Good morning. Here’s what happened overnight and what you need to know today.
1.
Guardian’s toll: US President Donald Trump reinstated a naval blockade of Iran and said the US would charge 20% on all cargo shipped through the Strait of Hormuz, escalating a standoff over the waterway after both sides exchanged fresh missile and drone strikes. Trump declared the strait would stay open “with or without Iran” and dubbed the US “the guardian of the Hormuz Strait”, posting on Truth Social that “as such, and as a matter of FAIRNESS, will be reimbursed, at the rate of 20% on all cargo shipped.” US Central Command said the blockade of Iranian ports would take effect at 4pm New York time on Tuesday, covering all vessel traffic regardless of flag. Iranian Foreign Minister Abbas Araqchi said Tehran had always been the strait’s guardian and would remain so “forever”. “20% is of course too much. We will be fair,” he added. The UN’s shipping agency said there is no legal basis for mandatory tolls on strait transits, a view echoed by Trump’s own secretary of state weeks earlier. The blockade announcement followed the first US combat use of sea drones, which struck a naval facility at Bandar Abbas. (Capital Brief)(Reuters)(Bloomberg)(WSJ)
2.
Up again: Oil posted its biggest jump in more than six years and stocks slid as markets caught up with Trump’s move to blockade Iran and levy a 20% Hormuz cargo fee. Brent crude settled up 9.6% at USD83.30 a barrel, its sharpest daily gain since May 2020, while US West Texas Intermediate settled up 9.4% at USD78.14. The blockade will cover Iran’s entire coastline, ports and oil terminals and all vessels regardless of flag. The move revived fears over energy shipments and stoked inflation worries, pushing investors to ratchet up bets on a Federal Reserve rate rise. Money markets priced in about even odds of a hike this month, with Fed governor Christopher Waller saying officials may need to tighten if inflation stays firm. The turmoil compounded an AI-driven selloff in chip stocks. US-listed SK Hynix ADRs slid after a strong Nasdaq debut on Friday. The Nasdaq closed about 1.55% lower. Investors attention will turn to bank earnings and new Fed Chair Kevin Warsh’s first congressional testimony tomorrow. (Reuters)(Bloomberg)(WSJ)
