Fallout Spreads Across the Middle East as the Iran War Grinds On

The U.S. says it can blockade Iran indefinitely, but the strain is already tangible. Defense Secretary Hegseth said the Navy can simply rotate ships, with the USS George Washington heading to replace the USS Abraham Lincoln after more than 250 days of deployment. The Lincoln has gone more than 200 days without a port call, and there are confirmed reports of suicide… Iran attacked two vessels linked to the UAE’s state-owned ADNOC as they transited Hormuz on Thursday, with no injuries reported and apparently limited damage. The UAE condemned what it called a “hostile Iranian attack,” while ADNOC said the situation had been brought under control. Yemen’s Houthis said they targeted Saudi Aramco’s Jazan refinery with two drones on Thursday, the second claimed attack on the Red Sea facility in less than a week and the third since July 25. Neither Saudi Arabia nor Aramco has confirmed the attack as of the time of writing. Bloomberg cited a person familiar with the incident as saying a storage tank sustained negligible damage. Last month, the Houthis threatened to blockade Saudi oil flows and have also attacked Saudi targets and shipping in the Bab al-Mandeb, while military activity is increasing along Yemen’s internal front lines. The US-Iran war is threatening to return Yemen to a state of active civil war after a 2022 truce that saw an end to large-scale fighting between the Houthis and Saudi-backed Yemeni government forces. Politics, Geopolitics & Conflict Yemen’s Houthis said they targeted Saudi Aramco’s Jazan refinery with two drones on Thursday, the second claimed attack on the Red Sea facility in less than a week and the third since July 25. Neither Saudi Arabia nor Aramco has confirmed the attack as of the time of writing. Bloomberg cited a person familiar with the incident as saying a storage tank sustained negligible damage. Last month, the Houthis threatened to blockade Saudi oil flows and have also attacked Saudi targets and shipping in the Bab al-Mandeb, while military activity is increasing along Yemen’s internal front lines. The US-Iran war is threatening to return Yemen to a state of active civil war after a 2022 truce that saw an end to large-scale fighting between the Houthis and Saudi-backed Yemeni government forces. Iran attacked two vessels linked to the UAE’s state-owned ADNOC as they transited Hormuz on Thursday, with no injuries reported and apparently limited damage. The UAE condemned what it called a “hostile Iranian attack,” while ADNOC said the situation had been brought under control. The U.S. says it can blockade Iran indefinitely, but the strain is already tangible. Defense Secretary Hegseth said the Navy can simply rotate ships, with the USS George Washington heading to replace the USS Abraham Lincoln after more than 250 days of deployment. The Lincoln has gone more than 200 days without a port call, and there are confirmed reports of suicide attempts and multiple sailors trying to go overboard. The Pentagon is facing congressional questions over deteriorating morale, supply shortages, contaminated water and plumbing problems aboard the carrier. Iran is under heavier pressure, but Washington has reached an awkward point in this war: it can keep squeezing Iran, and Iran can keep blocking Hormuz in a stalemate neither side seems willing or able to break. Vance said on Thursday that keeping oil prices low is the new #1 goal (nukes have now been relegated to a secondary priority). The Trump administration has accused Israeli settlers of terrorism after they surrounded Palestinian homes in the West Bank and cut off water, electricity and essential supplies. U.S. Ambassador to Israel Mike Huckabee called the siege a “horrific act of terror,” prompting Israeli forces to intervene under pressure. The language is being viewed as rather strong coming from Huckabee, one of the most vociferous supporters of Israel and the settlement movement in U.S. politics. Washington has drawn its first red line. Discovery & Development Mexico will consider shale development in only two basins: Burgos and Sabinas-Burro-Picachos, with further studies conditional on finding enough deep saline water for fracking. The decision does not authorize drilling, but it is a change under President Sheinbaum, who inherited Obrador’s effective ban on fracking. Burgos is the main target, extending south from the Eagle Ford shale in Texas. Mexico imported an average 6.4 Bcf/d of U.S. pipeline gas in 2025, giving the government a clear reason to reconsider domestic shale without opening the country wholesale to fracking. Greenland has delayed a Trump-linked company’s plans to drill for Arctic oil, saying environmental and social reviews cannot be completed before the proposed start date. Texas-based Greenland Energy Company and UK partner 80 Mile are now targeting winter 2027 for the first well at Jameson Land. The play is an 8,429-square-kilometer undrilled basin on Greenland’s east coast that the companies claim could contain oil worth as much as $1 trillion. The license predates Greenland’s 2021 decision to stop issuing new oil exploration permits. GEC chairman Larry Swets has reported ties to Trump’s circle, board member Carol Craig is involved in the U.S. Golden Dome missile-defense program, and Citadel founder Ken Griffin holds a 9.3% stake. Egypt has opened 14 oil and gas blocks to international bidders. Eight blocks are in the Mediterranean, Nile Delta and North Sinai, with another six in the Gulf of Suez, Sinai and Western Desert. Egypt currently produces about 4.2 Bcf/d against consumption of 6.2 Bcf/d–and an import bill it can’t afford. The government believes the new acreage could contain about 11 Tcf, but that’s just an exploration target. Libya and Tunisia have revived an offshore oil and gas bid round covering exploration acreage and the undeveloped Zarat discovery along their maritime border. The 3,000-square-kilometer exploration block contains five prospects estimated to hold more than 1.6 billion barrels of oil and 3.1 trillion cubic feet of gas in place. Zarat separately holds an estimated 266 million barrels of oil and condensate and 1.1 Tcf of gas in place. The round opens September 7, with awards expected by April next year. Deals, Mergers & Acquisitions Argentina’s YPF has submitted a $51B LNG project for incentives under President Milei’s RIGI investment program, the largest proposal yet under the scheme. YPF, Italy’s Eni and the UAE’s XRG plan to produce gas from Vaca Muerta and export it through two floating LNG plants off Río Negro (with combined capacity of 12 million tonnes per year). The partners expect to invest $29B before the planned 2031 start-up. YPF estimates the project could generate about $10B a year in LNG exports for 20 years.