WS #6188

The dominant market narrative remains the Iran war and Strait of Hormuz blockade, which continues to drive oil prices higher despite the UAE's OPEC exit. WTI crude closed at $99.93/bbl (+3.7%) and Brent at $111.26/bbl (+2.8%), with US gasoline prices at four-year highs. The UAE's OPEC departure, while potentially bearish for oil in normal times, is being overwhelmed by the supply disruption from the Hormuz blockade. Iran is running out of storage capacity (12-22 days left), and Trump is reportedly dissatisfied with Iran's latest proposal, suggesting no near-term de-escalation. The World Bank warns global energy prices could rise 24% in 2026. This oil shock is feeding into inflation fears, with gold falling 2% to four-week lows on inflation concerns. US consumer confidence edged up to 92.8 but remains weak, with the University of Michigan sentiment index at 49.8, a record low. The AI sector saw a selloff after a WSJ report that OpenAI missed internal growth targets, dragging down Oracle (-4%), Broadcom (-4%), and Nvidia (-1%). However, after-hours earnings from Starbucks (+5% on raised outlook) and Visa (beat on EPS and revenue) provided some positive signals. The DOJ indicted former FBI Director James Comey for a second time, but this is political noise. King Charles III's address to Congress emphasized NATO unity and Ukraine support, but is unlikely to move markets directly. The key takeaway is that the oil supply crisis is escalating, with no counter-signals in this window, and the AI trade is showing signs of fatigue.