Trump seizes Iranian ship as ceasefire cracks

Good morning. Here’s what happened overnight and what you need to know today.

1.

Iran war: The US Navy seized an Iranian cargo ship after blowing a hole in its engine room, Trump announced on social media, as the two-week ceasefire edged closer to its Wednesday expiry with Iran rejecting a second round of peace talks and the Strait of Hormuz remaining shut. Trump said the USS Spruance intercepted the nearly 900-foot Touska in the Gulf of Oman after it tried to breach the naval blockade, with US Marines now in custody of the vessel, which he said was under Treasury sanctions for “prior history of illegal activity.” The announcement came hours after Trump said he was sending his representatives (JD Vance, Steve Witkoff and son-in-law Jared Kushner) to Islamabad for a second round of talks on Monday, threatening that if Tehran rejected his terms, the US would “knock out every single power plant, and every single bridge, in Iran. NO MORE MR NICE GUY!” he said. Iran’s state news agency IRNA rejected the proposed talks, citing Washington’s excessive demands, unrealistic expectations, constant shifts in stance and the ongoing naval blockade. The WSJ reported Saturday that the US military is preparing to board and seize Iran-linked oil tankers and commercial ships in international waters in coming days. Meanwhile, the Strait of Hormuz remains effectively closed after Iranian forces on Saturday fired on two Indian-flagged vessels. Oil prices, which dropped sharply on Friday, face renewed upward pressure when markets open. (Capital Brief)(AP)(Donald Trump)(Reuters)

2.

Strait talk: The Hormuz whiplash over the weekend has pushed Australia closer to fuel rationing, with petrol already at $2.50 a litre and diesel topping $3 at the height of the price shock. AMP chief economist Shane Oliver warned that if oil flow does not quickly resume, recession becomes a live risk. “Our rough estimate is that if the flow of oil through the Strait does not quickly resume we could survive till late next month but beyond that fuel rationing would likely be required which would mean a direct reduction in economic activity and the likelihood of recession,” he wrote to investors. In the brief window before Iran shut the strait again, 18 commercial ships completed outbound transits and 10 made inbound crossings, according to Bloomberg data. However over a dozen others turned back after Tehran reimposed restrictions and fired on vessels attempting to cross. No crossings were recorded on Sunday. Before the re-closure, Energy Minister Chris Bowen told journalists on Saturday that Australia had 46 days of petrol, 31 days of diesel and 30 days of jet fuel on hand, with 61 fuel ships en route. Even if the strait fully reopened it would take weeks for substantial Persian Gulf oil and gas to reach buyers, with the IEA warning this week that more than 80 energy facilities had been damaged and restoring output to prewar levels could take up to two years. (Capital Brief)(Bloomberg)(AFR)