WS #6112

The Iran-US conflict remains the dominant market theme, with the narrative arc ESCALATING. Oil prices surged again (WTI +2.09% to $96.37, Brent +2.82% to $108.23) as the Strait of Hormuz remains effectively closed. Baker Hughes CFO warned the strait may not fully reopen until late 2026, and the company sees geopolitical risk as a 'structural reality' for oil and gas markets. The US Treasury imposed sanctions on a major Chinese refinery (Luqing Petrochemical) and nearly 40 other targets to disrupt Iran's illicit oil trade, marking the fourth round of such sanctions. Iran's oil storage capacity is depleting amid the blockade, risking permanent damage to its oil fields. Germany's Chancellor Merz criticized the US for lacking a strategy in the Iran war, while Iran's FM discussed the war with Putin in St. Petersburg, with Putin pledging support for Iran. The White House confirmed Trump met with his national security team to discuss Iran's latest proposal, but no breakthrough is apparent. Budget airlines (Frontier, Avelo) are seeking $2.5B in federal aid due to rising jet fuel costs, and Europe is considering allowing US Jet A fuel to mitigate supply shortages. On the corporate front, NOV reported a Q1 EPS miss ($0.05 vs $0.15 estimate) citing $54M in revenue disruption from the Middle East conflict, while Baker Hughes' Middle East/Asia revenue fell 19%. OpenAI and Microsoft restructured their partnership, ending exclusivity and allowing OpenAI to sell through any cloud provider, which could impact the competitive landscape for AI infrastructure. China blocked Meta's acquisition of AI startup Manus, tightening scrutiny of US tech investment. Alphabet (GOOGL) hit a new all-time high of $350.34, and the S&P 500 and Nasdaq closed at record highs despite geopolitical tensions, indicating a 'risk-on' sentiment that may be fragile.