As the U.S. gears up for a potential ground war in Iran, $100-plus oil threatens ‘demand destruction’ — starting in Asia

Good morning. In today’s Fortune:

- In Iran, the likely next phase is a ground war—troops, ships, jets, and helicopters are on their way, as the White House declined to rule out “boots on the ground.” The goal will be to reopen the Strait of Hormuz. We’ve got a map of the safe route through Hormuz (though those ships will pay a steep fee).

- Oil’s “demand destruction”: The price of oil eased but remains above $100. Stock traders did not celebrate, and U.S. futures were in negative territory this morning. Analysts are worried that sustained high oil prices threaten “demand destruction,” where certain industries simply cease to function—and there are signs of that in Asia already.

- Shock as the founder of Supermicro was arrested in a chip-smuggling probe.

- The French really are thinner than the rest of us.

- Fetch my clubs! Are you really a Fortune 500 CEO if you don’t have a country club membership?

THE MARKETS

Oil is heading down but stock markets aren’t buying it

Oil declined to $109 per barrel after Israel’s Benjamin Netanyahu said his forces would no longer target Iran’s energy infrastructure. Netanyahu also said Iran’s ability to enrich uranium had been destroyed—a key war goal. “This war [is] ending a lot faster than people think,” he said. S&P 500 futures were down 0.71% this morning prior to the open in New York. The index fell 0.27% yesterday. Markets in Asia were largely down this morning, again, with the exception of India’s Nifty 50 (up 0.49%) and South Korea’s KOSPI (up 0.31%). Europe was a different story: the Stoxx 600 rose 0.25% before lunch.

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ONE BIG THING

Supermicro founder arrested in chip-smuggling probe

Federal agents on Thursday arrested Yih-Shyan “Wally” Liaw, a prominent Silicon Valley executive deep in the AI ecosystem who co-founded Supermicro in 1993 and is a close confidante of CEO and chairman Charles Liang. The stock tumbled roughly 12% in after-hours trading following the news, Fortune’s Amanda Gerut reports. According to a stunning release from the Department of Justice, an indictment was unsealed in Manhattan federal court on Thursday charging Liaw, 71, and two others with allegedly working in secret to divert billions in Supermicro AI servers to China in violation of U.S. export control laws. The two alleged co-conspirators charged alongside Liaw include Supermicro’s Taiwan general manager Ruei-Tsang “Steven” Chang, who remains a fugitive, and a third-party fixer named Ting-Wei “Willy” Sun, who was also taken into custody on Thursday.

IRAN

The likely next phase is a ground war

We’re starting to get a clearer picture of the next phase of the war: An assault on Iran’s assets around the Strait of Hormuz. Some U.S. lawmakers like Sen. Richard Blumenthal, D-Conn., are fearful that will require putting troops inside Iran. “Some of the objectives that [Trump] continues to espouse simply cannot be achieved without a physical presence there—securing the uranium cannot be done without a physical presence,” he told the Associated Press.

President Trump denied he would engage in a ground war in Iran, but also left open the door to that same scenario: “I’m not putting troops anywhere,” Trump told the New York Times. “If I were, I certainly wouldn’t tell you.”

The reality is that there are 2,200 U.S. Marines aboard the amphibious assault ship U.S.S. Tripoli on their way to the region and they will receive backup from A-10 Warthog jets and Apache attack helicopters. Those assets can be used to provide close air support for ground troops, Fortune’s Jason Ma—an ex-Marine—tells me.

The White House confirmed to Reuters that it had discussed using ground forces but that no decisions have been made.

There is, in fact, a safe route through Hormuz

The strait isn’t blocked—it is controlled by Iran, which selectively allows friendly ships through the seaway that normally supplies one-fifth of the world’s oil. Eight ships this week have successfully navigated the 24-mile gap between Iran and Oman, according to the Financial Times. They have pursued an unusual route, the paper says, by heading around the north side of Larak Island, hugging the coast of Iran, before moving south again. It looks like this:

The cost of safe passage is $2 million per operator, Lloyds of London reported. Any “enemy” ships face a sea potentially full of mines, drone strikes, or attacks from fast-moving speed boats. Using U.S.-allied planes and helicopters to clear the strait will take weeks, the Wall Street Journal says.

The logistics of using military escorts to safeguard ships in the strait are formidable: Two destroyers are needed for every two to four tankers, the Financial Times says.

‘Demand destruction’: The high price of oil is changing everything

It’s day 21 of the war against Iran. In the last 24 hours, Israel struck sites in Syria and Lebanon, and Iran targeted Kuwait’s Mina Al-Ahmadi refinery and locations in Dubai and Bahrain. 4,200 people have