Großwald Curated No. 32 — Hormuz, energy & 'in some ways worse than NATO'

The week began with promise and ended with a transit receipt. The Hormuz coalition that Signal No. 17 said had "no appetite" and No. 28 said was being "assembled without the political decision that would make it legible" reached its political expression on Thursday: more than 40 countries convened under British chairmanship. Cooper described it as the "collective mobilisation of our full range of diplomatic and economic tools." No participant publicly assigned a ship. No timeline was set. No rules of engagement were discussed. Military planners will convene next week. The institutional output of the largest diplomatic gathering of the crisis was a promise to plan.

The United States did not attend the meeting it had demanded.

Washington's absence was not passive. On Wednesday night, Trump told the nation the US would hit Iran "extremely hard over the next two to three weeks" and advised countries that depend on Hormuz oil to "just grab it." The $1.5 trillion defence budget requested on Friday — the largest proportional increase since the pre-WWII buildup — and $200 billion in additional Iran war funding confirmed the posture: the United States is not proposing to reopen the Strait through coalition action. It is proposing to destroy Iran's capacity to close it, unilaterally, and has told allies to fend for themselves in the meantime. That is a third pathway — neither the multilateral coalition nor bilateral accommodation, but American escalation dominance — and it is the one Washington is actually pursuing.

Across the same five days, three developments collectively emptied the coalition of its operational logic.

First, France positioned itself as a non-hostile state in Iran's emerging two-tier maritime order. French diplomats spent the preceding week softening the Bahrain UNSC resolution. Macron publicly ruled out military force, calling a naval operation to reopen Hormuz "unrealistic" — it would "take forever" and expose all transiting vessels to Revolutionary Guard and ballistic missile threats. On Thursday, the Malta-flagged CMA CGM Kribi — a 5,466 TEU containership owned by France's CMA CGM — exited the Strait after sailing from waters off Dubai. The vessel broadcast "Owner France" on its AIS destination field before entering Iranian territorial waters, navigating the approved corridor between Qeshm and Larak. CMA CGM coordinated the transit directly with Iranian maritime authorities. The same day, a Japanese-linked LNG tanker operated by Mitsui OSK Lines entered the Strait — the first LNG carrier movement since the war began. Two non-US-aligned vessels transited in the same 24-hour window. Cargo moved.

The AIS tactic — broadcasting "Owner France" the way Chinese COSCO vessels broadcast "Chinese owner & crew" — is the commercial equivalent of a diplomatic flag. One of Europe's three major naval powers is negotiating bilateral passage through a strait that the coalition it belongs to is attempting to reopen collectively.

Second, the American absence converted the coalition from a US-European project into a European project the US will not help execute. Washington started the war, demanded European participation, threatened to divert Ukraine weapons supplies to coerce compliance — the FT reported that Trump used PURL and Ukraine weapons as leverage to extract the 19 March joint statement — and then declined to attend the coordination meeting that was the institutional follow-through to that coerced statement.

Third, what began as improvised bilateral passage is hardening into an administered maritime order. Iran's parliament is reviewing legislation to formalise restrictions on hostile-nation vessels and charge tolls for others. Separately, Tehran said on Thursday it was drafting a protocol with Oman — the co-sovereign of the Strait, through whose territorial waters the shipping lane also passes — to manage the passage of vessels. Deputy Foreign Minister Gharibabadi said new rules would be needed after the war, and that toll levels would be determined "soon." If the two states that control the chokepoint are co-developing passage rules, the administered regime is not a unilateral Iranian imposition — it is a bilateral governance arrangement between the only two sovereigns whose consent is legally required. But the regime is already operational without legislation. By Sunday, the scale was clear: three Omani-operated tankers, a French-owned containership, a Japanese-owned gas carrier, and — on Sunday — a Petronas-chartered tanker loaded with 1 million barrels of Iraqi crude all transited the Strait. Iran explicitly exempted Iraq from any restrictions, cleared seven Malaysian vessels by name, and told Kuala Lumpur no tolls would be charged. Tehran is running a country-by-country admissions process — not a blockade with exceptions, but a customs-and-immigration desk at the world's most important chokepoint.

These three developments interact. The bilateral track is no longer a French experiment. It is a functioning alternative to the coalition — producing cargo movement for every flag state that demonstrates non-hostility to Tehran. Each successful transit reduces the urgency of the collective solution by one flag. If French-flagged vessels can transit by coordinating with Iranian authorities, the case for a French naval commitment to an escort mission weakens — because France has already solved its own commercial problem. The same logic applies to Malaysia, Japan, Oman, and Iraq. The coalition is not competing with Iran. It is competing with a replacement maritime order that Iran is constructing in real time.

The consequence for European defence procurement is direct. The Hormuz crisis was supposed to be the forcing function for European naval autonomy. Mine-clearance investment, escort-rotation sustainment, force-generation commitments — the entire pipeline that France's 35-nation planning track from No. 26 was designed to build — depends on political urgency that the crisis is supposed to provide. If the crisis resolves through bilateral accommodation rather than collective action, the forcing function evaporates. The UK planning session on Monday produces a concept for a mission whose political mandate recedes with every containership that transits under a national flag. The UNSC vote on Saturday strips Chapter VII; passage produces no operational authority beyond customary law.

The naval posture on the water is real. A French carrier strike group, a Greek FDI frigate, a Spanish Aegis destroyer, a Dutch air-defence frigate, a British Type 45, an Italian corvette. But these ships are operating under national authority and bilateral arrangements. The collective mandate that would convert their presence into a sustained rotation does not exist and is now less likely to exist than it was on Sunday — because the bilateral alternative is producing cargo movement and the multilateral track is producing meetings.

Two supply shocks arrived in the same week in the same region and produced six incompatible national responses that are now distorting the market they were designed to stabilise.

The global shock is Hormuz. Brent surged roughly 7 per cent on Thursday alone to around $108 and reached close to $120 by the weekend — a four-year high. The regional shock is Ukraine's Baltic port campaign. Vantor satellite imagery confirmed by Reuters showed that at least eight reservoirs at Primorsk — each 50,000 cubic metres — were damaged by Ukrainian drone strikes, amounting to roughly 40 per cent of the port's total storage capacity. Ust-Luga was struck for the fifth time in ten days; eight oil product reservoirs with 30,000 cubic metres capacity each were damaged by fire — about a quarter of all storage at that facility. Reuters reported on Friday that both terminals remained unable to handle shipments for a second consecutive week, with refineries scrambling to find alternative export routes via rail to Vysotsk or Taman. Traders said diesel fuel had not been accepted at Primorsk since 22 March. Reuters reported separately that Russian oil output cuts are now "imminent" because the pipeline system is choked with oil that cannot reach damaged port infrastructure. At least 20 per cent of total Russian export capacity remains offline — down from 40 per cent at the peak in late March, but still enough to dislocate the system. The loading schedule from Ust-Luga is not expected to be complete. Kazakhstan, which ships 200,000–400,000 tonnes of KEBCO crude via Ust-Luga monthly, is also affected.

Russia's gasoline export ban entered force on 1 April — 117,000 barrels per day removed from global markets through 31 July. This is a third supply constraint stacking on top of Hormuz and the Baltic campaign.

The downstream response fragmented across Central Europe day by day, each policy visible in Signal but the cumulative picture visible only at weekly scale.

Prague will impose fuel price controls from 8 April — a cap on retailer margins combined with a diesel excise cut — and has released crude from state reserves for Orlen Unipetrol. Romania is preparing a diesel excise reduction after already capping markups and limiting exports. Hungary combined price caps with lower excise duties, an export ban, and preferential treatment for Hungarian-plated vehicles — creating a two-tier domestic market. Poland cut VAT and excise and is considering a windfall tax on oil companies. Slovakia is weighing restrictions on foreign drivers after border stations were drained by fuel tourism from across the border.

Each policy is domestically rational. Together they are producing the cross-border distortions that Central European officials have warned about. Slovak price differentials draw foreign demand. Hungary's plate restrictions create arbitrage at every border crossing. Romania's export limits fragment regional supply further. The landlocked refinery system — Slovnaft in Bratislava, MOL in Százhalombatta, Orlen Unipetrol in Litvínov, PKN Orlen in Płock — still depends on crude-routing patterns and pipeline geography that were built for Russian supply and cannot be reworked in weeks.

On Saturday, the fragmentation reached EU level. Finance ministers from Germany, Italy, Spain, Portugal, and Austria called for an EU-wide windfall tax on energy companies — the same emergency instrument Brussels deployed in 2022. "Those who profit from the consequences of the war must do their part to ease the burden on the general public," they wrote. The German Fuel and Energy Association rejected the proposal. The Commission said it was "working closely with member states on possible targeted policy measures." This is the seventh distinct policy response to the same price shock — six national, one supranational — and the first that explicitly reaches for the 2022 crisis playbook. The comparison is earned: European gas prices have risen more than 70 per cent since Epic Fury began.

OPEC+ met on Sunday and agreed to raise output quotas by 206,000 barrels per day for May — a figure that consultancy Energy Aspects called "academic" because the member states with spare capacity are the same ones whose exports are blocked by the Hormuz closure. The increase represents less than 2 per cent of the supply disrupted by the war. Crude has reached close to $120 a barrel. JPMorgan warned on Thursday that prices could spike above $150 — an all-time high — if Hormuz flows remain disrupted into mid-May. The largest oil supply disruption on record is estimated to have removed 12 to 15 million barrels per day, or up to 15 per cent of global supply.

The contradiction identified in Signal No. 29 is now visible in policy outputs: Washington eased sanctions on Russian oil to lower global prices while Ukraine kinetically destroyed the export infrastructure those sanctions were supposed to govern. US sanctions policy and Ukraine's military campaign are working at cross purposes — and both are nominally on the same side. Asian buyers are rushing to secure Russian barrels under a 30-day waiver, but they are buying ESPO Blend from Pacific-facing ports — cargoes already at sea before the strikes began. The Baltic barrels cannot move. Russia cannot redirect 2 million barrels per day from the Gulf of Finland to Kozmino. The Iran war should have been Moscow's revenue opportunity. Instead, 40 per cent of export capacity was offline at the peak, the Baltic discount persists at $25 below Brent, and the finite pool of Pacific-origin crude that Asian buyers are competing for will be exhausted before the Baltic infrastructure is restored.

Zelenskyy's Easter truce offer — "if they agree to stop the attacks on our energy infrastructure, we will reciprocate" — acknowledged that allies had sent Kyiv "signals" about scaling back long-range strikes on Russian oil as global prices surged. The Kremlin reacted coolly. The truce proposal is a calibration move, not a concession: it places the onus on Moscow while signalling to European capitals that Kyiv is reading the political temperature. But the proposal also reveals the campaign's political constraint. The Baltic port strikes are the most effective economic weapon Ukraine has deployed in four years of war. They are also producing energy consequences that erode European support for the war they are supposed to help win. Whether the campaign is sustainable depends less on Ukrainian drone production than on whether European capitals will tolerate the energy consequences — and this week's six fuel-market interventions suggest the tolerance is already fraying.

The connection to European defence that no Signal carried: the energy shock is eroding the real purchasing power of the budgets committed to European rearmament, and no instrument in the current architecture corrects for it.

SAFE's €150 billion nominal cap contains no inflation-indexation mechanism. The €90 billion Ukraine loan is denominated in nominal euros. EDIP's €1.5 billion work programme is denominated in nominal euros. The procurement these instruments are designed to fund — munitions, vehicles, air defence systems, drone production capacity — is priced in a market where energy costs are rising. Rheinmetall, KNDS, MBDA, Diehl, and every other manufacturer that runs furnaces, forges, and assembly lines absorbs those costs or passes them through. The €28.3 billion the Commission staged this week for Ukrainian defence procurement has less purchasing power on Friday than it did when the instrument was designed. That erosion compounds every week the dual shock continues.

Signal No. 24 identified the trilemma — rearm, decarbonise, weather the energy shock — and noted that the European Council conclusions still treat energy resilience and defence readiness as parallel priorities with no fiscal interaction acknowledged. The ETS emergency brake and the methane "stop the clock" were the first institutional concessions that all three are in collision. This week's seven fuel-market interventions — six national, one supranational — are the second. They will not be the last.

The Hungarian election on 12 April — on which the €90 billion loan, the 20th sanctions package, and Hungary's approximately €16 billion SAFE allocation all depend — is now happening in a country running price caps, export bans, and two-tier fuel markets. Orbán's domestic position on energy is strengthened, not weakened, by the crisis: he can point to Budapest's interventions as protection while blaming Brussels for the conditions that required them. Independent polls show Tisza 20 points ahead. But the energy environment in which that election takes place is materially different from the one the polls were measuring three weeks ago.

On Friday, Dmitry Medvedev — deputy chairman of Russia's Security Council — posted a statement on Telegram that contained two assessments worth reading separately and together.

The first: Trump's NATO withdrawal threat is theatre. "Of course, neither Trump nor America will withdraw from NATO. There's no point in it, and Congress won't allow it. Trump's rhetoric is pure provocation." Medvedev cited the institutional constraint: the NATO Support Act, passed by Congress in December 2023, requires two-thirds Senate approval for withdrawal. The act was co-sponsored by Marco Rubio — now Secretary of State, now saying NATO relationships must be "re-examined." Senate Minority Leader Schumer confirmed on Wednesday that the Senate would not vote to leave. The legal barrier is real. Medvedev is telling European capitals what Curated No. 30 already argued: the withdrawal threat cannot be planned against because it is structurally unlikely to convert into action, but the conditionality it creates is operationally corrosive regardless.

The second: the consequence of Trump's theatre is real, and it is worse for Russia than NATO itself. "The EU is no longer just an economic union. It can transform, and rather quickly, into a full-blown military alliance, one overtly hostile to Russia, and in some ways worse than NATO." He called for Russia to "abandon a tolerant attitude" toward neighbours joining what he termed the "military-economic European Union" — including Ukraine.

That second statement is a formal policy reversal. In September 2025, Putin told Slovak Prime Minister Fico: "As for Ukraine's membership of the EU, we have never objected to this. As for NATO, this is another issue." In June 2022, Putin said Russia was not concerned about Ukraine's EU candidacy "because the EU is not a military organisation." Moscow's position — held consistently for over three years — was that the EU was an economic project, distinct from NATO, and that membership in one did not threaten Russia the way membership in the other did. That distinction underpinned Russia's willingness to discuss EU membership for Ukraine as a component of a settlement framework.

Medvedev has now collapsed the distinction. The EU's defence-industrial turn — SAFE's €150 billion lending capacity, EDIP's production ramp-up, the drone derogation compressing procurement to wartime speed, the Industrial Accelerator Act's content rules, the €90 billion Ukraine defence procurement pipeline staged this week — has converted the economic union into what Moscow now regards as a military threat. The instruments that European defence planners treat as financing mechanisms, Moscow is treating as force-structure decisions.

The two assessments interact in a way that neither conveys alone. If the NATO withdrawal threat is theatre — and Medvedev says it is — then its value to Moscow is not the prospect of NATO dissolving but the dysfunction the theatre produces inside the alliance: conditional guarantees, fractured base-access, competing national postures, the inability to plan. Read together, Moscow's optimal outcome is a NATO that is too weak to function as a credible deterrent but too present to be replaced by something worse. The moment Trump's conditionality becomes severe enough to trigger genuine European military integration — Starmer's pivot toward Brussels, Stubb's "more European NATO," France's nuclear umbrella offer, the SAFE/EDIP architecture — the calculus flips against Russia. A cohesive European defence union without American leadership is, in Medvedev's explicit assessment, a more dangerous adversary than the American-led alliance it replaces.

Signal No. 29 wrote that Starmer's pivot toward Brussels was "exactly the outcome Moscow would design." Medvedev's statement inverts that. Moscow designed the fracture. It did not design what the fracture is producing. The question for European defence planners is whether the construction — SAFE, EDIP, GCAP, the drone derogation, the bilateral security agreements — is moving fast enough and coherently enough to cross the threshold where European military integration becomes irreversible. That threshold is the point at which the EU stops being an economic union that happens to fund some defence programmes and becomes a military alliance that happens to have an economic foundation. Medvedev's alarm signals that Moscow's revealed preference is that Europe not reach that point. Everything this week — the bilateral Hormuz escape valve, the six incompatible energy policies, FCAS's terminal governance crisis — suggests the crossing is neither assured nor impossible.