WS #9922

The dominant signal in this window is the escalation of Ukrainian drone strikes on Russian oil infrastructure, with multiple sources corroborating a large-scale attack on Moscow's Kapotnya oil refinery, just 15 km from the Kremlin. This marks a significant escalation in the conflict, occurring as G7 leaders meet in France. The attack has damaged the refinery and caused a fire, with Moscow's air defenses reportedly unable to prevent the strike. This development is likely to keep upward pressure on oil prices, countering the recent sell-off following the US-Iran peace deal. Separately, the US-Iran peace deal narrative continues to de-escalate, with Qatar planning to rapidly restart LNG production after the Strait of Hormuz reopens, and Brent crude stabilizing above $83 after a 4% plunge. The BOJ press conference ended without new signals, and the AI relief rally is fading. The overall narrative arc is a mixed picture: Ukraine-Russia escalation (bearish for energy, bullish for defense) versus Iran de-escalation (bearish for oil, bullish for shipping and consumer sectors).