Daily Strike — Catch-Up Edition: May 10–12

This is a catch-up edition covering the roughly 53 hours from Sunday evening, May 10, through Tuesday evening, May 12. The ceasefire framework that was already under pressure at the close of Sunday’s edition has deteriorated sharply: Trump publicly rejected Iran’s formal counter-proposal, diplomats on both sides signaled hardening positions, the Pentagon disclosed a significant increase in war costs, Washington sanctioned the Chinese buyers underwriting Tehran’s war economy, and a 40-nation coalition convened to plan Hormuz reopening with or without Iranian cooperation. Markets priced in the breakdown — Brent crossed $110 for the first time since the blockade began.

Trump calls ceasefire “on life support,” dismisses Iran’s counter-proposal as “garbage”

Iran’s formal counter-proposal, transmitted through Pakistani intermediaries, demanded an end to active US military operations, the lifting of the Hormuz blockade, sanctions relief, and recognition of Iranian sovereignty over the Strait. Trump responded by calling the document “a piece of garbage” that he “didn’t even finish reading,” Al Jazeera reported. He described the ceasefire itself as “on life support.”

Iranian Foreign Minister Baghaei defended Tehran’s demands as “legitimate rights” rather than negotiating maximalism, signaling the counter-proposal reflects a floor, not an opening bid. Parliament Speaker Ghalibaf added that Iran is “prepared for every option,” Al Jazeera reported. The hardening is mutual: Trump’s public characterization forecloses quiet revision through the Pakistani channel, and Iran’s framing of its demands as rights rather than positions removes the rhetorical room for face-saving compromise. The ceasefire is nominally intact, but the diplomatic architecture that might have resolved it has stalled.

OFAC sanctions 12 entities for routing Iranian oil to China

The Treasury Department’s Office of Foreign Assets Control designated 12 entities — four based in Hong Kong, four in the UAE, and one in Oman — for facilitating IRGC oil sales to Chinese buyers, US News reported. Treasury Secretary Bessent said China has been “buying 90% of their energy, so they are funding the largest state sponsor of terrorism.”

The action arrived as Trump was en route to Beijing for a summit with Xi Jinping — a deliberate sequencing that puts China’s continued purchase of Iranian crude at the center of the diplomatic agenda rather than treating it as a background economic issue. Beijing has refused to recognize US unilateral sanctions. The practical question is whether Xi uses the summit to offer any concession on Chinese oil purchases as a pathway toward Hormuz mediation, or whether Beijing treats the OFAC action as a provocation requiring a counter-move. That answer will shape the week’s diplomatic arc more than any bilateral Iran-US channel can.

Pentagon puts Iran war cost at $29 billion; munitions drawdown disputed

Pentagon Comptroller Jules Hurst told a Senate committee that total conflict costs have risen from $25 billion to $29 billion, Al Jazeera reported. Independent analysis by the Center for Strategic and International Studies estimates roughly 45% of US Precision Strike Missiles have been expended and approximately 50% of THAAD and Patriot interceptors are no longer in inventory. Defense Secretary Hegseth dismissed concerns about munitions depletion as “foolishly overstated.”

The gap between the CSIS accounting and Hegseth’s public posture matters operationally. Interceptor inventory is the binding constraint on any sustained Iranian ballistic or cruise missile campaign; at 50% drawdown, the margin for absorbing an Iranian escalation without repositioning assets from other theaters narrows considerably. The $29 billion figure also renews pressure on the supplemental appropriations request that has been pending before the Senate Armed Services Committee, and it gives the war-powers caucus a hard number to anchor AUMF debate.

Markets

Brent crude settled at $110.43/bbl on ceasefire collapse fears — the highest level since the blockade began — per Fortune. Gold is at $4,707/oz. The 10-year Treasury yield is at 4.42%. Defense equities continue to carry a conflict premium: XAR is up approximately 44% year-to-date, LMT is up 30% YTD, RTX is up 5.5% YTD, and ITA is flat YTD at $214.33. The divergence between XAR (which is weighted toward missile and munitions manufacturers) and ITA (broader aerospace and defense) reflects the market’s view that the conflict is a production-rate story, not an order-book story.

The $110 Brent level is significant because it approaches the threshold where IEA member-state emergency reserve releases, which have been discussed but not triggered, become politically unavoidable. Any further ceasefire deterioration that pushes Brent above $115 is likely to force coordinated reserve releases from the US, EU, and Japan.

Secondary fronts

Iraqi supertanker turns back at blockade line; 62 vessels diverted. The Agios Fanourios I, carrying Iraqi crude bound for Vietnam, reversed course upon approaching the US naval blockade line, gCaptain reported. CENTCOM has now confirmed 62 commercial vessels have been diverted in total since the blockade was established. The Iraqi diversion is notable because Iraq’s oil exports — separate from Iran’s — are affected by the Hormuz closure, adding Baghdad’s economic grievance to the coalition of parties pressing for a resolution.

Kuwait reveals IRGC Bubiyan Island infiltration. Kuwait disclosed that six IRGC fighters attempted to infiltrate Bubiyan Island on May 1 — a disclosure held for nearly two weeks, Al Jazeera’s liveblog reported. One Kuwaiti soldier was wounded; four IRGC fighters were captured and two escaped. The delay in disclosure suggests Kuwait weighed the diplomatic consequences of a public confrontation with Tehran before concluding that the facts were too significant to suppress. A confirmed IRGC ground incursion into a GCC member state — even a failed one — changes the threat calculus for Kuwait and potentially triggers consultations under the GCC mutual defense framework.

UK and France co-chair 40-nation Hormuz defence summit. Defense ministers from 40 countries convened on May 12, co-chaired by UK Secretary of State John Healey and French Minister Catherine Vautrin, to coordinate post-hostilities Hormuz reopening, the UK government announced. HMS Dragon, a Type 45 destroyer, has been forward-deployed to the Gulf. Iran warned it would respond to the pre-positioning with “a decisive and immediate response.” The summit signals that NATO-adjacent states are preparing to enforce a Hormuz reopening unilaterally if the ceasefire fails, which reduces Tehran’s leverage over the timeline.

USS Alaska dispatched to Gibraltar. The Ohio-class ballistic missile submarine USS Alaska (SSBN-732) was sent to Gibraltar as strategic signaling, Al Jazeera’s liveblog reported. Trump separately warned Iran it would face “a lot harder” strikes if diplomacy fails. An SSBN deployment to Gibraltar is a messaging action — Ohio-class boats carry the Trident II; their transit is visible to satellite and is intended to be seen. The question is whether Iran’s strategic planners read the signal as coercive pressure to accept US terms or as evidence that Washington is preparing an escalation regardless of Iran’s diplomatic posture.

What to watch tomorrow

1. Trump-Xi Beijing summit outcomes on Iran — whether Xi agrees to pressure Tehran to accept revised ceasefire terms, offers to mediate Hormuz reopening as a concession, or rejects US framing of China’s oil purchases as a sanctions-enforcement issue. Any joint communique language on Iran will be read closely.
2. Iranian military response to HMS Dragon and any Charles de Gaulle pre-positioning — Tehran’s threat of a “decisive and immediate response” to the UK warship deployment sets up a near-term test of Iranian escalatory intent. Watch for IRGC naval activity near the Type 45’s operating area and any CENTCOM force-posture adjustments.
3. US escalation decision post-ceasefire collapse — Trump’s “a lot harder” warning and the USS Alaska dispatch are coercive signals; the operational question is whether CENTCOM receives a strike authorization or a formal ultimatum to Iran within the next 48-72 hours. Watch for any SECDEF orders or CENTCOM public statements on rules of engagement.

What we’re tracking but haven’t published on yet

• The Pakistani intermediary channel is under maximum strain. Islamabad’s diplomatic capital is tied to producing a deliverable, and Trump’s “garbage” framing publicly humiliated the channel. Whether Pakistan’s foreign ministry issues any statement on the state of mediation — or quietly withdraws from the facilitator role — is a leading indicator of whether any diplomatic track remains viable.
• The Congressional AUMF track: Senate war-powers debate was flagged for the week of May 11, and the $29 billion cost disclosure gives the Armed Services Committee a hard figure to anchor authorization language. Watch for any floor-scheduling announcements or committee markup notices.
• Iran’s parallel nuclear consultations with China and Russia, confirmed last weekend, may be elevated in significance by the Beijing summit. If Xi uses the Trump meeting to signal support for an alternative Iran settlement framework — one that routes around US demands on Hormuz sovereignty — the nuclear-track channel becomes the operative one.

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— The America Strikes desk