form the basis of a new multipolar world unless America and her allies can dismantle this gathering force.
Change invariably arises out of crises. This one will be either financial or military or both in or around 2030-2032 with the latter date signaling the end of the 100-year bull cycle that began in the trough of the Great Depression in 1932.
The Putin-Xi Summit in Beijing
By putting the dots together, it seems that Putin and Xi not only discussed how the war in Europe and the conflict in the Middle East are likely to progress but they discussed scenarios on how the new architecture for Eurasia and the Middle East might be coordinated, a discussion that we will return to.
Europe
Both Sergey Lavrov’s statement on instructions from President Putin to his American counterpart and the Russia’s Foreign Ministries were blunt in condemning Ukraine’s attack on the college dormitory in Starobilsk that has so far killed 21 students.
As a side note, according to reports (Larry Johnson) the college was chosen because Palantir’s A1 mistook the college for a military base indicating that the US military relies on A! without any analyst backup.
The two statements from Moscow mark a ‘Transformation Point’ in Russia’s war in the Ukraine and thus with NATO. Russia having given notice to NATO specialists to leave or risked being killed will now destroy all Ukrainian miliary bases. The question will then arise: will the attacks then extend to those countries supplying the equipment and the intelligence for these drone and missile attacks?
Is the groundwork also now being laid for the delusional EU leaders’ fixation on attacking Russia and thus in Sergey Lavrov’s statement to the US Secretary of State was a signal to Brussels ‘Don’t try it, we are prepared?
What will happen over the coming weeks will be more massive attacks by Russia on Ukraine and at a time when European business activity is weakening.
Figure 1:
European & UK PMIs were Shockingly Weak arguing against Rate Hikes Source: Simon Ward
Middle East
There are reports (Al Jazeera) that a deal between the United States and Iran is ready for signature but others close to the negotiations indicate that a deal is far from being completed. Larry Johnson writes:
‘Washington and Israel want Iranian concessions first, while Tehran wants tangible
front-loaded economic security relief before it gives ground on anything that matters.
That is the heart of the deadlock.’
Compounding the risks is that during the ceasefire America bombed areas around Banda Abbas and attacked Iran’s small boats last weekend whilst overflying the Strait of Hormoz. These send signals to Iran that negotiations are a cover for more military action.
Iran’s basic conditions have not changed. They are:
1. Immediate release of frozen assets
2. Comprehensive Sanctions Relief
3. Sovereignty over the Strait of Hormoz
4. Total Ceasefire across all conflict fronts including Lebanon that ensures protection for Iran and its regional allies.
5. Compensation for war damage that America, Israel and others have inflicted on Iran
6. The Nuclear issue: Enrichment is non-negotiable.
Some but limited progress has been made in the discussions, but both sides remain intransigent. Iran has suffered from 47 years of being seen as a pariah country by the west and has suffered from sanctions and attacks.
America is emboldened by being joined at the hip by Israel and did see Iran as a route to controlling global energy and as a means of dismantling her competitive force BRICS.
Our view supported by experts that we know is that a renewed attack will be the only way to settle the issue: either America forces Iran to wave the ‘White Flag’ or else Iran sees America off.
Overview
President Trump’s vision of an enlarged Abraham Accord is an attempt to forestall the measures that are being put together by China, Russia, Pakistan and others to create a new architecture for the Middle East.
China has invested $89 billion into the Middle East mostly into GCC since 2019. Bilateral trade between China and the Gulf nations reached $257bn last year a little higher than the combined trade of western countries. Financial integration is deepening with Chinese banks expanding credit in the region by extending $16bn in loans to GCC countries; and Gulf states are investing heavily in China’s domestic energy and petrochemical sectors.
Relations between China and Russia with the Gulf States have been deep monitored through diplomatic channels whilst those with America have been opportunistic and aggressive.
Discussions are taking place through back channels on how to replace America’s security umbrella as Gulf States see how Iran has not been defeated yet. There are informed rumors that Saudi and Qatar will in the not-so-distant future push back from having America as their security umbrella.
Pakistan, with close ties to China and a military that saw off India last year is establishing an agreed foothold in Saudi by stationing fighter jets and military forces in the country.
If America attacks Iran again – likely – and is seen off by Iran, then we will then see the new Gulf architecture being assembled over the coming years. The basics in our view will be:
• The Gulf States ask America to withdraw their military bases and forces from their countries.
• The security umbrella will be provided by China and Russia but with Pakistan being the physical presence.
• Iran and Oman will police the gateway into and through the Strait of Hormoz which will include a payment of $2M per vessel in Rials or CNY and cargo that transits through the Strait to be paid in CNY or non-US$s.
• This will be the end of the petrodollar which is worth between $1.25 trillion and $1.5 trillion a year at prewar energy prices
• Iran will be enjoined with other Gulf States to create a new force in the region and in the world. The tentacles have already been laid by China and Russia through diplomacy and investments.
The American enlarged Abraham Accord plan was always going to be a non-starter given Isreal’s military tactics in Gaza and Lebanon.
What is noticeable is how Russia has become aggressive in their approach towards Ukraine and NATO and how Iran is standing firm against America and Israel
Policies were probably agreed when Putin and Xi met in Beijing. The multipolar world is taking shape visibly.
The global consequences of the Strait of Hormoz remaining closed for more weeks if not months will be massive on business activity, financial markets and the copper industry. Once we have a clearer sense of the length of the Strait closure we will assess the extent of those risks. Reality is safer than illusions
© Simon Hunt Strategic Services simon-hunt.com
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