Geopolitics

Iran says the Strait of Hormuz has been shut down, but U.S. President Donald Trump says 9 million barrels of oil a day are still getting out. Energy Secretary Chris Wright said in a post on X on Tuesday that the seven-day average for oil leaving the strait was almost 9 million barrels per day. Axios reported on Sunday, citing U.S. officials, that about 8 million barrels are leaving each night via a southern lane with U.S. help, while pipeline exports run about 4 million barrels per day, putting total flows at about 15 million barrels per day versus 20 million barrels per day before the conflict.

Grain exports from Russia’s Black Sea port of Novorossiysk have been suspended after three major terminals were heavily damaged in a Ukrainian drone attack. A loading gallery at United Grain Co.’s Novorossiysk Grain Plant collapsed and several silos were damaged, while Demetra’s terminal also saw damage to its loading gallery and truck unloading facility, people familiar with the matter said. The KSK terminal was also hit. The disruption during the harvest season has raised supply concerns, helping Chicago wheat futures surge as much as 4% for the biggest intraday gain in three weeks.

Geopolitical tensions pushed oil and gold sharply higher. U.S. crude futures rose 0.89% to $83.94 a barrel and Brent gained 0.78% to $89.60, both the highest since July 31. Spot gold climbed 0.46% to $4,387.03 an ounce. Asia-Pacific markets were mixed, with MSCI’s Asia-Pacific index excluding Japan up 0.5% and Japan’s Nikkei flat, while Japan’s bond market came under pressure as the 5-year JGB yield hit a record 2.1% and the 2-year yield reached a 31-year high.

Iran said the Strait of Hormuz will remain closed, intensifying concerns about supply disruptions and lifting Brent crude back above $88 a barrel. U.S. equities gave up earlier gains, with the S&P 500 down 0.3% and the Nasdaq 100 down 0.4%. As oil prices climbed, inflation expectations rose and markets repriced the odds of a Federal Reserve rate hike to nearly 50%. Economists forecast U.S. July CPI rose 0.1% month over month after a 0.4% decline in the prior month, while a small-business hiring-plans gauge climbed to its highest level since October 2022.

International crude prices jumped about 5% on Friday as expectations for a Strait of Hormuz agreement faded, settling at $82.13 a barrel. U.S. equities ended lower, with the Nasdaq down 0.32%, the Dow off 0.13% and the S&P 500 edging down 0.06% after the benchmark had set a record closing high earlier in the week. Intel shares declined after the chipmaker said it plans to raise $15 billion through a share sale. Energy stocks outperformed, with Apache and Marathon Petroleum among notable gainers.

The Dow Jones Industrial Average surged 1,007 points, while the S&P 500 rose 142 points to 7,731 and the Nasdaq Composite gained 2.6%. Stocks advanced after Caterpillar (CAT) and Palantir (PLTR) posted results that topped expectations. Sentiment also improved after CNBC reported Treasury Secretary Scott Bessent saying progress tied to an Iran nuclear deal could reopen the Strait of Hormuz within 24–48 hours. All three major indexes are up 13%–14% so far this year.

After the Iran war began, Diamondback Energy accelerated work on drilled but uncompleted wells, lifting output about 4% year-to-date. Second-quarter oil production rose to 525,000 b/d and total production averaged nearly 1.02 million boe/d, topping 1 million boe/d for the first time in the company’s history. The company is holding to a $3.9 billion full-year capital spending plan rather than significantly ramping production. The article says that even if the Strait of Hormuz fully reopened immediately, restoring global crude inventories to prewar levels would still take 18 months, requiring net additions of 2.1 million b/d to stockpiles.

On August 4, foreign institutional investors (FIIs) posted net purchases of Rs 2,446.47 crore in Indian equities, while domestic institutional investors (DIIs) recorded net sales of Rs 936 crore. The Nifty 50 fell 0.57% and the Sensex declined 0.58% on the day. Brent crude rose 2.5% to around $85 a barrel amid uncertainty over the US-Iran conflict. FCNR-B deposits increased by $28 billion between June 5 and July 30, reflecting the impact of the Reserve Bank of India’s foreign-currency inflow initiative.

Russia’s logistics and shipping group FESCO has suspended all new shipment orders via the Black Sea after its cargo vessel Yanina was hit by Ukrainian seaborne drones and sank while carrying frozen food and construction materials. Ukraine said it logged 57 attacks on vessels in July, including strikes in ports and at sea, along with 67 hits on port facilities. The incident adds to rising security risks for Black Sea shipping, disrupting key regional flows such as grain and construction materials and creating knock-on effects for global dry bulk freight and Black Sea-linked agricultural markets.

Wars involving Iran and Ukraine have intensified pressure on global oil supplies after Russian refineries were bombed and exports through the Strait of Hormuz and the Black Sea were disrupted. The global refining deficit has reached 6.5 million barrels a day, including damaged capacity and products that cannot leave key waterways. More than 1.2 million barrels per day of refining capacity in the Middle East is offline due to physical damage. Saudi Arabia has shifted exports to routes via the Suez Canal and Egypt’s SUMED pipeline for 5 million barrels a day, while Brazil’s Petrobras reported a 14% year-on-year output increase and is running refineries at full capacity, adding to upward pressure on international crude prices.