WS #14152

The dominant US-Iran/Hormuz narrative remains in an ESCALATING phase, with multiple corroborating sources confirming continued attacks on shipping and a hardening of positions. The UAE confirmed a third ADNOC tanker attack in the Strait of Hormuz within a week, while Iran's Deputy Foreign Minister Gharibabadi firmly rejected Trump's threat to declare the strait US territory, stating it 'will remain Iranian' and 'will be closed and opened only under Iran's command.' This escalation is reflected in oil prices, with Brent crude near $90 and the S&P 500 energy index rallying 1.4%. However, a potential de-escalation signal persists as Iran and Oman reportedly edge closer to a deal on shipping lanes through the strait, though the US is not party to these talks. The market impact is mixed: energy stocks benefit from higher oil prices, while airlines and shipping face headwinds from elevated fuel costs and supply chain disruptions. The S&P 500 slipped from its record high on Friday, weighed down by AI-related chip stocks like Applied Materials (-5.1%) and Broadcom (-5.9%), despite the energy sector's gains. The Nvidia-SB Energy-OpenAI data center investment story continues with reduced credit support, as bond traders agonize over $70 billion of shadow credit backstops for AI companies. Additionally, a new development has emerged: the Trump administration has returned over $100 billion in tariff refunds to businesses, boosting corporate profits and GDP growth, with Apple alone receiving nearly $2.2 billion.