WS #12419

The US-Iran conflict remains the dominant market narrative, with the situation continuing to escalate. The US has deployed additional F-16 and F-35 fighter jets to the Middle East, and the IAEA is investigating reports of an attack on an Iranian nuclear construction site. Iran's Revolutionary Guards reported that two ships were involved in an 'accident' after defying warnings in the Strait of Hormuz, while oil loadings at the Caspian Pipeline Consortium terminal were suspended after drone attacks on tankers. Despite these escalations, US Energy Secretary Chris Wright stated that oil flows through Hormuz have recovered to about 7 million barrels per day (two-thirds of pre-conflict levels), and the US will ensure freedom of navigation with or without Iran's cooperation. This provides a partial counter to the bearish oil thesis, though the risk of further disruption remains high. Separately, Russia launched its largest ballistic missile attack on Kyiv, killing at least six, and Ukrainian drones struck three Russian oil depots. The UK's incoming PM Andy Burnham faces a potential Labour backlash over plans to reverse the ban on new North Sea oil and gas drilling, while Thames Water lenders are preparing a legal challenge against potential nationalisation. On the corporate front, Apple has regained the title of the world's most valuable company, surpassing Nvidia, as concerns about AI stock valuations persist. Tesla reports earnings this week, with analyst sentiment split. The dominant narrative is ESCALATING on the Iran conflict, with oil supply disruption risks persisting despite partial recovery in flows.