Iran is telling its neighbors where it could hit next. Saudi oil plants. The United Arab Emirates. The data centers and internet cables the region's AI push depends on. Benoit Faucon's Page One story in Tuesday's Journal lays out the list, and cites satellite images of dirt mounds built around Iran's nuclear sites.
The war is more than seven months old and largely deadlocked. Both sides are restocking. A third U.S. carrier strike group and another Marine unit are headed to the region. Iran used the quiet months to rebuild missile and drone sites and refill its stockpile. President Trump said last week there'd be no attack before the Nov. 3 midterms. Iran's top national-security official, Mohsen Rezaei, said Sunday that Tehran could target the UAE, data centers and internet cables. Behnam Ben Taleblu of the Foundation for Defense of Democracies put it plainly. Iran is “actively preparing for the next war.”
The shooting hasn't stopped at sea or on the ground. Over the weekend at least three merchant ships took hits near the Strait of Hormuz, by the count of a Royal Navy-linked tracking agency. A drone set fire to the Emirati tanker Petro Dolphin near Oman, and two Indian sailors are missing. On Saturday, Oct. 10, a Houthi missile hit Riyadh's international airport. At least 13 people died and hundreds were hurt. Two terminals were struck. Monday's Journal called it the deadliest attack on the U.S. or its Gulf allies in the war. Riyadh is about 500 miles from Houthi territory in Yemen, and Saudi officials say they're running low on interceptors.
The pipeline that was the escape route
Early in the war Saudi Arabia had a way around Hormuz. A pipeline carried its crude west to the Red Sea coast. In September the Houthis hit that East-West pipeline. The Finance Ministry now expects the economy to shrink 3.6% in 2026. The crown prince's megaprojects ran to trillions of dollars against a yearly budget of about $350 billion. Kristian Coates Ulrichsen of Rice University's Baker Institute told the Journal the crown prince has few good options. “Any military response risks getting drawn in deeper to an asymmetric conflict.”
Someone is making money in the mess. Adnoc Logistics & Services is the shipping arm of Abu Dhabi's state oil company. It runs tankers from inside the Gulf to just outside Hormuz and hands the oil off there. When the war made it costlier to get oil out of the Gulf, the rates its ships charge surged. Its second-quarter profit quadrupled to $917 million. Tuesday's Journal says it's in talks to buy a stake in HEA Energy at a value of up to $3 billion. In August it bought 11 ships for about $1.3 billion. Crude closed at $93.74 on Monday, Oct. 12, up $1.89, and at $94.14 on Tuesday. Chevron (CVX) hit a 52-week high of $218.79 the same day.
Our read
This is Investments/Risk · IN04, and we'll keep it calm. The target list explains the war premium in oil better than any chart. Every item on it, the Saudi plants, the Emirates, the cables, is a thing that moves crude or the money that buys it. That's why the books hold energy as the hedge. Chevron is held at weight in 37 books, ExxonMobil (XOM) in 34 and Cheniere (LNG) in 20; nothing added. A hedge you keep adding to isn't a hedge, it's a bet. The September letter's three conditions for new money stand at one of three passed, and that isn't enough.
Here's your check this week. The war premium reached your household before it reached any portfolio. It's in the diesel that moves your groceries and the fuel surcharge on your last flight. Open your statement and find what you actually hold in energy, direct or inside a fund. If the answer is nothing, your household pays the premium with nothing on the other side of the ledger. If the answer is a lot, ask whether it's sized as insurance or as a wager. Decide that on a quiet day, and bring the answer to your next review. Nobody prices an umbrella fairly once it's already pouring.