KAOS THEORY

Lakshmi Sreekumar, an energy trader, derivatives specialist, and macro analyst, returns for a sharp tour of oil’s geopolitical maze. She examines Hormuz as a “sieve,” Iran’s IRGC strategy, dark shipping, and why oil forecasts keep missing the mark. The conversation also explores China’s structural demand decline, possible conflict paths, Fed policy, and the prospect of a global oil surplus by 2028.

Welcome to KAOS THEORY — a podcast collaboration between Grant Williams and me that focuses on the intersection of Macroeconomics and Geopolitics in an increasingly disorderly world.7/13/26: Episode 13 — Michael Every ReduxIn the latest episode of KAOS Theory, Grant Williams and I welcome Michael Every back to the show for a wide-ranging discussion on the latest confrontation with Iran and what it reveals about the rapidly changing geopolitical landscape. Moving well beyond the daily headlines, our conversation examines the strategic calculations of the United States, Iran, Israel, and China, and explores why the assumptions underpinning the post-Cold War order continue to unravel. Along the way, Michael explains why today’s conflicts are increasingly fought through economic leverage, supply chains, and energy infrastructure rather than simply military force, while Grant and I probe the implications for markets, investors, and policymakers as the global balance of power continues to shift.Where you can find Michael Every:X: https://x.com/TheMichaelEveryLinkedIn: https://www.linkedin.com/in/barry-strauss-8848702/Show NotesAs always, I include my Show Notes, and this time it’s useful to point out that no matter how much I prep for a show, the geopolitical volatility of the day is such that our conversations with Michael seldom follow any predetermined script!Proposed Agenda for KAOS THEORY 13: Michael Every Redux0:00–5:00 — Opening Frame: “The Peacefire and the Physical War”Goal: Establish that this is not a normal macro conversation.Opening prompt:“Michael, your recent notes basically say CPI, central banks, PMIs, and oil prices are now pieces of a much larger puzzle: war, shipping, industrial choke points, and economic statecraft. So let’s start with the big frame: are Iran and China separate geopolitical problems, or are they two theaters in the same physical-world conflict?”Core question:“What is your current base case: messy MOU extension, renewed military escalation, or a fake peace that becomes a different kind of war?”Part I — Iran / Middle East: The MOU as Battlefield5:00–17:00 — Segment 1: Is the Iran MOU Sustainable?Core questions:* You’ve described the current situation as a ‘peacefire.’ The U.S. seems to read the MOU as a path to Iran containment; Tehran seems to read it as a path to sanctions relief while preserving Hezbollah and Hormuz leverage. Can both interpretations survive inside the same document?* Is there a Venn diagram overlap for acceptable Win Conditions between Trump, Netanyahu, and IRGC?Follow-ups:* “Is the MOU really a peace framework, or just a temporary balance sheet for coercion?”* “Who needs the MOU more: Trump, Iranian political leadership, the IRGC, Israel, or China?”* “Does Iran’s political leadership want assets unfrozen while the IRGC wants Hormuz semi-frozen?”* “What would make you say the MOU is dead even if nobody has declared it dead?”Best trapdoor:“Is the MOU a ceasefire, a hostage negotiation over Hormuz, or a countdown clock?”17:00–30:00 — Segment 2: Hormuz — Open, Closed, or Weaponized?Core questions:· Is China playing games by restricting product exports (thereby keeping consumer-facing inflation high) while keeping oil imports low (thereby assuaging Trump)?· The market keeps looking at crude. You keep pointing to Hormuz traffic, refined product prices, bunker fuel, war-risk insurance, and crack spreads. Is Brent now the wrong scoreboard?Follow-ups:* “If Hormuz traffic is climbing but refined products are still tight, what is the market missing?”* “Can Iran allow enough traffic to avoid global panic while keeping enough friction to preserve leverage?”* “Is this less about closing Hormuz and more about turning Hormuz into a toll booth?”* “How important is the southern Oman passage, and why would Iran oppose its normalization?”* “Can the U.S. escort enough oil to calm markets without restoring true normality?”Market bridge:“Could we get the weird outcome where crude looks contained, but consumer inflation tightens through jet fuel, diesel, bunker fuel, shipping, food, and utilities?”30:00–45:00 — Segment 3: Hezbollah, Lebanon, Israel — The MOU’s Hidden ContradictionCore questions:· “I want to test my Hannibalesque double-envelopment thesis. Maybe Trump appears weak in the center through the MOU, while letting the pincers form: Israel/Lebanon against Hezbollah on one side, and potentially Iraq anti-corruption / anti-IRGC moves on the other. Clever-but-too-cute, or plausible?”· “You wrote that Tehran may read the MOU as peace where Hezbollah wins despite losing the battle, while the U.S. reads it as peace where Hezbollah loses because Israel stays or Hezbollah is disarmed. Isn’t that contradiction the real war?”Follow-ups:* “If Israel stays in southern Lebanon until Hezbollah is disarmed, is that a violation of peace or the enforcement mechanism of peace?”* “Could Lebanon’s state interest now diverge from Hezbollah’s interest?”* “Are U.S./Gulf sanctions against Hezbollah part of the same military-diplomatic campaign?”* “Would Iran tolerate Hezbollah being slowly strangled under cover of an Iran MOU?”* “Is Israel the spoiler, the enforcer, or the pincer?”45:00–55:00 — Segment 4: Iraq and the Second PincerCore question:· “If Iraq becomes the second pincer — through anti-corruption probes, state cleanup, or pressure on pro-IRGC commercial and militia networks — how dangerous is that for Iran’s regional architecture?”· The Houthis have been eerily quiet. If the first 2 pincers are real, shouldn’t there be a 3rd pincer to wipe out the third H of the Houthi/Hezbollah/Hamas Cerberus to preempt any problems at Bab al Mandab?Follow-ups:* “Is Iraq more important to Iran than markets appreciate?”* “Could anti-corruption become the polite name for anti-IRGC financial warfare?”* “Would Iran be more threatened by losing influence in Iraq than by temporary pressure in Lebanon?”* “If Hezbollah is one forward-defense pillar and Iraq is another, does pressure on both make renewed escalation more likely?”Make-him-choose:“If this double envelopment is real, does Iran respond in Hormuz, Lebanon, Iraq, Israel, or through China/Russia diplomatic channels?”Part II — China / Geo-Economics: The Other Front55:00–67:00 — Segment 5: China’s Oil GameCore question:“China’s oil imports have dropped sharply while the U.S., Japan, and others are using emergency or abnormal flows to keep prices contained. Is China helping suppress oil to assuage Trump, managing inventory, or positioning itself for a longer conflict?”Follow-ups:* “Is lower Chinese oil demand a peace signal or a war hedge?”* “Could China be deliberately reducing visible oil pressure while retaining leverage elsewhere?”* “Does Beijing want Trump to get lower crude but still suffer higher consumer inflation through product bottlenecks?”* “How sustainable is the current oil calm if China resumes normal imports?”* “Would China prefer Iran to keep Hormuz semi-disrupted but not fully catastrophic?”Sharp formulation:“Is China playing good cop in crude and bad cop in goods?”67:00–80:00 — Segment 6: China’s Product Export Restrictions and Industrial Choke PointsCore question:“You’ve pointed to rare earths, Japan, tungsten scrap, cobalt curbs, Chinese solar inverters, and the broader industrial security map. Is China’s real leverage no longer commodities, but the products and components that embody commodities?”Follow-ups:* “Are we moving from commodity inflation to product scarcity inflation?”* “Is China restricting exports to inflict inflation pain, expose Western dependency, or force a negotiation?”* “How should we think about China’s leverage over Japan specifically?”* “Is the West finally realizing that supply chains are not economic plumbing but strategic terrain?”* “Does China’s playbook amount to: ‘You control the dollar and sea lanes; we control the industrial choke points’?”Best trapdoor:“If China can reduce oil imports while restricting critical product exports, are markets using the wrong inflation model entirely?”80:00–87:00 — Segment 7: Fortress North America vs ChinaCore questions:· What are the US levers in bifurcating world energy flows? My gut says that the geopolitical imperative for Product Export Bans is higher than ever now given Trump’s focus on lowering gasoline prices.· “You’ve floated the NAFTA-to-NAPHTHA idea — North America as an energy, hydrocarbons, commodities, consumers, technology, and military bloc. Is Fortress North America the logical U.S. response to China’s choke-point strategy?”Follow-ups:* “Would a reworked USMCA become the economic backbone of a Donroe Doctrine?”* “Is the U.S. trying to build a trusted-bloc industrial system around energy, defense, minerals, chips, and capital markets?”* “Where does that leave Europe, Japan, Australia, India, and the Gulf?”* “Is this still globalization with security filters, or is it bloc formation?”* “Does Fortress North America lower inflation through energy abundance or raise inflation through deglobalization?”87:00–90:00 — Closing Rapid FireKeep this brutal and clean.* “Iran MOU: extended, broken, or militarized?”* “Most likely next escalation point: Hormuz, Lebanon, Iraq, Israel, or Red Sea?”* “China: calming crude or weaponizing goods?”* “Most mispriced market variable: oil, dollar, rates, gold, shipping, or crack spreads?”* “What does the market still not understand?”* “One indicator you would watch every morning before looking at the S&P?”Final Questions:· You and I saw eye-to-eye on Trump’s Economic Statecraft goals and you agreed with my Reverse Marshall Plan mental model. Question: Can we still get to the nirvana of Disinflationary Growth? We were there briefly before the Iran War.· “If you had to summarize this whole moment for a portfolio manager still staring at Fed dots and CPI prints, what would you say?”KAOS THEORY 9: Michael EveryICYMI, please listen to our conversation with Michael last year about the Tariff Wars: Get full access to Kaoboy Musings at www.urbankaoboy.com/subscribe

Meredith Angwin, an energy analyst and author who writes the Electric Grandma Substack, explains why grid reliability matters. She describes baseload versus peaker plants, how renewables create just-in-time gas dependency, the role of nuclear and transmission constraints, and quirky ideas like space data centers. Short, clear, and focused on the toughest challenges for keeping electricity reliable.

Barry Strauss, a renowned historian and author, dives into the intricate ties between ancient and modern geopolitics. He discusses how Israel, much like ancient Judea, must diversify alliances to navigate competing powers. He highlights the historical relations between Jews and Iranians, arguing today's tensions are an anomaly. The conversation explores the significance of internal cohesion and leadership, drawing parallels to U.S. interests in the Middle East and the lasting lessons from Roman diplomacy and civic responsibility.

Kim Ghattas, an Emmy Award-winning Middle East expert and author of "Black Wave," shares her insights into the geopolitical landscape shaped by historical events. She discusses the pivotal year of 1979, examining how the Iranian Revolution and the siege of Mecca ignited a rivalry between Saudi Arabia and Iran. Ghattas also explores sectarian divides, the balance of modernization and conservatism in Saudi governance, and the ongoing impact of these dynamics on the region's increasingly complex political environment.

Michael Every, Rabobank's Global Strategist, delves into the decline of the post-WWII Liberal World Order and the rise of Economic Statecraft. He discusses the historical context of power shifts, particularly the challenges posed by China’s demographic and economic strategies. Every explains the implications of U.S. trade barriers and tariffs as tools to reshape global dynamics. He also highlights the maritime capabilities gap between the U.S. and China, emphasizing how this affects geopolitical tensions and the future of international governance.

Welcome to KAOS THEORY — a podcast collaboration between Grant Williams and me that focuses on the intersection of Macroeconomics and Geopolitics in an increasingly disorderly world.11/9/24: Episode 8 — Barry StraussHistory might not always repeat, but it certainly rhymes.Internal divisiveness, external threats, border crises, epidemics, inflation/currency debasement, wealth inequality — these challenges all might sound recent and familiar, but they faced also Ancient Rome. Barry Strauss, best-selling author of many books on ancient history as well as Senior Fellow at Hoover and Professor Emeritus at Cornell, shares lessons of resiliency and longevity from Ancient Rome.Barry Strauss is a Corliss Page Dean Senior Fellow at the Hoover Institution as well as the Bryce and Edith M. Bowmar Professor in Humanistic Studies Emeritus at Cornell University.Strauss is a recognized authority on the subject of leadership and the lessons that can be learned from the experiences of the greatest political and military leaders of the ancient world (Caesar, Hannibal, Alexander, among many others). These lessons apply to business and government leaders of today who are faced with complex issues that are both challenging and often defy easy solutions. In addition to writing eight books, Strauss has spoken at the Hoover Institution, the Center for European Policy Analysis and many universities, institutes and war colleges here and abroad as well as for AXA Investment Managers and Cornell Executive Business Education. His articles have appeared in the Wall Street Journal, the Washington Post and the L.A. Times. Most recently, Strauss has been interviewed on CNN’s Fareed Zakaria GPS, A&E, the History Channel, the BBC and PBS.This episode has been long in the planning, and Grant and I are thrilled to finally welcome Barry Strauss to Kaos Theory to discuss the lessons of Ancient Rome as they pertain to modern day Geopolitics.Where you can find Barry Strauss:Website: https://barrystrauss.com/Amazon Store: https://www.amazon.com/stores/Barry-Strauss/author/B0045ANWJM?ref=sr_ntt_srch_lnk_1&qid=1731250431&sr=8-1&isDramIntegrated=true&shoppingPortalEnabled=trueFacebook: https://www.facebook.com/barrystrauss.authorX: https://x.com/barrystraussLinkedIn: https://www.linkedin.com/in/barry-strauss-8848702/Show Notes:I usually don’t do this, but because I’m a huge fan of Roman history, I thought I would provide the outline from my show preparation notes for those of you interested. We covered a lot of topics (boldfaced) but not all of the topics below, and perhaps we will get Barry back in the future to delve a bit deeper:* MOTIVATION - What can Ancient Rome teach us about today?* Defining “Ancient Rome”* End of Republic: 27 BC* Constantine the Great 306 AD* End of Western Empire 476 AD* Sack of Constantinople 1204 AD* End of Byzantine Empire 1453 AD* Reasons for Longevity* Role of Institutions/Succession Mechanisms* Institutions* Byzantine Empire is example on the resilience of the structure* Education* Pragmatism* Role of Leadership* Antiquitas podcast: “Augustus = Clausewitz in a toga”* Ten Caesars list* Role of Geography/Borders* Importance of Geography* US much better than Ancient Rome* Naval supremacy – Highlight The War That Made the Roman Empire and the Battle of Actium* Borders* Hadrian’s Wall / Antonine Wall* Aurelian Walls* Theodosian Walls* Role of Climate Change/Disease* Antonine Plague* Late Antique Little Ice Age during 3rd Century* 536 AD Climate Catastrophe causing GLOBAL COOLING* Massive volcanic event* Justinianic Plague* Crop patterns provoking steppe tribe migrations* Barry’s Theory: US is extension of British Empire* One political system is so strong and it broke off and remade itself* Rome: Republic -> Empire* US: Empire -> Republic* “Messy” Democracy or Benevolent Autocracy – False Choice?* PARALLELS – Where are we today?* Late Republic Analogs:* Marius vs. Sulla Civil War* Gracchi Rise of Populism* Caesar – Rise of Autocracy* Many fear Trump as a Caesar character* Early/Mid Empire Analogs:* Expansionist vs. Settled Empire* Augustus -> Trajan: Expansionist?* Hadrian and on: Isolationist?* Parallels to Globalism vs. Isolationism shift today* End of Pax Romana Analogs:* Travails of Marcus Aurelius – Foreshadowing?* Plague, Invaders on 2 fronts, Insurrection* Crisis of the 3rd Century* Parallel Issues:* Widespread epidemic/plague* Internal divisiveness* Multiple external threats* Porous borders leading to building of walls* Inflation/Currency Debasement* Nero’s spending programs and debasement * Vespasian’s fiscal prudence gives hope* Debasement continues under Pius/Marcus Aurelius and later* Wealth Inequality* Great wealth inequality by Trajan’s time despite Vespasian fiscal prudence * Leaders* MK: Trump reminds me of Aurelian* Barry: Trump reminds me of Diocletian* Later (Byzantine) Empire Analogs* Challenges during Justinian’s reign in 6th Century* Post-Basil II decline* 11th Century decline leading to Crusades and Sack of Constantinople* LESSONS FOR TODAY* Antiquitas Comparisons of Leaders* Augustus - George Washington/Steve Jobs* Tiberius - John Adams/Tim Cook* Obama/Trump parallels?* Barry: Don’t underestimate the resilience of the US* Lessons for today’s US/China Great Power Competition?* Antiquitas: Podcasts on War* Thucydides* Sun Tzu* Clausewitz* CURRENT PROJECTS* Hoover Fellow / Research* Antiquitas Podcast* Recent Books* Ten Caesars* The War That Made The Roman Empire* Jews vs. Rome (coming August, 2025) Get full access to Kaoboy Musings at www.urbankaoboy.com/subscribe

Scott Smitson, Professor at Denison University and a Geopolitical Strategist, dives into the complex interplay of energy geopolitics and economic warfare. He explores how current Middle East tensions impact global oil prices, comparing today's market dynamics with historical events like the 1973 Oil Embargo. The discussion highlights the U.S.’s evolving role as a leading oil supplier and examines China's energy vulnerabilities. Smitson also addresses the implications of a strong dollar and the future shift towards green technology, offering a captivating look at global energy strategies.

Welcome to KAOS THEORY — a podcast collaboration between Grant Williams and me that focuses on the intersection of Macroeconomics and Geopolitics in an increasingly disorderly world.8/2/24: Episode 7 — Oriana Skylar MastroOriana Skylar Mastro is a Center Fellow at the Freeman Spogli Institute for International Studies at Stanford University where her research focuses on Chinese military and security policy, and Asia-Pacific security issues. She is also an Assistant Professor of Political Science at Stanford and a Non-Resident Senior Fellow at the Carnegie Endowment for International Peace. Having served 15 years in the US Air Force Reserves, Oriana’s military background and specific expertise on Indo-Pacific security issues have landed her various advisory roles at numerous Washington, DC thinktanks as well as at US Indo-Pacific Command (INDOPACOM), the Department of Defense Command responsible for coordinating all of the US Armed Forces in the Indo-Pacific region.I met Oriana last May at the RAND Institute, where she was a panelist at a private US/China “Great Power Competition” Summit I chaired (summary link below). I believe her incisive and no-nonsense insights into China’s geopolitical strengths and weakness need to be heard, and the release of Oriana’s new book, Upstart: How China Became A Great Power, gave us the perfect opportunity to invite her to KAOS THEORY.Oriana leads us through China’s “Upstart Strategy,” which is comprised of a dynamic mix of Emulation, Exploitation, and Entrepreneurship. Although we covered wide-ranging topics of geopolitical significance, our conversation here just scratches the surface, and I encourage everyone to read her book, which has been touted as a “must-read” by the likes of General H.R. McMaster as well as Admiral Phil Davidson.Oriana can be found on these platforms:Twitter/X: @osmastroWebsite: https://www.orianaskylarmastro.com/Additional ResourcesHere is a detailed summary of the US/China Event I chaired last May, which featured Oriana as a panelist:If you liked what you heard today, please also check out the other episodes of KAOS THEORY in this Directory, which I will keep updated: Get full access to Kaoboy Musings at www.urbankaoboy.com/subscribe

Welcome to KAOS THEORY — a podcast series that Grant Williams and I are collaborating on that focuses on the intersection of Macroeconomics and Geopolitics in an increasingly disorderly world.5/20/24: Episode 6 — Brian McCarthyBrian McCarthy is the founder of MacroLens, an institutional newsletter focused on macroeconomics. Brian previously ran a single-strategy China-focused hedge fund at Emerging Sovereign Group from 2012-2019. He is an expert on China’s balance of payments and currency management.Because China looms so large on the world stage both macroeconomically and geopolitically, this conversation is both timely and important in its implications. We talk about everything from China’s burgeoning bad debts, the Scylla/Charybdis Dilemmas facing the PBOC, and the impact of recent new tariffs on China.Brian notably addresses both the Brad Setser “Shadow Reserves” Hypothesis as well as the Gavekal Revaluation Hypothesis and gives us some real-world lessons on how to navigate a currency regime that is heavily manipulated by central authorities. Finally, we touch upon the geopolitical ramifications of China’s top-down, centrally planned economy and currency policies and specifically how they impact domestic policies in the US.Brian can be found on these platforms:Twitter/X: @briangobosox Website: https://macrolens.com/Substack: macrolens.substack.com Get full access to Kaoboy Musings at www.urbankaoboy.com/subscribe