PUTTING THE WORST POSSIBLE SPIN ON GOOD NEWS.

Bloomberg's headline is straightforward enough.  "Hormuz Oil Flows Rising as Gulf Giants’ Ramp Up Accelerates."  The first paragraph of the article, however, is a clanker.

The flow of crude through the Strait of Hormuz is creeping higher as producers across the Middle East boost exports in the face of Iran's lingering threat to shipping. The increase is keeping global crude oil prices in check.

The reports I'm seeing of gas lines that Iranian wags, if there are any wags, might be calling "Jimmy Carter's revenge," and the news of the gangbangers that used to raise havoc in Iraq or Lebanon being mobilized to cow the population, strongly suggest to me that if those are the effects of Iran's "threat to shipping," I'd hate to see what defeat looks like.

I keep monitoring the crude oil options, and the open put interest continues to exceed the open call interest.  At sea, incentives matter, and risk premia are real.

About 6 million to 8 million barrels a day of crude are now being shipped through the world's key oil chokepoint, according to estimates from oil traders involved in and monitoring cargo activity. Flows slipped in July, when an onslaught of attacks on supertankers by Iran led to the breakdown of an interim ceasefire and heightened risks to navigation. They remain at roughly half prewar levels.

Still, estimates can be wide-ranging and volatile. Some trackers and US officials have suggested even higher volumes, though the security situation remains precarious. Two freighters were struck on Monday, according to the UK navy, a reminder that there's still significant peril when transiting. One factor helping sustain the increase is the highest earnings in the history of the supertanker market, adding for the incentive for shipowners to cross.

Either way, there are signs that producers across the region have been moving more oil in recent days. To enable that, a batch of tankers are doing shuttle runs, hauling barrels to just outside the Persian Gulf. Once the shuttle ships get there, their cargoes are then collected by waiting tankers that remain unwilling to go through the strait themselves. Every major regional supplier bar Iran is now selling its barrels for collection outside Hormuz.

Perhaps the people whose money is at risk have more incentive to get things right.

"In the last few days, more oil seems to be coming out of Hormuz," Georgios Sakellariou, a freight analyst at Signal Maritime, an analytics company. "If it's sustainable, crude oil prices will stay down, although recently that has still meant something close to $85 a barrel."

Brent oil futures were trading at about $88 a barrel on Thursday, on course for the biggest weekly drop since late June when the interim ceasefire was still helping to keep shipments moving. The resumption of negotiations between the US and Iran over ending the war has also stymied prices this week. The boss of Europe's largest oil refiner said this week he is bearish on the outlook for crude prices, in part as barrels quietly escape Hormuz.

A sudden inflow of ships late last week has enabled higher loadings, and it isn't clear if more ships had entered in recent days to keep that pace going over the coming weeks.

Saudi Arabia had the highest number of tankers in several weeks at its export installations in the region on Tuesday, satellite images gathered by Bloomberg show. A day earlier, loading activity from Iraq's ports in the region even briefly exceeded above prewar rates. Smaller producers like Qatar and Kuwait are starting moving more too, adding to the momentum.

Poor Qatar, on the one hand benefitting by a strong Iran, on the other benefitting by oil exports.

Predictably, establishmentarian media (otherwise known as anyone with a vested interest in Our President failing) put the worst possible spin on that de facto opening of Hormuz for everyone but Iran.

The director of the Middle East program at Defense Priorities, writing in the [failing — Ed.]New York Times, concedes that Iran can no longer completely block the Strait of Hormuz – but only due to the exertions of the U.S. “The war with Iran has revealed two things: Iran cannot completely close the Strait of Hormuz, and the United States cannot completely open it.”

However, the point is that the U.S. can open it enough while starving the ayatollahs. Accepting the obvious refutation of conventional wisdom, another piece in the NYT now warns that, unless Washington is prepared to be magnanimous, a desperate Islamic Republic may strike out wildly and heedlessly. “By all accounts, Iran’s economy is in truly terrible shape…The Trump administration is not wrong to think that Iran’s economic situation is dire. But it’s counting on Iranian authorities responding to more pressure by negotiating; they might well respond by escalating the conflict.”

But that will only earn them more enemies. I think the U.S. is now at the point where it is becoming decisively dominant over the Islamic Republic. The challenge is how to employ that growing power to lessen the hold of the villains over the innocent publics and, with it, to create the building blocks of new modes of peace and stability. We are still at the beginning, and it is important to build a consensus so that the growing opportunity will not be squandered or thrown away. Whatever happens, the result has been an immense reversal of fortune for Iran—and European maritime calculation.

As if the mullahs, or rogue local commanders, didn't go all use it or lose it and put their missiles on spray-and-pray early in the joint operations, and then flip a couple of scraped-together flying gas mains at the Emirates and antagonize them.

Let the thing be pressed.