WS #13673

The Strait of Hormuz crisis remains the dominant market driver, with a clear split between diplomatic progress and continued military escalation. Iran's Foreign Minister Araghchi says a deal with Oman is 'very close' on a temporary shipping route, and a US official expects a deal soon that would lift the blockade. However, Iran's IRGC hardens its stance, stating the strait stays closed until the US accepts Tehran's conditions, and the UAE reports an Iranian missile strike on an ADNOC tanker, which Saudi Arabia, Qatar, and the GCC strongly condemn. This mixed signal keeps oil prices volatile, with Brent around $83.55 and WTI at $78.18, and any headline could trigger sharp moves. Separately, Ukraine's strikes on two Russian oil refineries (Ilsky and Syzran) add to supply concerns, while a US Senate bill threatening 100% tariffs on Russian oil buyers could push crude above $100 if enforced. The AI trade is rebounding strongly, with all six AI stocks up at least 16% this week, and Palantir's earnings beat reinforcing the recovery. Berkshire Hathaway's Q2 report is due Saturday, with net earnings more than doubling to $25.7 billion and a potential $6 billion buyback. The Fed is expected to hold rates in September after weak July jobs data, supporting equities. Overall, the market is balancing geopolitical risk with a dovish Fed and AI recovery, but the Hormuz situation remains the key swing factor.