WS #14282

The dominant market narrative remains the escalating US-Iran conflict over the Strait of Hormuz, which is now in a critical phase as the 60-day negotiating period expires without an extension. Iran has formally shifted to a 'fully offensive' war policy, and the US has responded with renewed threats to bomb Oman if it interferes with the blockade, adding fresh volatility to an already severely disrupted marine insurance market. Hormuz traffic hit a record low of one ship on Aug 16, down from eight the prior day, with three ship attacks reported in the past 72 hours, underscoring the severity of the supply disruption. Oil prices have surged, with Brent above $90 and WTI near $85, while European gas (TTF) hit a new high above €62/MWh. The 30-year Treasury yield reached 5.31%, the highest since 2007, pressuring equities. US indices closed lower (S&P -0.52%, Dow -0.51%, Nasdaq -0.32%), with energy the only gaining sector. In a counter-signal, Iran says it is near finalizing a deal with Oman over a transit route plan, though the US has threatened to bomb Oman if it interferes, and Trump reiterated his desire to declare the strait US territory. Additionally, Trump's approval rating has fallen to 33%, the lowest of his presidency, with 80% of Americans expecting the war to last an extended period, increasing political pressure on the administration to find a path out of the conflict.