Macro

Meta has signed agreements with Oklo, Vistra, and TerraPower to secure up to 6.6 GW of nuclear power by 2035 to support its growing data center electricity demand, particularly for AI infrastructure like the Prometheus supercluster. The deals, focused on the PJM region, include long-term power purchases and development funding, signaling strong tech-sector demand for clean, baseload power and potentially reshaping nuclear energy's role in supporting large-scale AI operations.

Oil prices surged in early July 2026 despite reaching four-month lows, influenced by geopolitical tensions including Iran's leader assassination and tanker attacks. OPEC+ approved an additional quota increase of 188,000 bpd, helping to stabilize shipping through the Strait of Hormuz and mitigate price hikes.

US and Israeli strikes on Iran in February 2026 escalated into a shipping crisis in the Strait of Hormuz, threatening global oil supplies. A June truce memorandum aimed to facilitate talks but was undermined by tanker attacks and renewed US military action in early July.

The closure choked off roughly 20 percent of global oil and major LNG flows, in what the IEA called the largest supply disruption in oil market history. Production losses reached 10 million barrels a day within a week and US pump prices climbed daily.

After US and Israeli strikes on Iran killed Supreme Leader Khamenei and Tehran retaliated with missile attacks on Gulf states, tanker traffic through the Strait of Hormuz — the world's most critical oil chokepoint — effectively stalled. Brent rose to $82.76, up 36% year to date, and Bank of America warned a prolonged closure could push Brent above $100 and European gas past 60 euros/MWh. Economists at Nomura, Goldman Sachs and ING said the shock forces the Fed, ECB and Asian central banks to hold or even hike as the energy spike feeds back into inflation, with Asia's big crude importers (China, India, Japan, South Korea) most exposed.

Iran retaliated against Israel and U.S. actions by striking Qatar's Ras Laffan LNG complex, causing extensive damage to key energy infrastructure. The attack, along with potential strikes on Saudi facilities, disrupted regional energy supplies, sending Brent crude above $116 and Asian spot LNG prices soaring 140%, with broad implications for global energy markets and shipping costs.

Since March 2026, ongoing conflict between Israel and Hezbollah has resulted in over 4,000 deaths and displaced more than a million people in Lebanon. Despite a US-brokered ceasefire in April and its reaffirmation in June, which reduced violence by about 35%, tensions remain high with Israel maintaining control in southern Lebanon. This standoff is exacerbating broader tensions between the United States and Iran.

U.S. electricity generation fell 0.7% year over year in January despite higher demand in the Northeast due to Winter Storm Fern, while average retail prices rose 9.5%, driven by an 86% year-over-year increase in natural gas prices. Generation shifts varied by region, with natural gas use rising in the Northeast and Mid-Atlantic but falling in the Southeast and Texas, while coal use increased in Florida, signaling divergent regional energy dynamics with implications for fuel competition and grid resilience.

Brent and WTI crude prices spiked amid a tightened U.S. blockade on Iranian ports and the UAE's announcement to exit OPEC, exacerbating supply concerns. The moves, combined with OPEC+ delays in boosting supply, threaten to keep oil prices elevated near $118/bbl, complicating market stability ahead of U.S. elections.

Gas prices remain above $4 per gallon nationally, with diesel over $5, as the Strait of Hormuz closure enters its sixth month and Ukrainian attacks on Russian refineries persist, driving crude oil above $80 per barrel and Brent above $90. Patrick De Haan of GasBuddy warns the national average could reach $4.50 or approach $5 in a worst case, though the seasonal switch to cheaper winter-blend gasoline may offer some relief. Price declines are slow due to refining costs and distribution disruptions, following the pattern that pump prices 'rise like a rocket and fall like a feather.' Federal measures include EPA waivers for E15 and E10 fuel sales, and the Trump administration released 172 million barrels from the Strategic Petroleum Reserve, which has fallen below Biden-era lows to levels last seen in the early 1980s, dropping by an average of 6.3 million barrels weekly since early April. Some states have implemented fuel tax holidays.

PJM Interconnection CEO David Mills warns that the US's largest power grid must be redesigned to handle surging electricity demand from AI and data centers, or face power shortages and rising consumer costs. With utilities like American Electric Power at risk of leaving and data centers potentially relocating, delayed action could undermine investor confidence and regional competitiveness. PJM must balance higher power prices needed for new investment against protecting consumers, a challenge threatening grid reliability and market stability.

Oil prices fell sharply after the U.S. and Iran reached a memorandum of understanding to reopen the Strait of Hormuz and end active hostilities, with a 60-day ceasefire for nuclear talks. The deal, announced by President Trump and ratified on June 17, removed the U.S. naval blockade of Iranian ports, allowing Iran to resume oil exports—potentially adding 500,000 to 800,000 barrels per day within months. Brent and WTI crude dropped over 1% and nearly 5%, respectively, with WTI falling below $80 per barrel, its lowest since March. The S&P 500 rose 1.7%, while airlines and cruise lines gained 1% to 5% on lower fuel costs, and the Nasdaq surged 3%. However, the agreement faces risks: a dispute over releasing $24 billion in frozen Iranian assets, Israel's non-participation, and potential OPEC+ supply waves if Saudi Arabia defends market share. The broader conflict remains unresolved, with the Strait of Hormuz not officially reopening until a formal signing.

U.S. annual inflation hit 4.2% in May 2026, the highest since April 2023, driven by a 23.5% surge in energy prices amid the ongoing Iran conflict that began in late February. The war has closed the Strait of Hormuz, disrupting global oil transit and pushing gasoline prices up over 30%. Markets now see a higher chance the Federal Reserve will hold or raise interest rates, and that crude oil may reach a new all-time high. The next key data point is the June CPI report, due July 14, 2026.

The Federal Reserve's interest rate path for the second half of 2026 is highly uncertain, with no cuts expected and potential hikes on the table. After six rate cuts in 2024-2025 brought the benchmark to 3.50%-3.75%, new Chairman Kevin Warsh has kept rates steady through four FOMC meetings since May, ending forward guidance. The outbreak of the Iran war in late February drove U.S. inflation to 4.2% year-over-year in May, the highest in three years, dashing hopes for further cuts. A fragile 60-day ceasefire with Iran may not reduce inflation near the Fed's 2% target. If peace talks fail, the Strait of Hormuz closure could keep inflation high, forcing rate hikes that would hurt stocks and bonds.

The United States plans to build up to 250 new nuclear reactors over coming decades to meet surging electricity demand from AI, data centers, and manufacturing. The push revives nuclear power as a low-carbon alternative, focusing on advanced reactors and small modular reactors with passive safety systems. Federal programs like the DOE's Launch Pad support development, with companies such as TerraPower, Kairos Power, and X-energy building demonstration reactors backed by the Advanced Reactor Demonstration Program. Tech giants Google and Meta have signed power purchase agreements. Critics cite unresolved safety, cost, and waste challenges, while experts stress the need for extensive testing and regulatory review of new designs.

The Federal Reserve held interest rates steady at 3.50%-3.75% at its June 17 FOMC meeting, the first under new Chair Kevin Warsh, who took over from Jerome Powell last month after Trump's administration dropped a pretextual criminal investigation into Powell in exchange for his confirmation. The decision was unanimous, but the hawkish tone of updated economic projections and Warsh’s first press conference triggered a sharp market sell-off. The Dow fell more than 500 points (1%), the S&P 500 dropped 1.2%, and the Nasdaq-100 lost 1.4%, as investors realized rate hikes remain on the table for 2026. Nine of 19 FOMC participants now project at least one quarter-point hike by year-end, a dramatic shift from earlier discussions of cuts; Warsh himself declined to submit a rate projection, reinforcing his break from forward guidance. The median fed funds rate projection for end-2026 rose to 3.8% from 3.4%, with most officials seeing rates between 3.6% and 4.1% by year-end, up from the prior 3.25%-3.75% range. However, 2027 and 2028 projections suggested some of that tightening could later be reversed, indicating the Committee acknowledged a near-term inflation challenge but not necessarily a sustained hiking cycle. Markets now price in one 25-basis-point hike by October 2026, with no further movement through 2027. The decision came despite pressure from President Donald Trump, who wants lower rates to juice the economy but whose policies—including the war with Iran—have contributed to elevated inflation. New Chair Kevin Warsh signaled a hawkish shift. The policy statement was dramatically shortened to 130 words, removing much of the forward guidance markets had become accustomed to; Warsh indicated the Committee concluded such guidance may no longer be helpful, urging markets to rely more on incoming data. The statement described the economy as solid, acknowledged uncertainty, and emphasized the commitment to restoring price stability. Updated projections showed inflation expectations rising sharply to 3.6% by year-end (up from 2.7% in March) and core inflation at 3.3%, while GDP growth was lowered to 2.2% and unemployment to 4.3%. The long-run rate was set at 3.1%. Consumer prices overall were up 4.2% in May from a year ago, the biggest annual increase since April 2023, while core inflation was a more modest 2.9% in May. The U.S. war with Iran has snarled tanker traffic in the Strait of Hormuz, triggering a sharp jump in gasoline prices, though a U.S.-Iran deal to reopen the strait is set to be signed Friday; AAA says the average price of regular gas in the U.S. is still more than a dollar a gallon higher than before the war. After anemic hiring in 2025, U.S. employers have added an average of 188,000 jobs in each of the last three months, though June saw only 57,000 new jobs, down from 172,000 in May and 115,000 in April, while the unemployment rate dipped to 4.2% from 4.3%. The Fed maintained its 'ample reserves' policy and $6.7 trillion balance sheet, with no immediate plans to reduce bond holdings. Trump, who had tried to browbeat Powell into lowering rates and launched a pretextual criminal investigation into him, was initially dismissive of the decision but sounded piqued when a reporter noted rates might go higher, saying 'It just keeps a country down.' He added that 'we have a very good guy over there now,' referring to Warsh, though observers noted the parallel to his treatment of Powell. Warsh committed to restoring price stability, calling high prices a burden, and announced task forces to review communications and inflation data. In an unusual move, Powell has elected to remain on the Fed's governing board, promising to keep a low profile and serve as a firewall against White House pressure. The Fed's next meeting is scheduled for July 28-29, with the next dot plot released on September 16. The hawkish shift was underscored by a significant market reaction: the S&P 500 closed 1.2% lower, the NASDAQ fell 1.3%, and the Dow dropped 1% (507 points). Consumer stocks tumbled, reflecting a decline in real wages for the average worker, as a year and a half of wage increases have been wiped out by inflation driven by energy prices. The bond market saw a selloff, with the two-year Treasury yield jumping 0.17 percentage points to 4.22%, its highest since February 2025, and the 10-year yield rising above 4.5%, a key determinant for corporate borrowing and mortgages. The decision was unanimous for the first time in a year, though Warsh described the two days of discussions as a 'good family fight.' He announced five task forces to review Fed communications, balance sheet policy, data sources, productivity, and the inflation framework, with a long-standing aim to reduce the balance sheet to pre-2008 levels—a move opposed by Fed governor Christopher Waller, who called it 'inefficient' and 'stupid.' Warsh also indicated press conferences after every meeting may be scrapped and wants to move away from agencies like the Bureau of Labor Statistics, which he said provide 'echoes of history' rather than real-time data. In a significant departure from his predecessors, Warsh stated that 'financial market prices are probably the most important source of information to guide central bankers.' The inflation set off by the war on Iran has changed interest-rate settings globally, with the Bank of Japan lifting its rate and the European Central Bank raising by 0.25 percentage points. At the G7 meeting in France, Trump said he extended the ceasefire with Iran partly to avoid an economic catastrophe, not wanting to be compared to Herbert Hoover. The Fed's statement did not specifically mention the war, citing only 'supply shocks' in energy. Trump was relatively muted, saying he was prepared to be 'guided' by Warsh on monetary policy, but added that a rate hike 'just keeps the country down.' Warsh announced five task forces to review Fed communications, balance sheet policy, data sources, productivity, and the inflation framework, with a long-standing aim to reduce the balance sheet to pre-2008 levels—a move opposed by Fed governor Christopher Waller, who called it 'inefficient' and 'stupid.' Warsh also indicated press conferences after every meeting may be scrapped and wants to move away from agencies like the BLS, which he said provide 'echoes of history' rather than real-time data. The Fed's next meeting is scheduled for July 28-29, with the next dot plot released on September 16.

A ceasefire between the U.S. and Iran in late June briefly allowed the International Maritime Organization to begin evacuating trapped ships and over 11,000 seafarers from the Strait of Hormuz, which Iran had effectively closed since late February after U.S. and Israeli attacks. The operation routed vessels along Oman's southern coastline, but halted days later when the Singapore-flagged Ever Lovely was attacked; no one claimed responsibility, but Iran's Revolutionary Guard criticized the evacuation as lacking Iranian involvement. Iran continues to assert control over the strait, demanding ships coordinate and obtain clearance, setting a dangerous precedent for other global waterways like the Strait of Gibraltar or Malacca. The strait normally carries about 20 million barrels of oil daily—20% of global consumption—and its closure has driven oil prices up, with Brent crude at $76 and WTI above $71, threatening inflation, corporate profits, and consumer spending. International maritime law, including the U.N. Convention on the Law of the Sea, offers little recourse as neither Iran nor the U.S. have ratified it, and President Trump's suggestion that the U.S. could control the strait and collect tolls further undermined confidence in the independence of international waterways.

The ongoing Iran war is severely disrupting global oil markets, driving increased volatility and raising alarms over potential energy supply shortages. A primary concern is the closure of the Strait of Hormuz, a critical chokepoint for a significant portion of the world's crude exports. Industry professionals, analysts, and governments are closely monitoring the conflict's effects on crude prices, production, and international trade flows, including LNG shipments. The situation, last updated July 31, 2026, continues to threaten the broader energy market outlook.

Oil prices surged above $90 a barrel, climbing nearly 8% on Wednesday, after President Donald Trump vowed retaliation for an Iranian missile attack on U.S. forces. The Dow Jones Industrial Average dropped 1,153 points, its worst day since April 2025, as the Federal Reserve held interest rates steady and committed to fighting elevated inflation. The average U.S. gas price hit $4.09, up 37% since the war began in late February. The Strait of Hormuz shipping traffic declined sharply, disrupting about one-fifth of global oil supply. A brief calm following a preliminary peace deal had been shattered by renewed large-scale fighting between the U.S. and Iran.

Oil prices surged nearly 4% to $94.23 per barrel for Brent crude after an eleventh consecutive night of U.S. Central Command strikes against Iran, with the Strait of Hormuz and Bab el-Mandeb blockades driving a $10 per barrel increase this week and expectations of $100 oil rising. War-risk insurance premiums for tankers transiting Hormuz have skyrocketed from 0.25% to 5% of vessel value—a nearly 1,900% increase—reflecting insurers' assessment of severe physical risks, as Secretary of State Marco Rubio told ASEAN foreign ministers that Washington and Tehran remain divided over the strait. The disruption at Hormuz has sharply cut tanker transits, threatening one-fifth of global seaborne oil and gas supplies, while Houthi missile attacks on two Saudi tankers in the Red Sea escalated threats to Saudi crude exports. OPEC+ is set to raise September output by 188,000 b/d on August 2, aiming to unwind 1.65 million b/d of voluntary cuts despite the conflict. Other developments include copper prices hitting a one-month high of $13,835 per tonne, a US-Saudi nuclear cooperation pact, and QatarEnergy extending LNG force majeure as the Hormuz closure persists.

Crop prices have hit a three-year high due to heat waves, conflict in the Black Sea disrupting grain trades, and the closure of the Strait of Hormuz, which has blockaded 3.9 million tonnes of urea exports—about 30% of the region's annual fertilizer exports. The International Food Policy Research Institute warns of an 'input crisis' that could become a full-blown food crisis, especially in poor countries, as fertilizer supply shortages rise. A UN report warns that rising energy and fertilizer prices from conflicts could push an additional 9 to 18 million people into hunger, with the average cost of a healthy diet increasing nearly 25% since 2021 to 4.28 PPP dollars per person per day.

The US war on Iran has led to the closure of the Strait of Hormuz, triggering a global crisis. The US failed to collapse Iran's government despite killing Ayatollah Khamenei, and Iran's asymmetric tactics have destroyed US bases. The strait's blockade has caused shortages of crude oil for diesel, urea fertilizer (half of global supply from the Middle East), and helium for semiconductors, threatening a food crisis amid an El Niño weather cycle. This coincides with a potential AI stock market bubble, as Chinese AI rivals undercut US firms, and the dollar's hegemony weakens due to high US debt and asset seizures. A US financial crash could destabilize the global economy.

Since the US-Iran war began on February 28, 2026, traffic through the Strait of Hormuz has collapsed to about 20% of pre-war levels, with only 3,371 vessels crossing in 167 days versus a normal 100 per day. Iran initially closed the strait, then reopened it in mid-June under a ceasefire that quickly collapsed after Iranian strikes on unauthorized vessels. Ships now navigate a fragmented system: a mined pre-war danger zone, a dark route with no tracking, an Omani route under international law that Iran attacks, and an Iranian-asserted route charging up to $2 million per tanker. Maritime insurance has soared from 0.25% to 10% of vessel value.

The closure of the Strait of Hormuz in March 2026 caused a record oil supply disruption of 10.1 million barrels per day, the largest in history. Iran blocked shipping through the strait on February 28, 2026, after the United States and Israel launched an air war against Iran. The disruption nearly doubled the previous record of 5.6 million barrels per day lost during the Iranian Revolution (1978–1979). Other major historical disruptions include the Arab oil embargo (4.3 million bpd), the invasion of Kuwait (4.3 million bpd), and the Iran-Iraq War (4.1 million bpd). The strait typically handles about 20% of global petroleum trade, and Gulf countries have cut production as tanker movements remain halted.

The U.S. launched its first military strikes in a month on Iran's Larak Island in the Strait of Hormuz, targeting two rocket launchers allegedly intended for sea mines. Iran retaliated by firing eight missiles at U.S. bases in Jordan, all intercepted by Jordanian air defenses. The reescalation, after a lull since late July, pushed Brent crude above $90/barrel and reduced Strait traffic to five ships daily from over 130 pre-war. Shell, a co-owner of Qatar's Pearl GTL plant damaged by an Iranian strike in March, has been among the worst-performing oil majors during the conflict. While higher oil and gas prices could temporarily boost Shell's stock, any outperformance is likely short-lived.

Six months into the war on Iran, major US oil companies have posted their highest profits since 2022, driven by a 22% rise in Brent crude to $88 a barrel since the conflict began on February 28. The Strait of Hormuz remains largely closed, disrupting one-fifth of global oil and gas shipments and creating windfalls for producers despite mounting risks to their Gulf assets. ExxonMobil, with 20% of its global supply from Qatar and the UAE, saw upstream earnings drop $1.3bn in H1 2026 due to lower volumes, offset by higher prices. Iran and its allies have launched at least 172 attacks on nonmilitary infrastructure in GCC states, with nearly half targeting energy facilities, including strikes on Kuwaiti refineries, Saudi Arabia's Abqaiq complex, and Qatar's Ras Laffan LNG hub. Prolonged disruption threatens to delay major projects and reduce US firms' regional oil and gas output by 30-40% this year.