SitRep: Shots Fired

After a 4-week ceasefire, the war with Iran is heating up once again.

Yesterday President Trump announced that “Project Freedom” would start early this morning. The plan would guide ships and tankers through the Strait of Hormuz.

However, it wasn’t clear if this meant that U.S. Navy ships would escort vessels.

Then we found out that no escorts would be happening. Project Freedom was a coordination effort designed to help ships navigate through safe parts of the Strait.

Today CENTCOM announced that two American-flagged vessels successfully transmitted through the Strait. It appears they may have slipped through undetected by the IRGC.

However, Project Freedom hasn’t solved the problem of Iranian missiles and drones blocking the vast majority of ships.

Getting Hot Again

Early this morning, CENTCOM announced that two U.S. destroyers had passed through the Strait of Hormuz.

Iran claims they fired two anti-ship missiles as a warning and forced the ships to turn around. What actually happened isn’t clear yet.

Additionally, at least one cargo ship and one oil tanker were hit in the last 24 hours by Iranian drones. Thankfully the tanker was empty.

The tanker appears to be owned/operated by the UAE, the most hawkish American Gulf ally. One of the cargo ships appears to be owned by a South Korean firm.

President Trump put out a statement around 1:30pm ET about the attacks. He stated that the Navy had “shot down seven small boats”.

Source: Truth Social

Additionally, Iran struck the UAE’s critical Fujairah oil export terminal with drones. Various videos showing at least one oil tank on fire have appeared as of midday.

The UAE’s Fujairah oil terminal on fire today, 5/4/2026

Fujairah is a key export facility for the UAE. It allowed them to bypass the Strait of Hormuz and continue to export large volumes of oil. Fujairah can be seen on the right side of the map below.

Source: ABC News

Iran’s IRGC has published a new map claiming control over a wider part of the waterway, which includes Fujairah. The orange lines represent Iran’s new claimed zone.

Mixed Signals

In summary:

• Iran has struck a number of tankers and cargo ships
• Iran has fired “warning” missiles at U.S. Navy ships
• Iran has struck the UAE’s key Fujairah oil export facility
• The U.S. Navy has sunk 6 Iranian fast attack boats
• The U.S. Navy is encouraging ships to pass through the Strait without Iranian approval

While it does look bad, both sides appear to have pulled their punches. Iran did not attempt to sink the ships and only hit a small section of the UAE’s oil export infrastructure. The U.S. claims to have sunk some small fast-attack boats, and avoided striking Iranian infrastructure.

In his recent Truth Social post (above), President Trump did not threaten an immediate resumption of full combat. But that doesn’t mean it isn’t in the works behind the scenes.

As a result of all this news, oil spiked about 5% higher on the day. U.S. stocks fell only slightly, with the S&P down 0.35% as of 1:45 pm ET.

Rickards’ Take

Jim Rickards has consistently highlighted how far apart America and Iran are in negotiations. And he has hammered the point home that more escalation is likely.

Jim laid out his thesis in an appearance on Steve Bannon’s War Room late last week.

“This is a game of chicken between the United States and Iran,” Jim says.

He goes on to explain that if President Trump were to declare victory and leave today, it would be seen as a strategic defeat. The same would be true if he accepted the Iranian proposal with its “red lines”.

So Jim says his only real option is escalation, similar to the Vietnam War.

Let’s dig into how this epic game of chicken is shaping up.

Economic or Kinetic?

The United States is betting on Iran folding first. The Trump team points out that the country’s currency is collapsing, it’s nearly out of oil storage, and its wells are at serious risk of long-term damage if forced to shut down.

However, Iran has operated under sanctions for 47 years. Now the pressure is being ramped up even further.

Meanwhile Americans are getting hit hard by higher fuel prices. And the world is about to feel serious pain from soaring energy and fertilizer prices.

Jim Rickards says that approaching midterm elections are going to be a serious concern for Trump. The GOP doesn’t want $7 gas going into a critically-important election cycle.

The clock is ticking for both sides. It may come down to which side can endure the most economic pain. Or full-scale fighting could resume.

A negotiated resolution seems unlikely anytime soon. I was hopeful we could see a deal where Iran lifts its blockade, and the U.S. lifts its in turn. But Trump has already rejected any such deal, stating that Iran has not “paid a big enough price” for what they have done to humanity.

So for now, we’re stuck with no resolution in sight. And the chances of a return to full-on fighting are increasing.

For Iran, this is an existential crisis. If they lose, their sovereignty is likely gone. In the worst case, they could end up like Libya after Obama turned it into a failed state. At the very least, Iran would likely have to agree to limits on missile/drone capabilities, which would crush their firepower and deterrence capabilities.

For America, Trump may also see this as an existential crisis. If Iran is perceived as “winning” in any way, it would hurt our perceived military and economic power. So he’s unlikely to agree to any deal where his critics could say Iran won.

At some point, something’s gotta give. Whether through economic or kinetic means, one side will outlast the other.

In the meantime, things could get gnarly for a while. Oil spikes always take a big economic toll.

And stocks are still basically at all-time highs. What a crazy world… In my opinion, it’s a good chance to de-risk and raise some cash if you haven’t yet.

More tomorrow.