How could the U.S. possibly make such a disastrous move against Iran?

Whether it’s a disastrous move depends on economic data: I. The Iran war has driven up oil prices—clearly above the cost of U.S. shale oil—sustaining robust growth in U.S. petroleum exports. The production cost of U.S. shale oil stands at approximately USD 66 per barrel. By late 2025, Brent crude prices had already fallen below this shale oil breakeven threshold; yet the U.S. launched the war, pushing crude prices back above that level. U.S. petroleum and petroleum product export volumes have continued to grow strongly. After achieving a critical breakthrough in shale oil technology in 2015, the U.S. lifted its decades-old ban on crude oil exports—transforming itself from a net crude importer into a net exporter of total petroleum (crude plus refined products). II. U.S. corporate profits remain unaffected by the Iran war—and continue growing strongly. In 2026, U.S. profits from global semiconductor hardware are projected to surge by 107.95%, accounting for 49.30% of total U.S. corporate profits—maintaining its leading edge. U.S. corporate profits continue rising. The ratio of corporate profits to outstanding credit market debt—a proxy for profit generated per unit of newly created credit—has also risen, pushing up market interest rates. This signals that U.S. credit expansion remains conducive to corporate profit growth and has not yet reached its limit.

The U.S.–Iran situation is not so simple.

First, the dollar is bankable, earns interest, and ranks among the world’s most liquid assets—most importantly, it’s stable, not subject to a 20% plunge within a month. So you’ll observe a counterintuitive phenomenon: the more intense the war, the higher the U.S. Dollar Index climbs. Second, demand contraction. With the Strait of Hormuz blockaded, global energy supply chains tighten and oil prices soar. Energy-importing nations across Asia and Europe must spend more dollars to buy oil—leaving less money available to purchase gold. Some countries are even forced to sell off previously acquired gold reserves just to cover urgent energy shortfalls. These two factors combined have temporarily crushed gold prices—leaving gold with virtually no room to rise. II. Second Move: Welding Shut the Petrodollar System The U.S.’s second method of extracting value globally is to reinforce the ‘oil–dollar’ system. In 1971, President Nixon announced the decoupling of the dollar from gold—stripping the dollar of its most critical anchor. But the U.S. promptly secured a new anchor: oil. In 1974, the U.S. and Saudi Arabia struck a secret agreement: all global oil trade would be priced and settled exclusively in U.S. dollars, in exchange for U.S. military protection for Saudi Arabia. From that day forward, the ‘petrodollar’ system was born. Yet cracks have recently emerged in this system. Since 2023, Saudi Arabia has begun accepting RMB for partial oil payments; Iraq and the UAE are likewise experimenting with alternatives to the dollar. Russia’s energy trade with China and India increasingly uses local currencies. According to data released by PBOC Governor Pan Gongsheng at the 2025 Lujiazui Forum, the RMB has become the world’s third-largest payment currency by aggregate measure; cross-border RMB receipts and payments exceeded RMB 64 trillion in 2024—a 23% year-on-year increase. The dollar’s share in oil settlements is being gradually eroded. The U.S.–Iran war, however, has hit pause on this trend. With the Strait of Hormuz blockaded, Middle Eastern oil cannot reach global markets—forcing Asia and Europe to turn to U.S. shale oil instead. And when buying oil from the U.S., only dollars are accepted. According to data from the U.S. Energy Information Administration (EIA), U.S. shale oil exports surged from roughly 4 million barrels per day pre-war to nearly 6 million barrels per day by early June—an increase of almost 50%. Moreover, the U.S. shale oil breakeven price hovers between USD 60–70 per barrel; the war pushed oil prices above USD 80, yielding over USD 10 in net profit per barrel for the U.S. Trump’s core constituency—the U.S. shale oil industry—has reaped extraordinary profits over these past three months. Profitability, however, is secondary. More crucially, countries that had been actively exploring RMB oil settlements over the past two years have been forced to suspend those efforts. The petrodollar system has thus been re-welded shut—by this very war. III. Third Move: Draining Global Liquidity If the first two moves represent geopolitical positioning, this third move strikes directly at the financial bloodstream. Once hostilities erupted, the blockade of the Strait of Hormuz drove up oil prices, which in turn fueled inflation. U.S. CPI rose 4.2% year-on-year in May—its highest level since May 2023—and U.S. Treasury yields briefly breached 5%. Many readers seeing this assume Trump is in trouble: with midterm elections looming, soaring inflation will surely cost him votes. But Trump is no fool—and this situation is far more complex than it appears. High Treasury yields mean investors can earn nearly 5% risk-free returns simply by parking money in the U.S.

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