Iran in the Crosshairs: The Situation Three Weeks In…

A follow-up conversation with Mr. X, former US intelligence officer

Two weeks ago, I published “Iran in the Crosshairs: An Intelligence Assessment“ — a conversation with Mr. X, a former officer from one of the three-letter intelligence agencies whose focus was Iran. His baseline: the US got suckered in, Iran blundered strategically, regime change is a fantasy, and the most likely outcome was a messy negotiated off-ramp within one to two months. The catastrophic scenario — a rogue IRGC faction igniting a full Gulf war — he put at under 20%.

A lot has happened. We got back on the phone across two sessions on March 13 and 18. What follows is the edited transcript of those conversations, updated with context from market data and reporting through March 19.

The headline update from Mr. X: a regime change has already occurred in Iran — just not the one anyone was hoping for. Power has shifted from the theocratic class to the IRGC. The nuclear material question is more concerning than two weeks ago. And in the last 48 hours, the conflict has entered a genuinely new and more dangerous phase that deserves its own section.

The full interview — covering the GCC’s precarious position, a deflationary cascade scenario the market hasn’t priced, and a detailed breakdown of the China-Taiwan military picture and what a Chinese move actually looks like — is available exclusively to Macro Ops Collective members. We cut it off below so you can get a taste. If you want the rest, you know what to do.

Where Things Stand: Tactical Win, Strategic Fog

Alex: It’s been about two weeks since we last spoke. Before specifics — how on or off script has this gone?

Mr. X: On the tactical side, the US military has executed well. The line of effort was clearly laid out: degrade ballistic missile launch capability, take out drone production, gut the IRGC and what was left of their conventional navy. They’ve hit over 6,000 targets. Launch-capable assets have been driven down from the hundreds to the low twenties or thirties. If you give the military a clear objective, they’ll accomplish it.

Mr. X: But strategically, I think this is going to fail. The stated objective for going in was removing Iran’s ability to build nuclear weapons. We hit Fordow, Natanz, and Isfahan back in June or July. But they already had the material to make roughly 15 nuclear bombs — and we don’t know where any of it went. We telegraphed our intentions publicly for months. They had time to disperse everything. Our analysts estimate 50 percent of the enriched uranium has been moved and or buried. You’re not finding that with airstrikes. You’d need boots on the ground and far better human intelligence than we have.

Alex: So we’ve degraded the delivery systems but potentially left the underlying material intact.

Mr. X: Exactly. And we may have created the exact conditions that incentivize them to use it.

The Regime Change Nobody’s Talking About

Alex: You told me something last week that I keep coming back to — that a regime change has already happened.

Mr. X: It has. Everyone keeps talking about regime change as the goal. I’d argue it already occurred — just not the kind anyone wanted. We went from the theocracy running the place to the IRGC running it. Nobody is discussing this.

Alex: Walk me through it.

Mr. X: When I was at the agency, our assessment was clear: Mojtaba Khamenei was not going to be the Supreme Leader. His father had essentially removed him from the line of succession. The reason Mojtaba went the IRGC route was because he knew he’d never have the religious credibility to lead the clerical establishment — no beard, no true scholarly credentials, fundamentally a military man. Then Larijani — the actual gatekeeper between the IRGC and the Supreme Leader, probably the second most powerful figure in the country — was killed. What I think happened is that the IRGC and Larijani together had positioned Mojtaba as someone they could control. With Larijani now gone too, the IRGC has stepped into that vacuum and consolidated power. That’s a regime change. It just went from father to son, which makes it easy to miss. But these are two fundamentally different power bases — religious versus military.

Alex: And practically, what does an IRGC-controlled Iran mean?

Mr. X: His father had a religious edict against nuclear weapons. That edict expired with his death. The IRGC are military thinkers. They watched us start bombing them in the middle of peace negotiations — twice in nine months, according to the Omanis. Their conclusion, the only rational one, is that they need a nuclear weapon for regime survival. I think that becomes priority number one now. And honestly? I don’t entirely blame them for it.

The Oman Foreign Minister Moment

Alex: Something significant landed this morning that I want your reaction to. Oman’s Foreign Minister Badr Albusaidi — the man who personally mediated the last round of US-Iran nuclear talks — published an op-ed in The Economist. He said, and I’m quoting here: ‘America has lost control of its own foreign policy.’

Mr. X: I saw it. It’s extraordinary. This is the man who was in the room. He’s a neighbor of Iran’s, a country that has itself been struck multiple times by Iranian missiles in this war. And he’s saying Iran’s retaliation was inevitable — that it was ‘probably the only rational option available to the Iranian leadership.’ He’s not a naif. He just has no incentive left to be diplomatic about what happened.

Alex: He writes that twice in nine months the US and Iran were on the verge of a real deal — and both times, hours or days after productive talks, Israel and the US launched military strikes. The UK’s National Security Advisor Jonathan Powell, who attended some of these talks, has confirmed that Iran was making genuine concessions on its nuclear program. And then the bombs dropped.

Mr. X: That’s the thing that I think has been underappreciated. The diplomatic damage here may be worse than the military damage. Iran has now been taught — twice — that negotiating with the United States is a trap that will literally get their people killed. The supreme leader gone, Larijani gone, commanders killed while talks were ongoing. What rational actor signs up for round three of that?

Alex: Albusaidi’s conclusion is that the greatest miscalculation wasn’t tactical — it was strategic. He writes: ‘Israel’s leadership seems to have persuaded America that Iran had been so weakened by sanctions, internal divisions, and the bombings of its nuclear sites last June, that an unconditional surrender would swiftly follow.’ And he adds — this is the brutal part — that for Israel to achieve its actual goal, the US would have to commit troops on the ground and open a new front in the forever wars. Which is exactly what Trump promised he would never do.

Mr. X: The IC’s read has always been that regime change probability is effectively zero. Not low — zero. And yet here we are, burning through stockpiles we need for other theaters, deploying carriers that are now approaching record-length deployment, at $200 billion in additional war spending the Pentagon is requesting. For an outcome that cannot happen. It’s hard to look at this and not conclude that we got played.

Israel Goes Rogue: The South Pars Strike and What Comes

Alex: I have to address what happened today, because it changes the picture significantly. Earlier today, Israel struck Iran’s South Pars gas field — the largest natural gas field in the world, shared between Iran and Qatar. Iran retaliated by hitting Qatar’s Ras Laffan LNG hub, two refineries in Riyadh, energy facilities in the UAE and Kuwait. Brent hit $110. Trump claimed the US ‘knew nothing’ about the Israeli strike, then threatened to ‘massively blow up’ South Pars if Iran kept hitting Qatar. Qatar — a US ally, home to Al Udeid Air Base — is now calling Iran’s retaliation ‘a dangerous escalation that threatens regional stability.’ Saudi Arabia says it reserves the right to ‘military actions if necessary.’ Oman, the only neutral party in the region, has been struck multiple times despite trying to stay out of it. What the hell just happened?

Mr. X: Israel played its hand. This is what I’ve been worried about. Look at the Gaza precedent. Israel leveled an entire territory, killed tens of thousands of civilians, did it openly, and largely shrugged off international condemnation. They developed a political tolerance for doing what they believe is necessary regardless of what allies prefer. That same logic is now being applied in Iran. Their stated strategic objective is permanent destabilization of the Islamic Republic. The US’s stated objective is much narrower — degrade military capabilities, then negotiate. Those are not the same objective, and we are discovering that the hard way.

Alex: An energy analyst I follow — Anas Alhajji — put it starkly. He says Israel is well aware of the basic equation: if it strikes Iranian energy infrastructure, Iran will retaliate against GCC energy facilities. That’s not a bug — it’s a feature. Either the GCC gets dragged into fighting Iran directly, which benefits Israel, or they suffer serious economic damage, which reduces their regional influence and economic power. Israel wins either way.

Mr. X: That’s exactly right. And the South Pars situation is worse than most people understand. That field is shared with Qatar’s North Field — it’s the world’s largest LNG hub. Qatar supplies LNG to Europe, Asia, everywhere. Qatar has already had to halt all gas production. The cascading effects of this aren’t just regional — they’re global. European gas is spiking. Japan, South Korea, the whole LNG import market is repricing. And if Iran hits Ras Laffan again, or the Saudis’ East-West pipeline, we’re talking about infrastructure damage that cannot be quickly repaired.

Alex: I’ve been thinking about the geography here, because I think maps are deceiving on the Strait. The way I’ve come to understand it: the shipping lanes don’t run straight through — they bend around the Musandam peninsula, and that turn exposes vessels to roughly 270 degrees of Iranian fire control from Qeshm, the surrounding high ground, and further inland. Iran doesn’t need to mine the entire strait or sink a ship every day. It just needs to make that turn lethal enough that no commercial operator will risk it. And the Red Sea precedent is worth remembering — the Houthis, a land power with effectively no navy, fought Operation Prosperity Guardian to a standstill against the most powerful naval force on earth. The Hormuz problem is harder than that.

Mr. X: That’s right. You close the Strait with fear, not hardware. One RPG from a speedboat and the next tanker turns around. And we have spent roughly $20+ billion in three weeks — primarily firing multi-million-dollar interceptors at twenty-thousand-dollar drones. That exchange ratio is unsustainable for everyone. We’re pulling Patriot batteries from Asia, compromising those theaters. The USS Gerald Ford has been deployed for 268 days and will reportedly break the Vietnam-era record for longest carrier deployment if this continues another month. The US is burning through capacity it needs elsewhere.

Alex: So where does this leave us? The off-ramp scenario you described two weeks ago assumed the US would want out after about a month of degrading Iran’s military infrastructure. But now Israel has just struck the world’s largest gas field and dragged Qatar into this. Can the US still engineer an off-ramp while Israel is doing this?

Mr. X: That’s the question I keep coming back to. And honestly, it’s getting harder to answer optimistically. The US objected when Israel first hit oil depots in Tehran without asking. Then, reportedly, the South Pars strike was ‘coordinated and approved’ by the Trump administration — or wasn’t, depending on which official is briefing which outlet on what day. That ambiguity is telling. Trump posted that the US ‘knew nothing,’ then threatened to blow up South Pars himself. That’s not the behavior of a country in control of its own war.

Alex: Which is exactly what Albusaidi said.

Mr. X: Right. And here’s what worries me most going forward: Israel’s interest is not a ceasefire. Israel’s interest is maximum degradation of the Iranian state, maximum isolation of Iran from its Gulf neighbors, and ideally an Iranian internal collapse that eliminates the threat permanently. The US’s interest — or what should be its interest — is a quick off-ramp that doesn’t destroy the global energy system, that doesn’t push Iran into building nukes, and that doesn’t turn every Muslim-majority country in the world into a recruiting poster for anti-American sentiment. These are not compatible objectives. And right now, one of those two countries has clear strategic vision and the other is improvising.

The GCC: From Safe Harbor to Target

Alex: Two weeks ago you said the GCC countries were not at serious risk of destabilization, that Iran’s attacks would produce a rally-around-the-flag effect, and that some were even discussing offensive operations. Does that still hold?

That’s where we’re cutting it for the free version.

The rest of the conversation covers what happens when those 200 million trapped barrels hit the market at once, Mr. X’s updated take on the China-Taiwan military picture, and his revised probability framework on how this whole thing ends. It’s the most important part.

If you want in, now’s a good time. We’re raising prices soon — keeping the Collective small and tight is a feature, not a bug — and the rate we’re at now won’t last much longer.

Stay frosty,

Alex