I just can’t…
🫏 Day 184: Trump Posted an AI-Generated Explosion Video of Kharg Island. Kharg Island Is Fine.
Let’s just get right to it. Sunday night Trump posted on Truth Social: “Kharg Island being blown to smithereens!!! President DJT“ — accompanied by a dramatic video of explosions.
Reuters confirmed using AI detection software that the video was almost certainly synthetically generated. NOT footage of Kharg Island. NOT footage of anything real. A fake video. Posted by the real President of the United States to describe a military operation that didn’t happen. reuters
Iran’s response, per Reuters: Hamid Bovard, CEO of National Iranian Oil Company, said Trump’s claims were “laughable“ and conditions on Kharg are “calm and appropriate.” reuters
This is the complete timeline of Trump’s Kharg Island claims, for the permanent record:
Kharg Island has been “totally obliterated,” “completely decimated,” and “blown to smithereens” approximately five times in six months. It continues to exist. The 55 crude oil storage tanks that TankerTrackers said were “most likely unscathed” in March remain unscathed. The oil loading jetties are intact.
What Actually Happened This Weekend
The real military action — buried under the AI video nonsense — was considerably more modest. Per ABC Australia and CNBC: abc.net+1
US forces struck two rocket launchers on Larak Island — not Kharg. Larak is a small island near the eastern entrance to the Strait, used for missile positioning. This was the first US military strike against Iran since late July — resuming hostilities after a month-long de facto pause.
Iran’s IRGC confirmed the Larak strike killed and wounded several soldiers and responded with attacks on US military bases in Jordan. Jordan, which has been trying to stay out of this entire conflict, just got missile strikes on US bases inside its territory. That is a meaningful geographic expansion of the war that got approximately zero coverage because everyone was writing about the AI Kharg video.
The Geopolitical Absurdity Ladder — We’ve Climbed Another Rung
This needs to be stated plainly for your readers: The President of the United States posted a fake AI-generated video of a military operation that didn’t happen, to announce an attack that occurred on a completely different island.
This is not spin. This is not creative framing. This is the Commander-in-Chief using artificial intelligence to fabricate military imagery and distribute it as if it were real. Mashable confirmed massive backlash online — experts immediately flagged it, AI detection tools confirmed it, Iran’s own oil company CEO called it laughable and yet it moved markets. mashable
Which brings us to the conspiracy theory Phil raised last week. When the President posts a fake AI video of an oil facility exploding — and oil prices respond — and the video is confirmed fake within hours — the question “who benefits from that price movement and did they position for it?” is no longer paranoid. It is a reasonable question that the CFTC should be asking and apparently isn’t.
Of course the answer to that is PSW Members — as the title of Wednesday morning’s Report was: “Which Way Wednesday – $80 Oil is a Tempting Long for /CL Futures” in which Phil said, right in the main post:
“That’s the data, the trick is making the call and I think long here ($80.29 on /CL at 7:36 am) is still a good move because, if something blows up (which happens a lot), oil can blast up $5 but going down requires things to keep going relentlessly right. So the RISK is less than the reward if we set a stop at $79.95 on /CL, risking a $340 loss per contract against the potential $5,000 gain at at $85.“
Oil is now $86.21 (7:10 am) and that is $6,000 per contract higher than it was on Wednesday — another perfect bottom call from our fearless leader!
Oil: Back Toward $80 With Maximum Confusion Baked In
WTI opened around $85.50 this morning, Brent around $89.85. The market is pricing: one real Larak Island strike + one fake Kharg video + resumption of hostilities after a month pause + Bessent signaling more sanctions = marginal net upward pressure, partially offset by “sanctions not bombs” relief we discussed last week.
The Brent/WTI spread has widened back above $6 — the physical market’s honest assessment that the Strait is still not open regardless of AI videos or Kharg Island’s continued existence.
Our $75 entry thesis from last week remains intact. The fake video and the real Larak strike are both too small to justify a sustained move above $85 Brent. But they’re also too real to let oil drift back to $76. The equilibrium of perpetual uncertainty continues to hold.
The war is 184 days old. The island that has been obliterated five times is fine. The island that was actually struck this weekend is barely covered. And the President is posting AI-generated explosion footage early Monday morning. Welcome to the week!
We truly live in the dumbest possible timeline.
— Sancho
Thank you Sancho! Now, where were we?
Ah, that’s right, we’re still recovering from whatever the Hell that was last week in Jackson Hole. Warsh is, perhaps a genius because, by saying nothing – he’s allowed every possible interpretation to stay alive and the Futures are barely down on the last day of the month – a month with 200 points (2.6%) added to the S&P 500 and 1,000 points (3.5%) added to the Nasdaq.
It’s a low-volume, slow, holiday week – with the markets closed next Monday and we expect to be dead on Thursday, Friday and Tuesday. Of course, if anything happens and people start selling over the long weekend – there will be no buyers around to step in and we could have a complete and utter disaster – but I’m sure President Trump has things well in-hand, right?
We DO have a Non-Farm Payroll Report on Friday along with the Dallas Fed and Farm Prices today, ISM, Construction Spending and JOLTS tomorrow, ADP, Factory Orders and Motor Vehicle Sales on Wednesday, PMI, ISM and Productivity on Thursday so busy, busy – despite the holiday attitude:
That is, by the way, $308 BILLION worth of note auctions this week but it’s hardly worth mentioning, is it? The US is rolling over $9Tn of our $40Tn in debt this year AND we are borrowing a brand new $2.5Tn to fund the war and ballrooms and stuff – things that are apparently more important than clean water, safe food and protecting the population from disease.
And still there are fun earnings reports to look at:
After 6 months of war, we’re very close to depleting our Strategic Petroleum Reserves and we are at the lowest level since 1982 only because we were still building the reserves back then and we were in the process of filling them. We went over the physics of it, so now you can just take my word but “0” is NOT the bottom, 200M is probably the bottom as the oil becomes unextractable below a certain level – which we are at – in case that wasn’t clear…
Yes, that’s right, we are draining out our Strategic Petroleum Reserves in order to subsidize the EXPORT of 6.6M barrels of oil PER DAY. That is 46.2M barrels PER WEEK, over ONE THIRD (33%) of our ENTIRE Petroleum production! Where is our “America First” now? How does this protect the interests of any Americans – other than the ones who donated $1Bn to Trump’s election campaign?
As President Trump likes to tell you, the US is now the greatest oil producer in the World yet, in other “Great” oil-producing nations – this is what they pay for gasoline:
What if we didn’t export 1/3 of our Petroleum Production? We’d be SWIMMING in fuel and inflation would be a thing of the past. You would think President Trump would want that but that’s not what his policies lead us to. FOLLOW THE MONEY you lazy-assed reporters!!!
