WS #2665

The dominant signal remains the escalating conflict in the Strait of Hormuz, with new developments amplifying energy supply risks and geopolitical tensions. The International Energy Agency head Fatih Birol warns the global economy faces a 'major, major threat' from the Iran war, stating its impact on oil is worse than the 1970s shocks combined and on gas worse than the Russia-Ukraine war. This is corroborated by reports of LNG shipments being rerouted from Europe to Asia due to disruptions, with 11 cargoes diverted, tightening global supply. Concurrently, French diesel prices have surged past €2.10/liter, a level not seen since 2022, directly attributed to the Iran conflict, pressuring European energy costs and inflation. Geopolitical escalation continues with Israel's Netanyahu continuing attacks despite U.S.-Iran talks, and the UK deploying the HMS Dragon destroyer with Sea Viper missile defense to the Eastern Mediterranean following an Iranian drone strike on Cyprus. U.S. Defense Secretary Pete Hegseth's rhetoric, suggesting 'no quarter' for enemies, raises risks of further military action. Domestically, Italian Prime Minister Meloni suffers a significant political setback as her judicial reform referendum is defeated, potentially weakening EU cohesion and stability. Corporate news includes Apple planning to introduce ads in Apple Maps, mirroring Google's model, to boost its services revenue, which already exceeds $100 billion annually. Elon Musk announces a major investment in proprietary AI chips via a new plant near Austin, targeting terawatt-scale compute capacity, which could impact semiconductor and AI sectors. Applied Optoelectronics (AAOI) stock rises on a new hyperscaler order, continuing its positive momentum.