WS #13803

The dominant market narrative remains the Strait of Hormuz closure and its impact on oil and gas prices, which is ESCALATING. Iran's foreign ministry reiterated that Hormuz will not reopen until the US meets six demands, including lifting the blockade and paying compensation, while Trump has pivoted to a 'low-key' economic pressure approach. This has pushed Brent above $86 and WTI near $80, with European natural gas surging over 8% to €60/MWh. Hormuz traffic has declined to just six crossings on Sunday, and the US SPR has fallen below 300 million barrels for the first time since 1983, down 6.1 million barrels to 298.7 million. These developments are bullish for energy (XOM, CVX, XLE) and bearish for airlines (DAL, UAL, AAL) and consumer sectors. Separately, Intel announced a $15 billion stock offering to fund AI expansion, sending shares down ~5%, which is a negative for INTC but could be a positive for AI infrastructure peers. The Ukraine drone strike on Russia's Taneko refinery in Nizhnekamsk, killing at least 13, is a major escalation in the Russia-Ukraine conflict, with multiple sources corroborating, and it adds to energy supply concerns. Additionally, a 7.4-magnitude earthquake struck Colombia, causing significant damage and deaths, but its market impact is limited to regional exposure. The Fed's upcoming CPI data on Wednesday is a key macro event, with markets pricing in no rate change. Overall, the signal is dominated by geopolitical energy risks, with Intel's offering as a notable company-specific development.