Trump searches for an exit strategy in Iran as $100 oil looms over the midterms

Good morning. On Fortune’s radar today:

- Stock traders rejoiced at the news that President Trump may be searching for a way out of Iran. Oil is still above $100 a barrel, and both Tehran and Wall Street expect American voters to punish Republicans at the midterm elections if this goes on much longer. There is an off-ramp, but it risks making Iran look like the winners, experts say. Suspiciously, a massive set of highly profitable trades in oil and stock futures were placed in New York minutes before Trump announced he wanted Iran to come to the table.

- Exclusive: Some people are so addicted to their phones that they end up in a $1,000-a-day rehab clinic outside Seattle.

- In Asia there are shortages of jet fuel, toilet paper, and fertilizer.

- Morgan Stanley warns of a “chaotic melt toward stagflation.”

- Private credit funds have shut the gates on some investors.

THE MARKETS

Stocks bounce on hopes of peace

Oil was at $102 per barrel this morning. S&P 500 futures were flat before the opening bell in New York. The index rose 1.15% on Monday. Asia had a good day: South Korea’s KOSPI rose 2.74%. Japan’s Nikkei 225 rose 1.43%. Europe was “meh” in early trading: The U.K.’s FTSE 100 and the Stoxx Europe 600 were both flat before lunch.

Recommended Video

ONE BIG THING

Inside a $1,000-a-day tech addiction rehab clinic

By age 21, Sarah Hill was so addicted to video games that she’d stopped seeing friends, showering, and brushing her teeth. At college, she spent so much time in her room compulsively accessing a chatbot site, Character AI, that she failed classes. “I’d lied about everything and I flunked,” she recalls. “My parents didn’t have any words. They were like, ‘Just go.’ I went to my room, but the last thing I saw was my mom resting her elbows on the counter and just crying. That was the worst thing I ever saw.” She enrolled at reSTART, one of the nation’s few residential rehab programs that treat tech addiction like alcohol or drug addiction. Fortune’s Kristin Stoller reports on the intense debate about how addictive tech can be, currently wending its way through the U.S. court system via lawsuits against Meta, YouTube, TikTok, and Snap.

IRAN

Tehran bets American voters won’t tolerate high gas prices

The price of oil whipsawed from nearly $114 a barrel yesterday down to as low as $97 and was sitting at $102 this morning, after President Trump suddenly announced he was giving Iran five more days to engage in talks that might end the war. Oil was at $72 before the war and some analysts—most recently Goldman Sachs—are forecasting it could go as high as $147 if the conflict doesn't end soon.

The Iranians have figured out that control of the Strait of Hormuz is their most effective weapon against the U.S. and Israel’s bombing of Tehran, according to Ed Yardeni of Yardeni Research. American voters won’t tolerate high gasoline prices for long. “The Iranians must figure that if they can keep oil prices elevated through the U.S. midterm elections, the Republicans will lose at least the House if not the Senate as well. They must hope that the Democrats might cut off funding for the war,” he told clients in a recent email.

No surprise then, that diplomats from Egypt, Turkey, Saudi Arabia, and Pakistan were in Riyadh yesterday acting as intermediaries between the White House and Tehran. “But there was one big problem,” as The Wall Street Journal archly put it, “Earlier that week, Israel killed Iran’s national security chief, Ali Larijani, who had been considered a viable partner who could engage with the West.”

What the off-ramp might look like: Iran doesn’t want a temporary ceasefire, The New York Times says. It is looking for a permanent peace pact in which it is not attacked again, and it wants economic sanctions lifted. Washington wants a complete cessation of Iran’s nuclear weapons program.

Even if Trump’s demands can be satisfied, a withdrawal of U.S. troops and the reopening of the strait would look a lot like a victory for Iran, according to Former Defense Secretary James Mattis. And Iran would retain de facto control of the 700-mile-long shipping lane because the mere threat of an attack would likely deter most freighters. "And they've got anti-ship cruise missiles that could be fired off the back of a pickup truck that can go 100 miles. So there's the problem,” he said.

Shortages of helium, jet fuel, toilet paper, and fertilizer

Unusual shortages are cropping up in Asian countries, which are vulnerable to reduced oil supplies, according to Fortune's Angelica Ang. South Korea is restricting the use of government vehicles from midnight on Wednesday. Cars with number plates ending in 1 or 6 will not be allowed to be driven on Monday. Plates ending in 2 or 7 will be banned on Tuesday, and so on, The Financial Times reports. China is imposing price controls on diesel. The Philippines has warned it may be running out of jet fuel. Farmers can’t get the fertilizer they need f