The global demand destruction playbook we outlined last month, describing how the Gulf energy shock would spread across continents, is now materializing on a large scale. The International Energy Agency said in a Tuesday update that global oil demand will decline this year for the first time since 2020.

“The Iran war has thoroughly upended the global outlook for oil consumption,” the IEA wrote in its Oil Market Report. “Demand destruction will spread as scarcity and higher prices persist.”

The IEA said the US-Iran conflict and the disruption of the Hormuz chokepoint have flipped the global oil market from a growth year to one of demand destruction, with world oil demand now expected to decline by 80,000 barrels per day rather than expand by 730,000 bpd as previously forecast. 

Tanker flows through the world’s most critical waterway collapsed to around 3.8 million bpd in early April, down from more than 20 million bpd pre-conflict, while alternative export routes, mainly pipelines from Saudi Arabia, the UAE, and Iraq, only partially offset the disruption. The end result is an overall export loss of a staggering 13 million bpd.

Physical oil markets have tightened significantly worldwide, with spot crude and refined product prices rising above futures prices. North Sea Dated crude traded near $130 a barrel, and physical cargoes briefly approached $150. 

IEA noted that the wave of demand destruction hit the Middle East and Asia-Pacific hardest, especially in naphtha, LPG, and jet fuel, as petrochemical plants slashed operating rates, flights were canceled, and households and businesses faced fuel shortages and price shocks. 

Strategic reserves are being drained to cushion the shock. Global observed oil stocks fell by 85 million barrels in March, with large drawdowns outside the Gulf, while crude and product storage jumped in the Gulf area because of the Hormuz disruption.

Two weeks ago, JPMorgan’s top commodity expert described how the demand destruction crisis would spread from the Gulf area, hitting Asia first, then Africa and Europe, before ultimately affecting the US, especially California.

Source

Last week, IEA boss Fatih Birol warned in an interview with Financial Times about countries’ panic hoarding crude and crude products. 

“I urge all countries not to impose bans or restrictions on exports,” Fatih Birol emphasized in the interview. “It is the worst time when you look at the global oil markets. Their trade partners, their allies and their neighbors will suffer as a result.”

The FT noted that Birol was “careful not to name China directly,” but made very clear his warning was likely aimed at Beijing, which has already moved to restrict exports of critical refined products, including gasoline, diesel, and jet fuel.

Jeff Currie of Carlyle recently outlined the hoarding risks in a note titled “A Crude Awakening“: “The physical shortfall is the trigger; the behavioral response is the multiplier.”

The IEA’s base case in today’s new report assumes tanker flows from the Gulf region will begin to recover by mid-year, though not return to pre-war levels. It also warned that if the conflict drags on, energy markets and countries highly exposed to Gulf flows should brace for even more severe disruptions in the months ahead.

Authored by Stacy Robinson via The Epoch Times (emphasis ours),

An appeals court has put a stop to criminal contempt proceedings initiated by a district judge against the Trump administration.

District Judge James Boasberg, chief judge of the District Court for the District of Columbia, stands for a portrait at E. Barrett Prettyman Federal Courthouse in Washington on March 16, 2023. Carolyn Van Houten/The Washington Post via AP

In a brief, unsigned order on April 14, the Court of Appeals for the D.C. Circuit vacated a previous order by U.S. District Judge James Boasberg, and ordered him to terminate the contempt investigation he launched in December.

The contempt proceedings stemmed from the deportation of illegal immigrants—suspected gang members—to El Salvador’s Terrorism Confinement Center, or CECOT, last year.

Boasberg had ordered planes carrying those detainees halted and turned around, but the men were sent to El Salvador anyway.

The Trump administration had appealed Boasberg’s order all the way to the Supreme Court, which overturned his ruling.

Despite that, Boasberg tried to hold members of the administration in contempt of his order unless they returned the suspected gang members to the United States.

The appeals court blocked that move by vacating Boasberg’s first contempt order, but he decided to move ahead with a contempt investigation in November.

“Undeterred, the district court is proceeding with criminal contempt for the government’s decision to transfer the plaintiffs to the custody of El Salvador,” the Appeals Court’s

As the squeeze continues on China’s energy supply (and Xi has started to lash out here and here), we suspect the next words out of the Chinese leader’s mouth (if he spoke Latin) will be “…et tu, Indonesia!”

As Stephen Green writes at PJMedia, it might have seemed like one of those dry, bureaucratic, almost meaningless announcements on Monday, when War Secretary Pete Hegseth posted on X that the U.S. and Indonesia “are elevating our relationship to a Major Defense Cooperation Partnership.” 

This arrangement “will explore mutually agreed cutting-edge initiatives, including co-developing sophisticated asymmetric capabilities pioneering next-generation defense technologies in the maritime, subsurface, and autonomous systems domains, and cooperating on maintenance, repair, and overhaul support to improve operational readiness.”

In parallel, it was reported that “US, Indonesia discuss allowing US military overflight in Indonesian airspace”, which refers to a “preliminary draft that is being discussed internally” right now, but the writing is on the wall that the US aims to leverage their MDCP to this end.

But a Major Defense Cooperation Partnership is kind of a big deal – and it’s aimed directly at China’s oil imports.

China’s difficulties begin in the Strait of Hormuz, but they peak at Malacca. 

Nearly two-thirds of China’s imports – largely the raw materials that keep its export machine humming – and a whopping 80% of its energy imports pass through Indonesia’s Strait of Malacca.

As Andrew Korybko notes, the grand strategic goal being pursued is Under Secretary of War Elbridge Colby’s “Strategy of Denial”.

The gist is that the US must do its utmost to prevent Chinese hegemony in Asia, in furtherance of which it’s indirectly controlling or cutting off Chinese resource imports (Venezuela and Iran) and seeking control over global chokepoints (Hormuz, Malacca, and the Panama Canal), with everything accelerating ahead of Trump’s trip to China from 14-15 May.

Trump hopes that this will coerce Xi into a lopsided trade deal.

“The game is not to control Venezuela and Iran to choke China…” Zoltan Pozsar of advisory firm Ex Uno Plures wrote in a March note.

And you might ask why Trump is squeezing China. Well, as Pozsar pointed out, “The aim is not to deny energy to China. The aim is to level the playing field between the two countries. To be blunt, in ways I couldn’t be at Credit Suisse: if you fuck me on rare earths, I fuck you on energy.”

By Mallory Shelbourne of USNI News

Aircraft carrier USS George H.W. Bush (CVN-77) is operating off the coast of Namibia, as it sails around the African continent and is set to join a growing naval force in the Arabian Sea amid a U.S. blockade of the Strait of Hormuz, USNI News has learned.

USS George H.W. Bush (CVN-77) transits the Atlantic Ocean, Feb. 15, 2026. US Navy photo

Bush, which deployed at the end of March, did not sail through the Strait of Gibraltar and into the Mediterranean Sea, a typical transit for East Coast-based carriers headed to the Middle East. The carrier and its escorts – which include USS Donald Cook (DDG-75), USS Mason (DDG-87) and USS Ross (DDG-71) – are instead sailing around Africa, two defense officials confirmed to USNI News on Monday. Supply-class fast oiler USNS Arctic (TAOE-8) is also operating with the Bush Carrier Strike Group.

The path around Africa allows the carrier and its escorts to avoid transiting the Red Sea and the Bab el-Mandeb, which were both hubs of activity for the Houthis in their drone and missile attacks on U.S. and commercial shipping in 2024 and 2025.

Bush’s transit around Africa comes as the U.S. initiates a blockade of the Strait of Hormuz following a Sunday announcement from President Donald Trump.

U.S. Central Command subsequently issued a statement explaining how U.S. forces would execute a blockade of the crucial waterway that has been a main flashpoint since the U.S. and Israel launched the war against Iran at the end of February.

“The blockade will be enforced impartially against vessels of all nations entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman,” reads the Sunday CENTCOM statement. “CENTCOM forces will not impede freedom of navigation for vessels transiting the Strait of Hormuz to and from non-Iranian ports.”

A Monday notice issued to mariners, obtained by USNI News, said a so-called “grace period” that would allow neutral ships at Iranian ports to leave ended at 10 a.m. Eastern time Monday.

“Following this time, any vessel entering or departing the blockaded area without authorization is subject to interception, diversion, and capture,” reads the notice.

“Neutral vessels may still be subject to the right of visit and search to determine the presence of contraband cargo,” the notice continues. “Humanitarian shipments including food, medical supplies, and other goods essential for survival of the civilian populations will be permitted, subject to inspection.”

In a Monday appearance at the Atlantic Council, Chief of Naval Operations Adm. Daryl Caudle spoke about the considerations for a blockade of the Strait of Hormuz, including the risk of mines, how contested the airspace is and whether allies and partners join in the blockade.

“I mean, this is a major undertaking that would have to take place here to do this effectively,” Caudle said. “And of course all that’s bounded by a legal structure – a ‘rules of engagement,’ the legal aspects of this, having good firm legal structure that underwrites the ability to enforce a blockade.”

A U.S. carrier has not transited the Bab el-Mandeb since USS Dwight D. Eisenhower (CVN-69) sailed through the strait in December 2023, shortly after the Houthis started their campaign of attacks on shipping in the Red Sea. U.S. destroyers that transited the Bab el-Mandeb in recent years have come under sustained attacks from Houthi forces.

Before Trump announced the blockade, two U.S. guided-missile destroyers sailed through the Strait of Hormuz and briefly operated in the Persian Gulf on Saturday, several days after the Trump administration announced a two-week ceasefire with Iran while American and Iranian officials continued negotiations.

USS Frank E. Petersen (DDG-121) and USS Michael Murphy (DDG-112) entered the strait to start “setting conditions for clearing mines,” USNI News reported at the time. The talks between Iran and the U.S. fell apart late Saturday, according to reports.

The Japan-based Tripoli Amphibious Ready Group – which includes big-deck amphibious warship USS Tripoli (LHA-7), amphibious transport dock USS New Orleans (LPD-18) and dock landing ship USS Rushmore (LSD-47) – is currently operating in the Arabian Sea.

The Abraham Lincoln Carrier Strike Group – featuring USS Abraham Lincoln (CVN-72), USS Spruance (DDG-111) and Petersen – is also in the Arabian Sea. There are also seven independently-deployed guided-missile destroyers operating in the waters.

Authored by Jonathan Turley,

Mayor Zohran Mamdani used his “First 100 Days” speech this week to announce that he has kept his promise to create a chain of city-run stores . . . by pledging to open one store sometime “next year.” According to the New York Post, the city is planning to make an East Harlem location the first store at a cost of $30 million. It will be located in La Marqueta near Park Avenue.

It is not clear if La Marqueta will  be renamed La Marxista, but it will follow a long line of failed state-operated and city-operated stores.

Chicago’s mayor, Brandon Johnson, also pledged such city-run stores.

It is notable that the stores received such emphasis by Mamdani.

It is not difficult to set up a grocery store, particularly when you run the city that approves permits and compliance conditions.

It is not even difficult to set up a money-losing store as long as you have a city budget to pay for it.

It is far more difficult to set up an independently sustainable store.

In my book, “Rage and the Republic,” I discuss the rise of support for socialism and communism among young citizens who have no experience or memory with the failures of such systems in the 20th Century. I specifically discuss Mamdani and his policies. These are calls that are likely to increase with the emerging new economy:

With the rise of American socialism, there are new calls for state subsidies and even the establishment of state-run grocery stores in places like Chicago. Past efforts have been colossal failures, including the still-ongoing effort in Kansas City. Over seven years, KC Sun Fresh is gushing money with losses in 2024 at $885,000. The millions lost on this store are on top of the $17 million that the city paid to buy the entire strip mall. By 2025, many of the shelves were entirely bare, while private grocery stores were successfully operating in the area. Despite these failures, there are new calls in other states to create their own state-owned stores. In New York City, socialist mayoral candidate Zohran Mamdani was heralded for his campaign to open up “government-owned, government-operated grocery stores” in 2025. There are also calls to subsidize key industries that are becoming less competitive in the global market—an effort that is unlikely to succeed as jobs are lost to cheap labor markets or automation.

Since the city already owns La Marqueta, it can avoid paying rent.

However, it will lose any rent that could be earned by renting the property to a business.

Mamdani pledged that these will be “stores where prices are fair, where workers are treated with dignity, and where New Yorkers can actually afford to shop at our stores…Eggs will be cheaper, bread will be cheaper, grocery shopping will no longer be an unsolvable equation.”

Of course, that has not worked out that way in other cities.

Governments are not known to be either efficient or competitive. The start-up costs of this first store will consume almost half of the budget for the original cost estimate for all five stores.

Soon, New Yorkers will be subsidizing grocery stores to artificially support the myth of socialism.

In the Soviet Union, state-run grocery stores were the subject of gallows humor. The “reimagining” of grocery stores left shelves bare with only imagined essential products. The most widely told joke spread just before the fall of the Soviet Union:

A man walks into a shop. He asks the clerk, “You don’t have any meat?” The clerk says, “No, here we don’t have any fish. The shop that doesn’t have any meat is across the street.”

As Mamdani demands a 10% property tax to fund his promises of free buses and other socialist programs, he is returning to the same socialist script. Of course, as the University of Chicago’s Milton Friedman noted, “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.”

Authored by Travis Gillmore via The Epoch Times,

Diversity, equity, and inclusion practices negatively impacted the U.S. economy, according to the 2026 White House Economic Report released April 13. 

Researchers calculated that DEI policies reduced output and lowered the country’s gross domestic product by about $94 billion each year, amounting to approximately $1,160 per year for families with two working adults. 

“These estimates imply that DEI promotion has led to inefficient management, raising the cost of doing business,” the report reads.

“These costs lead the companies practicing DEI to hire fewer people and pay their workers less.” 

President Donald Trump commissioned the report, released by the White House Council of Economic Advisers. 

DEI policies “actively encouraged” employment discrimination, according to the report, which cited fourfold growth in the percentage of minorities holding management positions between 2016 and 2023. 

During the same period, industries that adopted DEI protocols were 2.7 percent less productive than industries that avoided the cultural shift. 

The president announced soon after taking office for a second time that his administration was targeting what he said are discriminatory hiring practices. 

“We’ve ended the tyranny of so-called diversity, equity, and inclusion policies all across the entire federal government and indeed the private sector and our military, and our country will be woke no longer,” Trump said when he addressed a joint session of Congress in March 2025. 

“We believe that whether you are a doctor, an accountant, a lawyer, or an air traffic controller, you should be hired and promoted based on skill and competence, not race or gender.” 

President Lyndon B. Johnson signed the Civil Rights Act into law in 1964, thus outlawing employment discrimination based on race, color, gender, religion, or national origin. 

Human resources departments across the country generally abided by the laws to avoid legal action, but things began to change approximately 10 years ago when corporate offices began adopting new diversity-related hiring agendas. 

President Joe Biden accelerated DEI practices with executive orders implementing the programs in the military and across the federal government’s various agencies and departments. 

Biden directed government agencies to “seek opportunities to establish a position of chief diversity officer or diversity and inclusion officer, … [and] ensure that all Federal employees have their respective gender identities accurately reflected and identified in the workplace,” among other changes. 

Agencies were required to submit “Equity Action Plans” outlining steps to further diversify staff. 

Treasury Secretary Janet Yellen oversaw the establishment of an Equity Hub and Advisory Committee on Racial Equality, spending millions of dollars on DEI consulting services in the process and redirecting billions of dollars in federal funding to “benefit specific racial groups,” according to the report. 

Studies show references to DEI programs exploded during the 2020s, with many corporations mentioning the policies during earnings calls, which cited analyses showing the number of DEI-related jobs quadrupled between 2017 and 2022. 

Trump rescinded the orders with a series of executive actions in January 2025. 

“The public release of these plans demonstrated immense public waste and shameful discrimination. That ends today,” the president wrote in one order. “Americans deserve a government committed to serving every person with equal dignity and respect, and to expending precious taxpayer resources only on making America great.” 

China has dismissed reports that it supplied or plans to supply weapons to Iran as “baseless smears,” after multiple outlets cited US intelligence accusing Beijing of potentially entering the war indirectly.

“China has always adopted a cautious and responsible attitude towards the export of military items, implementing strict controls in accordance with its own export control laws and regulations and its international obligations. We oppose baseless smears or malicious association,” Foreign Ministry spokesman Guo Jiakun stated at a regular briefing on Monday.

Source: Alma

Reports first published by CNN and later cited by Reuters and The New York Times said US intelligence assesses that China is preparing to deliver new air defense systems to Iran within weeks, citing three people familiar with recent intelligence assessments.

CNN reported indications that Beijing is working to route the shipments through third countries to conceal their origin. The report said China is preparing to transfer shoulder-fired anti-air missile systems known as MANPADs, while citing unnamed sources.

A spokesperson for the Chinese embassy in Washington also addressed the claims, seeking to make clear that Beijing “has never provided weapons to any party to the conflict” and urged the United States to avoid leveling such baseless charges.

This accusation first surfaced shortly before US-Iran negotiations in Islamabad collapsed, and was followed by an escalation in tensions as Washington imposed a naval blockade targeting Iranian ports and shipping through the Strait of Hormuz.

Earlier, over the weekend, when he was asked by reporters about reports that China is sending the weapons, the president responded that “if China does that, China will have big problems, OK?”

Recall too that in early April an American pilot whose F-15 jet was shot down over Iran was rescued after evading capture for more than a day in a dramatic special forces raid into Iran – this is at least according to the official story anyway.

It’s widely believed that this shootdown was the result of Iranians deploying MANPADs or other smaller, mobile anti-air defense system. It came after both the US and Israel declared total air superiority and freedom of action over Iran’s skies.

Amid China’s denials and the ongoing speculation, what is for sure is that Russia and Iran have military ties which run deeper, given especially they are running a joint Shahed drone program related to the Ukraine war. Western mainstream media has also been eager to true and tie ‘rogue’ Beijing in with some kind of Tehran-Moscow-Beijing nexus.

The US Treasury Department’s technology team is actively seeking access to Anthropic PBC’s highly restricted Mythos AI model so it can begin hunting for software vulnerabilities, according to a person familiar with the situation cited by Bloomberg. 

Illustration via WIRED

Treasury Chief Information Officer Sam Corcos briefed the department’s cybersecurity team on the technology last week and has directed efforts to gain access to the model “as soon as this week.”

The request comes days after Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell summoned top Wall Street CEOs to an urgent meeting at Treasury headquarters. Executives were warned that Mythos and similar frontier AI models could usher in a new era of heightened cyber risk. Anthropic itself has cautioned that the model may be capable of powering sophisticated cyberattacks unless companies proactively test it against their own systems and build defenses ahead of any wider release.

At the meeting, bank leaders were strongly urged to take the model seriously and use it internally to detect vulnerabilities.

What Is Mythos and Why the Restrictions?

Anthropic introduced Mythos (also referred to as Claude Mythos Preview) as part of its new Project Glasswing initiative. In internal testing, the model demonstrated extraordinary offensive cybersecurity capabilities: it was able to identify and exploit vulnerabilities “in every major operating system and every major web browser when directed by a user to do so.” In one documented case, it wrote a web browser exploit that successfully chained together four separate vulnerabilities.

Project Glasswing brings together Amazon Web Services (AWS), Apple, Broadcom, Cisco, CrowdStrike, Google, JPMorganChase, the Linux Foundation, Microsoft, NVIDIA, and Palo Alto Networks to address growing concerns within the cybersecurity community that AI models are now capable of discovering and exploiting vulnerabilities at a faster pace than humans can keep up with.

…

According to the post on Anthropic’s website, the model’s strong agentic coding and reasoning skills enable it to uncover and exploit security flaws when directed by the user that have existed for years, even decades without detection. Benchmarking results cited by the company suggest a notable performance gap between Mythos Preview and its previous models in cybersecurity-related tasks. –cxtoday.com

What Mythos Has Discovered: Key Findings from Red Team Testing

In controlled testing against real codebases in isolated containers, the model autonomously identified thousands of zero-day vulnerabilities across every major operating system and every major web browser. The testing used an agentic workflow: file prioritization based on a 5-tier vulnerability likelihood ranking, parallel Claude Code invocations, and secondary validation for severity and exploitability.

Standout Zero-Day Discoveries Include:

27-year-old remote crash vulnerability in OpenBSD (TCP SACK processing): An integer overflow in signed TCP sequence number comparison that enables a null-pointer dereference and remote denial-of-service against any responding host. The bug had survived decades of manual code review and extensive fuzzing campaigns.
16-year-old bug in FFmpeg (H.264 parser): A slice number collision that triggers an out-of-bounds heap write when processing crafted frames with 65,536+ slices. The vulnerability originated in 2003, became exploitable after a 2010 refactor, and had evaded detection despite automated testing tools hitting the vulnerable path five million times.
17-year-old FreeBSD NFS Remote Code Execution (CVE-2026-4747): A stack buffer overflow in RPCSEC_GSS authentication (96-byte buffer for 304-byte input) combined with NFSv4 information disclosure. Mythos autonomously constructed a 20-gadget ROP chain split across six sequential RPC requests — a feat the prior model (Claude Opus 4.6) could achieve only with significant human guidance.

Firefox JavaScript Engine Testing Results were especially dramatic:

Claude Opus 4.6: Developed only 2 working exploits out of several hundred attempts.
Mythos Preview: Developed 181 working exploits and achieved register control in 29 additional cases.

OSS-Fuzz Results showed a similar leap:

Mythos generated 595 tier-1/2 crashes (plus several tier-3–5), including multiple tier-5 control-flow hijacks (full arbitrary code execution) on fully patched targets.

These discoveries were achieved at remarkably low cost – many individual zero-day runs cost under $50, with full OpenBSD testing campaigns under $20,000 and Linux kernel N-day exploits under $2,000 each.

Because of the dual-use risks, Anthropic has not released Mythos to the public. Instead, it is being provided on a tightly limited basis through Project Glasswing to a select group of vetted organizations – including major tech companies, cybersecurity firms, JPMorgan Chase, and the Linux Foundation – for defensive purposes only (scanning their own systems to find and patch flaws before attackers can exploit them). Anthropic has committed up to $100 million in usage credits to support these efforts.

Several major financial institutions have already begun internal testing:

JPMorgan Chase was publicly named as part of Project Glasswing.
Goldman Sachs, Citigroup, Bank of America, and Morgan Stanley have also gained access or are in the process, according to people familiar with the matter.

The company stated in its Project Glasswing announcement that it has been in “ongoing discussions” with government officials about the model and is “ready to work with local, state, and federal representatives.”

Pentagon Supply-Chain Risk Designation

The Treasury’s push for access is notable because the Pentagon formally designated Anthropic a US supply-chain risk earlier this year following a dispute over how the company’s AI technology could be used by the military. The Defense Department gave Anthropic a six-month window to transition its services to another provider. Anthropic is actively fighting the designation in federal court.

Despite this, Corcos – who previously encouraged the use of Anthropic’s Claude AI tools inside Treasury before the Pentagon label – is now driving the department’s effort to investigate Mythos. 

* * *

Authored by Jay Rogers via RealClearMarkets.com,

Something cracked in private credit this month, and the men who manage systemic risk for a living are saying so.

Goldman Sachs CEO David Solomon’s just-released 2025 annual shareholder letter warns that concerns about private credit – including “underwriting quality or exposure to software companies that may be negatively affected by AI” – are “a reminder that the credit cycle has not been repealed.” His predecessor Lloyd Blankfein went further on Bloomberg’s Big Take podcast: “I don’t feel the storm, but the horses are starting to whinny in the corral.” JPMorgan has already voted with its balance sheet, marking down software company loans held as collateral by private credit funds and reducing borrowing capacity for those funds, before any actual defaults. “I’m shocked that people are shocked,” said JPMorgan’s Troy Rohrbaugh.

The backdrop is three major liquidity failures in the space of six weeks. Blackstone’s $82 billion BCRED faced record redemption requests of $3.7 billion (7.9% of assets) and had to inject $400 million of its own capital to honor them. BlackRock gated its $26 billion HLEND after receiving withdrawal requests of 9.3% of NAV. Blue Owl permanently halted redemptions in OBDC II and sold $1.4 billion in loans to fund an orderly exit. Blue Owl shares have since fallen roughly 40% year-to-date.

These are not random liquidity events. They are the structural consequence of a capital concentration problem I have been watching build for a decade. In 2025 alone, the ten largest private credit funds captured nearly 46% of all capital raised, the highest concentration in over a decade. That tidal wave of capital forces mega-platforms into ever-larger deals, typically companies with $200 million or more in EBITDA, where they compete head-to-head with broadly syndicated loan syndicates and public high-yield. The result is spread compression, yield erosion, and the complete elimination of the pricing advantages that private credit was supposed to offer.

The AI disruption angle makes the mega-fund problem worse. Software represents roughly 25% of all private credit loans. The sector’s underwriting assumptions – stable recurring revenue, high switching costs, durable cash flows – are precisely what AI tooling is actively challenging. Fitch’s privately monitored ratings portfolio posted a record 9.2% default rate in 2025, up from 8.1% in 2024, with companies below $25 million EBITDA posting a 15.8% default rate. When software loan valuations get marked to reflect AI disruption reality, the leverage stack that amplified returns on the way up will amplify losses on the way down.

Contrast this with the lower middle market. Middle-market direct-lending spreads have stabilized in the 500–550 bps range over SOFR, carrying a 100–150 bps premium to syndicated markets. Q3 2025 BDC data showed all-in yields still at 9.76% after 150 bps of rate cuts, with trailing one-year realized losses of just 0.66%. These are smaller companies with less AI disruption exposure, stronger covenants, bilateral lender relationships, and managers who can still walk away from a bad deal. Preqin return dispersion data shows top-quartile North America direct-lending IRRs outpacing medians at an increasing rate, precisely because scale-driven managers are chasing volume over selectivity.

Blankfein’s warning about retail exposure to private credit is the right one to heed. The $1.8 trillion private credit market has now reached the approximate size of the subprime mortgage market at its 2007 peak. The push by both Wall Street and the Trump administration to route this exposure through 401(k) plans, at the precise moment the cycle is turning, is a risk worth naming clearly.

For allocators, the path forward is clear.

Avoid the liquidity mismatch of retail evergreen vehicles – the redemption crises of early 2026 were structural, not idiosyncratic. Avoid software-heavy direct lending portfolios until the AI disruption cycle is fully repriced. Favor closed-end, institutional-grade mid-market funds with experienced managers who still underwrite as if it is their own capital. The returns are still there in private credit, just are not where the most capital went.

Private credit is not broken. The credit cycle has not been repealed. It has merely been deferred – and Goldman’s Solomon, JPMorgan’s Rohrbaugh, and Blankfein’s corral metaphor are all pointing at the same door.

An unusually large number of crude oil tankers on the open seas has the American Gulf coast as a destination as the ships are redirected to load cargoes bound for markets around the world already experiencing shortages.

As Alton Wallace writes at The Center Square, second-term Republican President Donald Trump said Saturday on social media that “massive numbers” of “completely empty” oil tankers are en route to the United States to purchase American energy.

“Foreign buyers are voting with their ships: American energy means stability, strength, and freedom from Middle East blackmail,” the president posted on Monday.

Shipping data posted by maritime intelligence company Windward shows 171 crude tankers are bound for the U.S. Gulf to load crude oil cargoes, which compares with about 110 in a typical month.

The surging vessel traffic comes as nations throughout Europe and Asia grapple to secure energy supplies and regional prices skyrocket. Germany is providing emergency fuel relief to its citizens while officials in the Philippines recently declared a national energy emergency as the world looks increasingly to the U.S. to replenish war-starved oil and gas markets.

“Hundreds of supertankers, the kind that carry two million barrels each, are currently racing toward the US Gulf Coast from every direction, Atlantic, Indian Ocean, around Africa, the scenic route, the ‘we were heading to Saudi Arabia but never mind’ route,” Jesús Enrique Rosas noted this weekend.

Oil markets research firm Kpler estimates U.S. crude oil exports in April will reach 5.2 million barrels per day, up about one-third from 3.9 million barrels a day in March, the Financial Times reported last week.

North Carolina-based Kpler analyst Matt Smith described the great volume of incoming ships as an “armada of tankers heading this way.”

Trump on Saturday remarked that the U.S. oil output is more than the combined total of Saudi Arabia and Russia, the next two largest producers, and the president promised a “quick turnaround” for the arriving fleet.

Shipping data shows approximately 28 very large crude carriers, which can hold about 2 million barrels of oil, have been contracted to load U.S. crude in May compared to a monthly average of just five in a typical month, according to Kpler.

Trump shared a post on Saturday by oil market researcher Rory Johnston that read “very cool seeing the wave of empty tankers heading to the U.S. to pick up some desperately needed crude for Hormuz-starved markets,” to which the president responded, “Great!!!”

“The more Iran leans on Hormuz, the faster global energy flows reroute around it. Over time, that erodes Tehran’s leverage and cuts into its long-term power,” Osint613 posted Sunday.

America and Israel on Feb. 28 launched military strikes against Iran. The Iranians, with control of the Strait of Hormuz, has stymied an otherwise one-sided confrontation. An 11th-hour ceasefire to last two weeks was announced Tuesday.

As the shipping logjam continues, Windward’s daily intelligence report on Monday shows 732 vessels carrying oil, gas, refined fuels, and other fossil fuels-based products await transit through the Strait of Hormuz.

To avoid the volatile region, many of these vessels are now rounding the Cape of Good Hope at the southern tip of Africa – a detour that bypasses the Suez Canal but adds up to 15 days of travel time to reach American docks.

In March, Port of Houston officials announced completion of the Project 11 channel widening project, which eliminated longstanding nighttime vessel movement restrictions in place for more than a century, allowing large vessels to safely transit the channel without waiting for daylight.

Finally, as Stephen Green explains at PJMedia.com, there may be a strategy here…

Supporters and critics alike – the honest critics, that is, who deserve protection under the Endangered Species Act – understand that Trump acts as a chaos agent. He knows the end result he wants, even if sometimes only broadly defined as “Make America Great Again.” The established rules and methods don’t allow for that, so Trump is happy to blow things up (sometimes literally), and see what can be rebuilt from the pieces.

The thing about that Persian Gulf stranglehold is that, like the Sword of Damocles, it’s most effective before it’s used. Now that Tehran has tried (and only partly and temporarily succeeded) in closing the Strait of Hormuz, “About the only escalation option the IRGC has is to renew its missile and drone attacks on neighboring Gulf states,” as my Hot Air colleague Ed Morrissey put it on Monday. But “Trump has an escalation for that as well: Bridge and Power Plant Day. Let’s see how long it takes for Iran to provoke it.”

Looking at the bigger picture, Rosas also wrote: “Iran played its biggest card and the main result is that the United States became the world’s emergency gas station and China’s cheap energy subsidy evaporated. The spice — er, oil — must flow. But Trump rewrote the rulebook about where it flows from.”

But, as Andrew Moran writes at Liberty Nation, there is a tricky balancing act here…

On the one hand, the US economy is far more insulated from global oil shocks than it was during the Iraq War, as it is a net petroleum exporter.

The March, April, and May trade data, to be released later this summer and early fall, should yield fascinating economic insights into the Iranian conflict.

On the other hand, consumers still bear the brunt of higher gas prices.

Private-sector data suggest that consumers continued to shop in March, even after excluding gasoline station transactions. Whether they can keep their wallets open this spring, even with handsome windfalls from the One Big Beautiful Bill’s tax refunds, will be a wild card for GDP numbers.

In the end, will this be a winning message for November’s midterm elections? It will be challenging to convince voters of a grand 4D chess scheme involving America’s oil and military prowess.