Iran Conflict Could Trigger Sovereign Debt Crisis, Armstrong Warns

Martin Armstrong is warning that the sovereign debt crisis may start in the Middle East, driven not by oil prices but by the debt loads Gulf States carried out of the Covid era.

Armstrong, speaking to Greg Hunter of USAWatchdog.com, said Iran's strategy of attacking Gulf State refineries and threatening the Strait of Hormuz is aimed at preventing those states from selling oil. If they cannot sell oil, they cannot service their loans. Those loans, he said, run straight to London's banking system.

"People are completely blindsided because they think that in the Middle East, they are just flush with money–not true," Armstrong said. "Now, they are like everybody else with debt up to their chin." He noted that during Covid, oil briefly touched $6.50 a barrel, below production costs for most producers. Governments borrowed heavily to survive. That debt remains unpaid.

The MOU between the US and Iran, signed about two weeks ago, briefly pushed oil below $70 a barrel and raised hopes for a 60-day ceasefire. Those hopes have faded. Attacks and counter-attacks have resumed. Armstrong called the conflict "much more complicated than people think" and said a peace deal is not coming.