CALAMITY: Oil Blows out. So Does War. So Does Finance. So Will Food.

Monday's headlines collide into a major storm of troubles.

Aug 10, 2026

So many big stories in the news today, it’s hard to know where to begin and end. Let’s start with the Strategic Petroleum Reserve (SPR). It fell below 300-million barrels, just reported for last week.

The energy department claims today that the effective bottom (the level at which you start destroying the salt caverns by going any lower) is 70-million barrels. That’s nonsense. It’s what the government wants you to believe or what it wants to believe it can do if it has to, or what it wants Iran to believe, which is all just more denial of reality. Throughout the entire time of the war, the oil industry has been saying the effective bottom of the SPR is around 250-million barrels.

The oil industry has generally accepted that the operational minimum for oil in the SPR, a point at which it would be more difficult to pump out the oil, is somewhere between 250 million and 300 million barrels. Meanwhile, sizing studies done on the SPR in the 1970s recommended an inventory minimum of 250 million barrels….

That means we are there … or very close.

“The SPR’s drawdown, distribution and fill capabilities are currently limited and are at risk going forward due to longstanding issues with aging infrastructure compounded with ongoing major construction intended to address them,” the GAO warned in the report.
“When you do a drawdown, then you accelerate kind of the degradation of the wells themselves and some of the equipment,” Goldwyn said. “It’s like anything else — you use it a lot, you have to maintain it.” (Morningstar)

The Government Accounting Office says that partial collapse has already been happening. Additionally, equipment failures have left us to where the government cannot pump as low as it claims, even if it decides it wants to.

More than a quarter of that [remaining] oil is physically inaccessible, blocked by failing pumps, corroded pipes, and underground salt caverns that have deformed beyond their operational parameters, according to internal government documents. (Eastern Herald)

Somewhere not far below the present level, you start to increase the risk of collapsing the salt caverns. (Because they pump water down into the caverns to float the oil up, and once they have to pump that much water in, the salt dissolves enough to collapse.)

The mechanics of salt cavern geology mean that caverns left idle, or drawn down rapidly and then not refilled, can shift in ways that compromise the borehole integrity needed for reliable extraction. Repairing that kind of structural degradation requires engineering work that goes well beyond standard maintenance: remediation of the cavern walls, replacement or relining of wellbore casings, and in some cases the permanent abandonment of caverns that have deformed beyond recovery.

So, we are now close to what we might call “cavern bottoms,” like the phrase “tank bottoms” where they really mean the effective bottom of oil tanks because the final 10-20% fills up with sludge composed of sand, water, paraffin, tars, etc. that you can’t get much fuel out of.

Energy executives made their concern explicit to Congress in June. Oil company representatives warned Trump administration officials and lawmakers that the country’s energy price shock exposure had grown sharply with each successive drawdown, pressing the administration to prioritize refilling over other uses of the reserve

Keep taking the caverns down below their present level, which now has a 200-handle, and we start significantly increasing the risk of severely damaging the caverns. In fact, they say we should begin refilling them now to avoid causing damage because just sitting at the present level will cause deformity over time due to lack of oil pressure against the sides of the salt and due to the water.

For now, the United States is carrying the lightest emergency oil buffer it has held in more than four decades, and a significant portion of that buffer cannot be mobilized at the pace the reserve was designed to provide. What the Department of Energy decides next, whether to fund the repairs, begin purchases, or defer both while oil prices are relatively low, will determine whether the SPR exits this period as a functioning emergency instrument or continues to erode toward a level at which it cannot absorb a serious shock.

That paragraph was written more than a month ago. The whole situation is only worse now.

Spotty fuel shortages start to hit

The shortages in fuels are starting to emerge. I covered this at greater length in my weekend Deeper Dive, but will add a little here from the latest headlines:

First, let’s note that US oil (West Texas Intermediate) has broken back solidly above $80/bbl ($82.20 at the time of this writing), and Brent Crude is pushing back toward $90 ($87.89 at the moment).

Airlines are now scrambling for jet fuel. I already reported on how Gatwick told all pilots flying into London at the start of last week to tank up before heading to London because Gatwick would be out of fuel before the end of last week. (Whether they got their hands on any additional fuel and/or staved off enough refueling to end the week with some jet fuel still in their tanks, I haven’t heard.)

In July, several European airlines announced that they were at risk of running out of jet fuel. Europe has turned to the United States and Asia for alternative fuel imports in recent months but continues to feel the strain of the shortages. The United Kingdom, France, and Germany are extremely vulnerable due to their heavy reliance on the Middle East for their fuel supplies.

Europe set itself up for this to happen if a situation like the present developed. It did that by dialing back its existing refining operations in preference for green energy, and not approving new refineries, making Europe more reliant on fuels refined in the ME. It has regulated itself into deep troubles. The US has done somewhat the same, but still refines enough to export fuels to Europe; however, doing so at such an accelerated rate raises fuel prices for Americans.

On 18th June, the consultancy Energy Aspects forecast a jet fuel supply deficit across Europe of almost 600,000 bpd in the third quarter of the year, compared to surpluses of around 116,000 bpd in the United States and 425,000 bpd in Asia-Pacific. Europe’s inventories totalled around 38 million barrels at the beginning of June, equivalent to roughly 30 days of its fuel demand. The International Energy Agency (IEA) made a similar estimate.

That situation, too, has only gotten worse in the month that has transpired since that report.

EU Energy Commissioner Dan Jorgensen said that the region could face jet fuel shortages near the end of the summer season but that Brussels plans to coordinate releases of national reserves as required. Several European countries have also turned to alternative suppliers to fill the gap.

Even if they step in with the remainder of their crude reserves, they are going to find they don’t have the refining capacity to utilize that crude, now that so much of their supplemental ME refining has been knocked out along with so much Russian refining. It won’t matter that they have the crude, if they don’t have available refining capacity—something I’ve always pointed to as a major chronic problem that would come out of both the war in Iran and the war in Ukraine.

The U.S., Nigeria, Canada, India and South Korea have all stepped in to provide Europe with jet fuel. Meanwhile, in Italy, refiners boosted jet fuel production by around 10 per cent during the first four months of the year, helping to meet national demand….
As jet fuel contributes around 20 to 25 per cent of an airline’s operating costs, keeping ticket prices down has been difficult. Some airlines have already been forced to cut flights….
The low-cost Irish airline Ryanair said that 20 per cent of its unhedged fuel was hit hard by price spikes, leading operating costs to increase by 11 per cent.

Californian government operates with the same kind of heat-damaged brains that Europe does, pushing for more green energy by tightening the noose on the energy they already have, so it is in the worst condition of any US state as we move now into the tighter phase of the energy crisis where physical fuel shortages are just starting to emerge in major parts of the world, putting more demand on US fuel, which will raise US fuel prices.

More war, even with less war

From there, let’s talk about the war because that will have something to say about how much worse the crisis gets (which is already going to be way worse than most people realize because we’ve been riding on buffers that are now pretty well wrung out). As I’ve said, when the buffers run out completely on their ability to deliver, then the fuel shortages will start showing up. In some countries that is already happening, but not noticeably yet in the US, though things have gotten really tight for airlines, and prices on Ag diesel have been through the roof compared to anything farmers have seen in years before.

Trump has now caved in on his air strikes, as I said in my last Deeper Dive was looking much more likely now. Today he announced that, instead of relying on more bombing, he’s going to rely on the effectiveness of his own blockade at laying siege to Iran. That means Iran keeps its blockade in place, something it has announced in the headlines below that it will do, regardless, until the US meets several of its demands, which present a very high bar for Trump. So, that means no flow of oil as Iran will continue to enforce its blockade via its war on shipping.

Those banking on the deal between Iran and Oman to open the Strait of Hormuz, have been breathing the carbon monoxide of burning oil wells, pipelines and refineries far too long. As I made clear in my Deeper Dive (“Oil Pressure on Prices Is Rising Dramatically and Has Just Entered the Danger Zone”), Iran has said several time in the last few days (officially) that the deal it is striking with Oman will NOT open the strait back up!

The deal only determines how navigation through the strait will be controlled and profited off of by Iran and Oman after it finally does open up. As I noted in the Deeper Dive, some other Arab states have already signed their acquiescence to the new agreement, so Trump’s opinion on it no longer even matters. You can read in the headlines below about all the demands Iran has now added to Trump that must be met before it will reopen the strait.

In fact, the war continues to rage on from Iran’s side as it attacked several more ships over the weekend, noted in that Deeper Dive and in the headlines below. This it does to continue to rigidly enforce its own blockade. So, no, there is no reprieve in site for the flow of oil out of the either of the bodies of water that line the Arabian Peninsula.

To put a good face on it, President Trump now says he is only “semi-negotiating” with Iran. That is all he has been doing, according to Iran, for some time, because they kept telling him, “We don’t know who it is you think you are negotiating with, but it isn’t us!” When they announced weeks ago they would no longer negotiate with Donald Trump, they meant it; but he kept saying they were begging him for a deal and were deep in negotiations with the US. Their list of their demands that emerged over the weekend, which they say must be met before they will end their blockade on either major body of water, is certainly not what “begging for a deal” looks like. As I reported last Thursday, “Iran Has Trump Right Where it Wants him and Is Turning up the Heat!”

As I also said over the weekend, Trump will do his best to spin his retreat into something that helps him avoid losing face, and that’s why he’s calling it “partial negotiations.” “Whatever,” says Iran. “Still not negotiating.”

The perfect storm

Another powerful story is told by Bob Moriarty in the the video I’ve posted below. He notes the same confluence of storms coming against the US and the world that I’ve been calling out this year and says they are going to merge at a catastrophic level this fall. (I’ve started the video at the part where it gets dangerous, but you can also take it back to the beginning to get a good overview of the precious metals market as it stands right now.)

Just as I’ve been doing, Bob connects the dots of our many shortages with troubles in Japan and says the troubles being faced by the yen and supported by the US Treasury are going to become a lot worse than what we’ve heard so far. A financial typhoon has broken out in Japan, and it is on a path directly toward the US since Japan is the largest foreign bond holder of US debt right now.

Bob also predicts a serious global famine due to the fuel shortages, fertilizer shortages, worker shortages (in the US) and the Super El Niño—risks I’ve been tracking here as well, though I haven’t been as strong on the famine prediction, aiming more along the line of food shortages. That is something I’ve never heard him predict this forcefully in the past either, but risks of the perfect storm in food and finance are certainly compounding, and some parts of the world are almost certain to face famine.

There is also a lot of powerful stuff about the collapse of the labor market in the headlines today and how bad it really is. I’ve been saying all year that the labor situation is worse than the headline figures would let on—calling it a stealth recession—and now we are seeing, just like with the distortions that have already formed in those salt caverns, that, beneath the surface, the trouble is deeper than headline numbers like the unemployment rate let on. I may get to that in a Deeper Dive, but this is enough for today.