Hormuz, Round Two — Oil Reclaims the Century Mark...

A ceasefire lull is over: Brent tops $100 for the first time since May as Iran, the US, and now the Houthis, escalate in parallel

The de-escalation priced into markets three weeks ago has unwound fast. Brent had fallen to around $73 a barrel earlier this month on hopes the US-Iran ceasefire framework and improving shipping conditions would restore oil flows — that optimism is gone. Brent crossed $100 a barrel for the first time since May 26 after President Trump threatened strikes on Iranian infrastructure following attacks by Yemen's Iran-backed Houthi rebels on two Saudi Arabian tankers. US strikes on Iran have now run for more than a week since Tehran resumed attacking ships in the Strait of Hormuz, and Trump has signalled no imminent ceasefire, saying Iran needs "more of the same" and that he is weighing a large-scale response. He has separately threatened to hit an Iranian bridge or power plant for every ship attack in the strait, while Kuwait's defence ministry reported repeated Iranian drone assaults on the north of the country. The Houthis are now a second front: they have threatened to blockade the Bab al-Mandeb Strait connecting the Red Sea and Gulf of Aden, widening the chokepoint risk beyond Hormuz alone. 

EARNINGS SEASON MEETS GEOPOLITICS
A hawkish Fed and cooling inflation gave markets a reason to rally — AI capex nerves and oil are giving them a reason to sell

Kevin Warsh's first Congressional testimony as Fed Chair reaffirmed inflation-fighting resolve and dismissed June's soft CPI print (-0.4% m/m, the steepest drop since April 2020) as one month's noise — even as Q2 bank earnings (JPMorgan, Citi, BofA, Goldman) and chipmakers (ASML, TSMC) beat on AI-driven demand. That strength has since been overtaken by risk-off flows: the Dow shed 506.93 points (-0.97%) to 51,711.65, the S&P 500 fell 1.21% to 7,408.30, and the Nasdaq dropped 2.15%, dragged by a 7% slide in Alphabet and a 14% collapse in Tesla after their earnings, with Alphabet's results fuelling concerns over the scale of AI spending. Add the prior week's semiconductor correction — IBM's worst decline since the 1960s, SpaceX trading below its IPO price — and the tape reads as a market repricing both AI capex durability and war risk simultaneously. 

GULF: RESILIENT BALANCE SHEETS, NERVOUS TAPE
Regional bourses are trading the conflict, not the fundamentals

Dubai, Abu Dhabi, Saudi and Oman all closed lower for a second straight week (Dubai -2.95%, Saudi Arabia -1.23%, Oman -2.05%) even as GCC credit spreads stayed broadly flat — the disconnect between sovereign resilience and equity sentiment that's defined this conflict since February. Higher oil is a fiscal tailwind for the region on paper; in practice, tanker risk and freight disruption are taxing the same economies benefiting from the price.

THE CORE QUESTION

Every prior Hormuz flare-up this year has mean-reverted within weeks. This one is different on two counts: the Houthis have opened a second chokepoint at Bab al-Mandeb, and Washington is now talking in terms of infrastructure strikes rather than tanker escorts. The market's base case is still de-escalation — GCC spreads and Gulf currencies haven't moved like a region pricing prolonged closure. The question for the week ahead is whether that base case survives contact with an actual Trump decision on striking Iranian infrastructure, or whether $100 oil becomes the floor, not the spike.

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Sources: Gulf News