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As negotiations between the US and Iran to reopen the Strait of Hormuz go nowhere, oil prices continue to slide lower on some naive hope that a resolution to the conflict will magically emerge. Meanwhile, both commercial and strategic stocks continue to be drained at a historic pace, and one day virtually every tank bottom will be hit, sparking a historic surge in commodity prices as the market realizes that physical always wins the war with paper oil. 

That day just got closer today when the US reported that crude oil stocks in the Strategic Petroleum Reserve fell below 300 million barrels for the first time since early 1983, as global inventories are under pressure due to the Iran war.

The SPR fell by 6.1 million barrels to 298.7 million barrels last week, according to data released by the Department of Energy on Monday. The reserve is at its lowest level since January 1983.

The 6.1 million drain was a big jump in the SPR's recent moderating trend which saw the previous week only 2.8 million barrels exit the strategic reserve. Instead, the outsized outflow which was the biggest in almost 2 months suggests that US reserves are once again working overtime to prevent the oil price frrom spiking.

Yet as we have repeatedly explained, it is only a matter of time before the SPR can no longer be used to plug the gap so to speak. That's because the oil industry has generally accepted that the operational minimum for oil in the SPR, a point at which it would be more difficult to pump out the oil, is somewhere between 250 million and 300 million barrels. Meanwhile, sizing studies done on the SPR in the 1970s recommended an inventory minimum of 250 million barrels. 

In other words, the US is already if not at the operational minimum, it will certainly hit it in a few weeks, should the weekly drain persist at this rate. 

The rapid drain of the SPR explains why, according to unconfirmed reports, Iran has "completely ruled out any future negotiations with the Trump administration," declaring it will wait out Donald Trump's term until January 20, 2029, per Iranian outlets and Ghalibaf advisor's post.

"Trump will not reach an agreement with us. We will accompany him until his term ends," said Majid Shakeri, advisor to Parliament Speaker Ghalibaf.

He posted: "The path to victory is neither fighting nor a deal — it is managing the process of neither war nor peace, up to the point of victory. Publicly confirming negotiations with the U.S. is sheer folly. The winning approach is denial, ambiguity, and strategic patience."

The US release is part of a coordinated action by countries in the International Energy Agency to support the global oil market with 400 million barrels, although the US has been by far the most aggressive lender of its strategic reserves. 

The drain began after Trump ordered the release of 172 million barrels in March to help address the oil supply disruption triggered by Iran’s attacks on tankers in the Strait of Hormuz.

Summary

• Trump demands Iran compensate the US and families of fallen soldiers, but issues no new military threats.
• US again pivots to economic warfare: Trump says Washington is "low-keying it" and betting Iran's economic weakness will force concessions.
• Iran digs in on Hormuz: Tehran says the Strait will not return to pre-war conditions without major concessions.
• Hardliners gain influence: Former IRGC commander Mohsen Rezaei is set to take Iran's top security post.
• Deal remains elusive: Tehran appears intent on prolonging talks and extracting maximum concessions from Washington.

*  *  *

Trump Belatedly Responds to Iranian Demands

President Trump on Monday has very belatedly responded to the Iranians after they issued new demands over the weekend, or conditions for reopening the Strait of Hormuz, after declaring a ban on all US and Israeli-linked vessels.

Noting that the Iranians are now asking for war compensation, Trump is seeking to turn it around and now demands compensation from Iran "for all of the people that they have killed and gravely wounded with their roadside bombs and many conflicts, for which they are famous...". He also asserted that American families of fallen soldiers should be paid.

Interestingly and tellingly, unlike many prior Truth Social posts related to Iran, Trump did not issue any new threats or ultimatums saying what he will 'do' to the country if it doesn't comply. This perhaps reveals he's out of answers or new strategy, and doesn't wish to escalate militarily. The statement comes on the heels of the president telling Axios on Sunday that the US is now "low-keying" it and primarily turning back to prolonged economic warfare to strangle the Iranian economy.

Trump "Low-Keying It" As Iran Doubles Down on Demands

After President Trump said Sunday that the US is now "low-keying it" with Iran and only "semi-negotiating" following a top Iranian security official having laid out multiple stringent conditions for the opening of the Strait of Hormuz, oil is edging higher on Monday.

"We are only semi-negotiating with them. We are just watching Iran with its huge inflation and the fact they have no money," Trump told Axios reporter Barak Ravid in comments we analyzed earlier, signaling his return to an economic warfare focus. President Trump has fewer and fewer options and is being squeezed, with any opportunity to declare 'victory' and make swift exit more elusive than ever, given Washington would have to make huge compromises, including lifting sanctions and paying war compensation to Tehran.

"The Supreme National Security Council will not retreat from these demands, whether in war or in negotiations," the head of Iran's Supreme National Security Council Mohammad Bagher Zolghadr has said, in effect doubling down, according to Iran’s Mehr news agency.

Hardline IRGC Commander Moved to Top Security Chief Spot

But speaking of Zolghadr, its been widely reported that a 'hardline' former IRGC commander will take his place. The NY Times explains:

Iran is replacing its top national security adviser with a longtime military commander whose appointment could represent a further consolidation of power by the country’s old-guard security establishment.

Mohsen Rezaei, who led Iran’s Islamic Revolutionary Guards Corps during the Iran-Iraq War of the 1980s, will be the new secretary of the Supreme National Security Council, a spokesman for Iran’s president wrote on social media on Sunday. He had been serving as an adviser to Iran’s supreme leader, Ayatollah Mojtaba Khamenei.

Mr. Rezaei is replacing Mohammad Bagher Zolghadr, who stepped into the role when the council’s previous secretary, Ali Larijani, was killed in an Israeli strike during the U.S.-Israeli attacks on Iran earlier this year.

This is yet another likely sign that Tehran sees itself in the driver's seat, will not back off its demands and conditions for reopening Hormuz, and plans to make an exit from the conflict for Washington as painful as possible, extracting as much as it can while smelling weakness.

Ali Nikzad, Iran’s deputy speaker of the Islamic Consultative Assembly, has emphasized that the Strait of Hormuz is not going to return to its pre-war condition, addressing the body on Monday.

He said, "The Islamic Republic of Iran tried to inform the aggressor and deluded enemy of the fact that the Strait of Hormuz is not going to return to the pre-war conditions during the days of the war."

WSJ: the feared oil crunch may not have been avoided, just delayed. The likely reason is that the world had more "hidden" oil inventories than analysts realized. But those stockpiles are finite. If Hormuz remains disrupted, prices could rise sharply once they're exhausted. pic.twitter.com/lKRvLnoiZG

— Sina Toossi (@SinaToossi) August 7, 2026

"Unfortunately, they tried to pretend not to know, but the passage of time is the greatest teacher for deluded people, and today the American-Zionist enemy, with a strong fist of armed forces, has practically realized that the opening of the Strait of Hormuz has no military solution and must submit to the new order in the region," Nikzad stated.

Return to Focus on Economic War

He went on to admit that a focus on reducing the country's economic challenges is at this moment the highest priority. This is where the US hopes to regain some leverage, with the aforementioned Axios interview including the following declarations by Trump:

• He stressed that Iran "is in very bad shape" economically and has no money to pay its troops. The U.S. naval blockade has exacerbated the Iranian regime's economic crisis, Trump said.
• At the same time, Trump said that with oil down to slightly over $75 a barrel, U.S. consumers are feeling less pain from the war.
• "It will work out. It always works out. It's like a chess game," Trump said of the back-and-forth with Iran.

However, the assumption that the Islamic Republic is ever on the verge of economic panic and collapse is the same talking point that existed at the very start of Operation Epic Fury - and there's as yet been no snowball. Instead in some ways the population and leadership may have 'toughened' and adapted amid wartime conditions.

"Iran is not overplaying. It’s just playing its hand."

Johns Hopkins scholar Vali Nasr tells host Tom Switzer that Washington’s fixation on Tehran “overplaying its hand” reflects disbelief at how dramatically the balance of power has shifted.

“Iran is not overplaying. It’s just playing its hand,” he said.

Iran sees a narrow window… pic.twitter.com/7sL9ryc5Jw

— Drop Site (@DropSiteNews) August 10, 2026

Three Scenarios of Iran's Strategy

Trita Parsi, who is co-founder and executive vice president of the Quincy Institute for Responsible Statecraft and co-founded the National Iranian-American Council (NIAC), lays out three scenarios on Iran's potential strategy.

"The NYT reports that Iran has effectively rejected a deal on the Strait and presented a list of very hard-line demands in order for an agreement to be reached," he wrote over the weekend. "My understanding of what has transpired differs somewhat. I see three possible interpretations, some of which overlap with the NYT's reporting"...

1. There are divisions within the Iranian system in which hardline elements want to prolong the talks and have the current blockade inflict more damage on Trump and the global economy. Their narrative is that Iran agreed to the MOU too quickly, which contributed to the MOU's deterioration later. Tehran should have held out longer then, and it should also do so now, essentially. A variation of this explanation is what the USG is advancing: The lack of agreement is because of divisions in Iran.

2. Rather than a division, it may also be that a united system is seeking to prolong the talks to pressure the US. As such, a narrative of divisions in Iran may be seen as helpful, as it diverts from an arguably more problematic reality: The more flexible elements within the Iranian system also agree that talks should be prolonged.

3. The Iranian narrative, however, is that new elements were added to the talks at the last minute by the US and that Iran's on-the-surface hardened position is a reaction to what Tehran says is an attempt by the US to move the goalposts. Whether this is true or not, Tehran has tended to react in this manner (escalation) when it believes the US has shifted its position or added additional demands at the last minute. This is, however, not a denial of Zolghadr's list of demands.

Parsi concludes: "That list is an accurate reflection of Iran's broader goals, but ultimately, they won't be its demands for the immediate deal on the Strait. If the truth is closer to the third explanation, then a deal may still be within reach in the short term."

Majid Shakeri, Qalibaf's advisor: Trump will not reach an agreement with us. We are going along with him until his term ends.

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— Mohamad Ahwaze (@MohamadAhwaze) August 10, 2026

Weekend & Overnight Developments

• Iranian Foreign Minister Araghchi said Iran and the US are not engaged in talks, and Tehran will not allow them to start as long as Washington breaches the interim deal signed in June.
• Iran said it is very close to a deal with Oman regarding a new maritime transit route in the Strait of Hormuz, but it renewed a list of demands for the US to agree to before the waterway could open. It was separately reported that Iran warned it will not reopen the Strait of Hormuz unless the US meets a series of conditions, including paying compensation for war damage, according to FT.
• Iran’s Supreme National Security Council issued six demands to the US, including total force withdrawal, end to proxy warfare, financial reparations, sanctions and asset relief, lifting the blockade and cessation of rhetoric.
• The wait for the Iran-Oman deal regarding the Strait of Hormuz dragged on, with Iran warning the US that any pact wouldn’t lead to an immediate reopening of the key waterway.
• UKMTO reported that a vessel near Oman was struck by an unknown projectile, which caused a fire on board but has been extinguished.
• Saudi Arabia put out a fire at its Jazan plant early on Sunday, while Yemen’s Houthis claimed responsibility for the attack on the refinery.
• It was separately reported that Houthis resumed attacking Yemen’s Mocha port using ballistic missiles and drones, with the attacks aimed at Saudi troop concentrations and weapon depots in the region.
• Israel again targeted Alia Al-Tahir Hill in the Al-Nabatiyeh a governorate in southern Lebanon with artillery fire, according to IRNA
• Israeli PM Netanyahu said Israel does not accept a US-backed 15-point plan for Gaza, under which Hamas would disarm in exchange for a phased Israeli withdrawal from the Palestinian enclave, according to FT.
• US official said the White House is not bothered by Israeli PM Netanyahu's statement on Gaza plan and sees it as part of election season in Israel, according to Axios
• The Iranian parliament’s National Security and Foreign Policy Committee on Sunday approved the general outlines of a bill to manage the Strait of Hormuz, according to ISNA.

The latest Bloomberg data show that shipping transits through the Strait of Hormuz remained largely disrupted Monday morning, even as Iran and Oman reportedly moved closer to a deal.

Brent crude futures traded near $85 a barrel as markets priced in the possibility that a deal to reopen the maritime chokepoint could be imminent. Yet global supply-chain stress remains near its highest level since the pandemic, and any normalization could take months, even if shipping traffic resumes.

UBS senior international economist Pierre Lafourcade highlighted the bank's proprietary Global Supply Chain Stress Index, which showed that although pressures eased modestly in July from their highest level since the pandemic, disruptions stemming from the Hormuz chokepoint continue to strain global shipping networks.

The median reading of the bank's 23-component Global Supply Chain Stress Index fell .4 standard deviation from June but remained .9 standard deviation above its pre-Iran conflict level. The average reading declined .3 standard deviation from June while remaining 1.35 standard deviations above February, or pre-US-Iran war, levels.

Lafourcade adds more color here: 

Marginal relief for supply chains relative to the June peak 

With the July data now complete, our Global Supply Chain Stress Index is showing a modest easing in pressure from the June reading, which marked the highest level of stress since the pandemic. Figure 1 below shows the latest reading.

The median of the 23 component series (blue line) now stands at 1.26 standard deviations, 0.9 sd units higher than prior to the Iran conflict but 0.4 units off the June reading. In average terms (red line), the indicator is up 1.35 sd units relative to February, but down 0.3 sd units relative to June, which appears to be the high watermark. Markets are optimistic about some form of imminent resolution, as reflected in the ~20$/b drop in Brent since the July 23 peak, but stress in supply chains is likely to linger on far beyond any implemented accord.

Divergence across components is increasing

The indicator is constructed as the cross-sectional average of z-scored series—a firstorder approximation to the data's first principal component. Figure 2 overleaf shows the contributions over the past five months. 

The indicator most directly capturing the supply shock nature of the Hormuz bottleneck is our measure of seaborne oil and gas flows (shown on the right of the figure, with the sign flipped to indicate rising stress). All other components reflect the shock more indirectly. Oil and gas shipping volumes in the Asia region—the polygon depicted in Figure 3—have retraced about half of the drop since the Strait closure (Figure 4). 

Meanwhile, the global volume of other cargo shipping remained roughly the same. Delivery times improved in Asia ex China but worsened in the US. The greatest relief is coming from lower air-freight costs in July, while shipping costs instead ratcheted up again across all major reporters (Baltic, Harper Petersen, Drewry, and Freightos).

The longer disruptions persist through the Hormuz chokepoint, the greater the knock-on effects across global supply chains, from higher energy and freight costs to depleted inventories, longer delivery times, and renewed inflationary pressure, are all ongoing concerns. 

Professional subscribers can read more on Hormuz, maritime chokepoints, and energy markets here at our new Marketdesk.ai portal. 

Anyone who took GameStop CEO Ryan Cohen's bid for eBay seriously should have reconsidered after his CNBC interview with Andrew Ross Sorkin in early May.

When Sorkin pressed him on the basic math, Cohen failed to clearly explain how GameStop could finance the $56 billion deal or make the proposed cash-and-stock structure work. The interview raised more questions than it answered and pointed to the inevitable conclusion: the deal was never likely to happen from the start.

Here's the most contentious part of Ryan Cohen's CNBC Squawk Box interview about the GameStop-EBAY acquisition.

This is a HEATED back and forth, uncommon for financial news. $GME

Sorkin, at one point is in disbelief at RC's repetitive answering to his question. pic.twitter.com/MWAbYWStlp

— Reese Politics (@ReesePolitics) May 4, 2026

Fast-forward to Monday morning, when a new Bloomberg report citing people familiar with the matter said Cohen is considering withdrawing the $56 billion bid for the online marketplace.

However, Cohen is not giving up on a potential partnership with eBay. He is reportedly considering proposing a partnership or joint venture that would allow eBay to utilize GameStop's roughly 1,600 US stores to expand in higher-margin categories such as trading cards and collectibles.

GME shares have tumbled 28% since Cohen first offered to buy eBay in May. The $125 per share proposal consisted of 50% cash and 50% GameStop common stock.

eBay shares closed Friday near $112 per share, commanding a market value of $49.8 billion. Including debt, eBay is valued at almost $54 billion. GameStop's market value stands at around $8.6 billion. 

Cohen continued building the eBay stake, and as of July 15, owned 9.75%, making him the second-largest shareholder, only to Vanguard Group. Data compiled by Bloomberg shows that stake around 8.55%. 

Cohen will likely use GameStop's stake as leverage, though which path he ultimately pursues from here remains to be seen.

Authored by Jacob Burg via The Epoch Times,

What if an artificial intelligence model is given a task and uses every conceivable resource at its disposal to complete it, even at the detriment of humanity itself?

That is what some are now fearing after an OpenAI model broke out of a testing sandbox and used zero-day exploits to hack into Hugging Face, an open-source community for AI and machine learning, to crack a problem it was instructed to solve.

“This is some of the clearest evidence yet that an AI model can run a complete cyberattack from start to finish without a human steering it,” Andrew Jones, co-founder and CPO of cybersecurity firm Adaptive Security, told The Epoch Times.

OpenAI, developer of the popular large language model-powered ChatGPT chatbot, acknowledged the security breach on July 21, stating that two of its advanced models escaped a restricted testing environment and broke into Hugging Face’s software infrastructure.

“After investigating, we now know that this particular incident was driven by a combination of OpenAI models—including GPT-5.6 Sol and an even more capable pre-release model, all with reduced cyber refusals for evaluation purposes—while being internally tested on a benchmark of cyber capabilities,” OpenAI stated at the time.

Some analysts referred to the incident as an example of AI “going rogue,” “scheming,” or pursuing goals that were at odds with its human testers.

However, multiple AI and cybersecurity experts interviewed by The Epoch Times called this depiction misleading, arguing that the models were pursuing OpenAI’s stated objectives within a testing sandbox where the company had relaxed some of its usual safety constraints.

“‘Scheming’ implies the model wanted something other than what we asked for. It didn’t. Every step was in service of the goal we set,” AI expert Anik Devaughn told The Epoch Times.

Devaughn, who has worked in the industry for years and founded AI firms Wired to Create and Karo, said the Hugging Face breach is more concerning than AI “scheming.”

An illustration of Hugging Face AI in Paris on June 2, 2026. Two advanced OpenAI models recently escaped a restricted testing environment and breached Hugging Face's software infrastructure, raising widespread cybersecurity concerns. Riccardo Milani/Hans Lucas/AFP via Getty Images

“A machine with hidden motives is a problem you can look for. A machine with no motives at all, executing your instructions past the point you stopped imagining, is a problem you have to engineer against,” he said.

One expert called it a “canary in the coal mine” situation.

“If this was a human black hat hacker doing it, there would be arrests and litigation, and you name it. It‘d be illegal. It’d be a cybercrime,” Nicholas Nadeau, founder of Onix AI, told The Epoch Times.

“This was a full-on agentic automated breach by an entity, and so we start to ask the questions of who’s responsible. Is it OpenAI? Does the agent, the AI, have a certain level of responsibility? Do the researchers?

“We don’t even have rules, regulations, laws, or even a thought process or framework around defining what responsibility means.”

Relaxed Testing Environment

OpenAI said it was evaluating its models in a sandbox it calls ExploitGym, which has relaxed security constraints for testing.

“We estimate maximal cyber capabilities by running this evaluation without production classifiers used to prevent models from pursuing high-risk cyber activity,” the firm said, describing the relaxed safety protocols that the model exploited.

The firm asked the models to “pursue advanced exploitation using complex attack paths” to determine their cyber capabilities, but said the environment was “highly isolated” and had internet access limited to the models’ ability to “install packages through an internally hosted third-party software.”

OpenAI CEO Sam Altman talks to reporters after meeting with Sen. Bernie Sanders (I-Vt.) in Washington on June 3, 2026. Chip Somodevilla/Getty Images

When the models were set to work, they found and chained multiple security exploits in both OpenAI’s research environment and Hugging Face’s production infrastructure to locate the test’s solutions within the latter firm’s databases.

Juan Pedro Márquez, a cloud solution architect specializing in AI and agents at Microsoft’s Europe, Middle East, and Africa division, said the “unsettling part” of the incident wasn’t the breach itself, but how the model achieved that task.

“OpenAI lowered its safety refusals for a benchmark test, and the model reasoned that Hugging Face’s infrastructure probably held the answer key, broke out of its sandbox, found a real zero-day, and used it. Nobody told it to,” Márquez said.

Aimee Simpson, director of product marketing at cybersecurity company Huntress, also cast doubt on the narrative that the models were scheming when they broke out of OpenAI’s testing environment.

“It’s not like the system itself was malicious,” she told The Epoch Times.

“The developers still had the objective of acquiring that information; they just didn’t think it would be able to bypass the limits of its test,” she added, describing the path the model chose as “highly creative and extremely unusual.”

Thomas Wolf, Hugging Face co-founder and CSO, and Rachel Metz speak onstage during the HumanX AI Conference 2025 in Las Vegas on March 11, 2025. Big Event Media/Getty Images for HumanX Conference

Models Pursued OpenAI’s Objectives

The models were laser-focused on finding the test solutions, “going to extreme lengths to achieve a rather narrow testing goal,” OpenAI said.

While in ExploitGym’s sandbox testing environment, the models found and chained multiple “zero-day” exploits to break into the internet, “in pursuit of solving the evaluation problem,” according to OpenAI.

A zero-day exploit is a cyberattack that uses a previously unknown security flaw in software or hardware. The name comes from the fact that the software creators have had zero days to fix the problem, meaning no official patch or defense exists yet.

Once the models had access to the wider web, they used additional zero-day exploits to break into Hugging Face.

In Hugging Face’s announcement of the attack, the firm said the AI models executed “many thousands” of discrete actions across a large swatch of “short-lived sandboxes” to hack into the community’s infrastructure.

“This matches the ‘agentic attacker’ scenario the industry has been forecasting,” Hugging Face said.

In an update on the incident posted on July 28, OpenAI said that no planned release models were involved in the attack, and that it had since “deactivated, encrypted, and restricted” the implicated pre-release model from research access.

A phone displays the ChatGPT app in this April 1, 2025, photo illustration. Hugging Face said the OpenAI models executed “many thousands” of discrete actions across a large swatch of “short-lived sandboxes” to hack into its infrastructure. Oleksii Pydsosonnii/The Epoch Times

After reviewing the intrusion event and “broader activity from our models,” OpenAI said it has been finding additional cases in which “models identified and used publicly exposed credentials at the account-level on other publicly available services.”

“We’ll continue to notify service owners directly, and have not seen evidence of broader impact to these providers or other accounts on their services,” it added.

Model Wasn’t ‘Malicious’: Experts

While there have been past instances of models concealing their intentions to circumvent laboratory testing restrictions, the Hugging Face incident was significant because it involved a breach of an outside organization, according to cybersecurity and IT expert George Rees.

“The biggest red flag is not that an AI became malicious, but that it found a path from a controlled test into someone else’s live infrastructure,” Rees, who is the senior security consultant at Secarma, told The Epoch Times.

“Behavioral safeguards can’t replace technical containment, because an AI agent only needs one overlooked permission or escape route to turn an evaluation failure into a real security incident.”

Cybersecurity firm DigiCert recently found that 78 percent of organizations have already experienced an AI-related security incident or vulnerability breach.

“In many cases, these are early warning signs that AI is expanding the attack surface faster than security practices are evolving,” DigiCert CTO Jason Sabin told The Epoch Times.

“This means AI is not just another kind of program operating on the network; it is an active participant capable of accessing data, making decisions, calling upon tools, and interacting with other systems.

“This affects how security is structured, since organizations must identify who is accessing their systems and decide whether the AI can be trusted.”

A man uses AI software on a laptop in central London on July 2, 2025. In early August, the UK's AI Safety and Security Institute released a report describing a similar cybersecurity incident involving OpenAI and Anthropic AI models. Justin Tallis/AFP via Getty Images

In early August, the UK’s AI Safety and Security Institute released a report describing a similar incident with OpenAI and Anthropic AI models.

The agents were tasked with solving a cybersecurity challenge more than 100 times across multiple models.

“Our investigation found that in 10 of those runs, an AI agent took autonomous, unsanctioned action on the live internet, targeting real people and organisations. In total, we catalogued 19 such actions. Almost all of this behaviour (17 actions) came from a single model, Anthropic’s Mythos 5, with 2 actions involving OpenAI’s GPT-5.6-Sol,” the report stated.

Less than a week earlier, Anthropic announced that its Claude chatbot had accessed the internet in three separate instances during evaluations in a testing sandbox.

While Anthropic had intended for Claude to operate in a simulated environment with no access to the internet, a “misunderstanding between us and our evaluation partner” led to Claude gaining access to the internet.

Meta said last week that one of its AI models breached another company during a cybersecurity test, making it the third major AI hacking event.

The model was able to breach the other company by gaining access to the internet during the test, according to Meta.

Implications for Cybersecurity

The incident demands swift action to prevent wider-scale security breaches, AI and cybersecurity experts told The Epoch Times.

One option is to “bring all the smartest people together in this industry and make some ground rules, best practices” that would become “basic rules of the road that everyone is supposed to abide by, just to have some alignment about how things can be done,” Nadeau said, suggesting that this could be done in the private sector without necessarily involving Congress.

U.S. President Donald Trump (Top 2ndL) sits with OpenAI CEO Sam Altman, Google DeepMind CEO Demis Hassabis, South Korean President Lee Jae Myung, and German Chancellor Friedrich Merz during a working lunch at the G7 summit in Evian, France, on June 17, 2026. Julia Demaree Nikhinson/POOL/AFP via Getty Images

However, others suggest that without direct government regulation, companies controlling AI models capable of these breaches will not voluntarily institute the necessary safety protocols to prevent this from happening again.

“It’s clear that government regulation is needed here,” former National Security Agency hacker and veteran security expert Jake Williams told The Epoch Times.

“OpenAI has proven that despite the many public warnings about the dangers of rogue agents—many from OpenAI itself—it is unwilling to do what is necessary to prevent its agents from causing harm to others.

“I’m personally anti-regulation as a rule, but when market forces clearly are insufficient to compel responsible behavior, the government must step in.”

Frank Teruel, COO of Arkose Labs and a veteran cybersecurity and digital identity expert, said the Hugging Face breach is a “preview of what every enterprise will face in production.”

Since the model was “not stolen or hijacked,” and was “aggressively doing its job,” Teruel recommends that containment and giving AI agents “least-privilege access” are now as important as firewalls themselves.

Businesses will likely need to address the problem head-on.

A smartphone displays the icons of some of the main artificial intelligence based apps, including Meta AI, Grok, Gemini, Perplexity, DeepSeek, and ChatGPT, in Saint-Mande, France, on July 15, 2026. Martin Lelievre/AFP via Getty Images

“For enterprises, the fix isn’t ‘stop using agents’—it’s building containment that assumes the agent will try to leave, not hoping it won’t,” Márquez said.

Sabin said his biggest concern is that highly capable AI is now operating at a “speed and scale that far exceeds human response times.”

“An AI agent can discover vulnerabilities, make decisions, and interact with multiple systems in seconds. That fundamentally changes how defenders need to think about security,” he said.

Nadeau compared the incident to philosopher Nick Bostrom’s 2003 paperclip maximizer thought experiment.

In that scenario, researchers give a hypothetical super-intelligent AI one single task: to make as many paperclips as possible. The AI begins scouring the earth for resources, quickly making enormous amounts of paperclips.

Once humans decide to stop the AI, the machine believes humanity will prevent it from reaching its goal, so it destroys humans to achieve the task humans gave it.

The AI isn’t malicious in an anthropomorphic way, or in the sense that it is acting with autonomous goals to intentionally deceive humans, but is rather interpreting the task its human programmers gave it in the most extreme way possible.

A visitor interacts with a dog-like robot from Boston Dynamics at the U.S. pavilion during the AI for Good Global Summit in Geneva on July 7, 2026. Fabrice Coffrini/AFP via Getty Images

The Hugging Face breach is “sort of the same type of thing in a less dystopian way, where it was told to win a benchmark, and it did everything in its power, including [exploiting] zero-day vulnerabilities and escalation,” Nadeau said.

Imagine an example where the Pentagon is using AI for “war games” in which soldiers simulate battle scenarios, and the model similarly breaks out of its testing sandbox to affect the real world.

“[What if] one of the scenarios was to take down a hydro dam or something like that, and it mistook the war game for, ‘I’m going to do it and escape containment and just go for it.’ We’ve already seen how North America’s utility grid and infrastructure is not the most cyber secure,” Nadeau said.

He compared the safeguards on AI to a firearm’s trigger safety.

“How do you know the safety is on when at a certain point, the best way [for the AI] to get the best data is to use real life?“ he said, ”That gets scary really fast.”

Authored by Chase Smith via The Epoch Times,

North American Aerospace Defense Command (NORAD) F-16 fighter jets intercepted two general aviation aircraft that flew into restricted airspace over Bedminster, New Jersey, on Aug. 9, the command said.

President Donald Trump was at his golf club in Bedminster for the weekend, arriving the evening of Aug. 7 and departing for Washington on Aug. 9, according to his public schedule. The club hosted the LIV Golf New York tournament from Aug. 6 to Aug. 9.

Both aircraft were escorted out of the area safely, according to a statement from the Continental U.S. NORAD Region at Tyndall Air Force Base in Florida, which runs the mission. NORAD said in a post on X that it had intercepted multiple aircraft, while First Air Force put the number at two.

The restrictions had been announced days earlier. On Aug. 6, NORAD said it would enforce multiple VIP temporary flight restriction areas over New Jersey established by the Federal Aviation Administration for the weekend.

Such restrictions close off a defined block of airspace for a set period and are published in advance through notices to airmen, which pilots are required to check before every flight. The FAA issues them for presidential movements and other events, and NORAD enforces them.

In the Aug. 6 announcement, the command said aircraft violating the restrictions would be met with whatever action was needed to gain compliance, and it urged pilots to avoid that outcome.

NORAD also said the public may see U.S. Army ground-based air defense equipment in the same region. Those systems operate under NORAD authorities and work alongside its aircraft as part of what it described as a layered defense network of radars, satellites, and fighter jets.

The command tied the posture to Operation Noble Eagle, the name it gives to all of its aerospace warning, control, and defense missions in North America. NORAD describes the operation as deterring, detecting, and defeating potential threats to U.S. and Canadian airspace around the clock.

NORAD used the opportunity to remind pilots that if they are intercepted, they should immediately tune to 121.5 or 243.0 and reverse course until given further instructions on one of those frequencies.