WS #12014

The US-Iran conflict continues to escalate sharply, with the US launching a third consecutive night of airstrikes on Iran and Trump announcing a naval blockade of the Strait of Hormuz along with a 20% fee on all cargo transiting the strait. This represents a major policy reversal from the previous stance of keeping the strait open without tolls. Brent crude oil surged 7.8% to $81.92/barrel, and WTI rose nearly 6.5% to $78.44. Multiple sources (Guardian, NYT, Bloomberg, Al Jazeera, Axios) corroborate the strikes and blockade announcement. Iran has reportedly attacked two UAE oil tankers with cruise missiles, killing one crew member. The Houthis have announced a full blockade of Saudi Arabia and closure of the Bab el-Mandeb Strait, threatening 60% of Middle East oil exports. The Strait of Hormuz saw only 14 ships transit yesterday, the lowest in a month. This is a significant escalation from the previous 'stable' narrative. Separately, Fed Governor Waller warned the Fed may need to raise rates 'in the near term' if inflation remains elevated, adding a hawkish tilt ahead of CPI data. Oil price surge and potential rate hikes create a stagflationary risk for equities. The dominant theme is ESCALATING. In addition, a chip rout is underway: SK Hynix fell 15% in Korea and 8.6% in its US debut, dragging down semis (ARM -7.6%, INTC -6.1%, ORCL -6.5%, SOXX -4.77%). This is partly driven by the oil shock and partly by AI-driven oversupply concerns. Meanwhile, Biogen received FDA approval for a subcutaneous version of Leqembi, which could boost BIIB. Hapag-Lloyd raised its full-year earnings outlook, reflecting higher freight rates due to the Hormuz disruption. The combination of oil spike, rate hike fears, and chip selloff points to broad equity weakness, with energy and shipping as relative beneficiaries.