WS #12010

The US-Iran conflict continues to escalate sharply. Houthis announced a full blockade of the Bab el-Mandeb Strait, threatening ~60% of Middle East oil exports. Two UAE national tankers were hit by Iranian cruise missiles in the southern Strait of Hormuz, with one Indian crew member killed. Iran warned of possible sudden escalation. Trump confirmed another major attack Monday night, stating the US is 'knocking out Iran's offensive capability' related to the Strait of Hormuz, and announced a 20% fee on cargo transiting the Strait. However, Trump also stated he thinks a deal with Iran is possible, per Reuters, which could act as a counter-signal. The RBNZ's Conway warned that Middle East conflict poses upside risks to inflation, suggesting further monetary tightening may be needed. Oil prices surged (WTI +9.42%, Brent +9.39%). Stock futures are little changed as traders await major bank earnings (JPM, GS, BAC, C, WFC) due Tuesday before the bell. The dominant theme is the US-Iran conflict, which is ESCALATING, but with a potential counter-signal from Trump's deal comments.