WS #12459

The US-Iran conflict has escalated significantly, with the US conducting a ninth consecutive night of airstrikes on Iran and Iran retaliating by attacking Bahrain. Oil prices have surged, with Brent crude surpassing $90 per barrel for the first time in nearly six weeks, and US gas prices hitting $4 per gallon. A ship was set ablaze in the Strait of Hormuz, further disrupting oil shipping. The US also reported another service member killed in Iraq. This escalation counters any prior de-escalation narrative and is likely to drive energy stocks higher while pressuring airlines and consumer stocks. Separately, Ukraine struck Russian energy infrastructure, including an oil depot in the Moscow region, and two tankers in the Black Sea, adding to supply concerns. In China, the car market is heading for its worst year since 2021, with sales plunging 20%, which is bearish for global auto and commodity demand. The DeepSeek quant fund reportedly lost 16% amid a China market rout. On the positive side, Alibaba's Qwen 3.8 Max AI model claimed second place behind Anthropic, signaling continued AI competition. The Fed is expected to hold rates steady in July, but rising oil prices are fueling inflation fears and increasing September rate hike expectations to 60.7%.