Iran said it will not reopen the Strait of Hormuz until the United States meets its conditions, keeping one of the world’s most important shipping lanes tied up in a standoff that’s already rattling oil prices and global markets. The Iranian Foreign Ministry spokesperson, Esmail Baghaei, put the demand plainly Monday: “It is up to the U.S. side to stop and make amends for its illegal and destructive actions,” he said, pointing to the American blockade of Iranian ports.
Iran wants the U.S. to lift the blockade, pay compensation for months of war damage, lift economic sanctions and release Iran’s frozen assets. That’s the price Tehran is setting for access through a waterway that normally carries roughly one-fifth of the world’s traded oil supplies. The closure has become the war’s most lasting consequence. Ordinary people will feel that in fuel costs, shipping costs and everything that rides on them. The people making the decisions sit far from the bill.
Who Holds the Strait
Iran is also holding separate talks with Oman over transit through the strait, including potentially a temporary shipping corridor, but it has said any actual reopening is contingent on talks with the U.S. Tehran has also suggested that vessels linked to “hostile countries” would be barred. That’s not a neutral shipping arrangement. It’s leverage, plain and simple, in a fight between states that treat trade routes like bargaining chips.
Meanwhile, Yemen’s Iranian-backed Houthi rebels struck a government-held port on the country’s Red Sea coast, deepening fears over threats to strategic shipping routes and a potential return to civil war. The region’s waterways keep getting turned into pressure points while the people living around them absorb the danger.
Markets Watch the Power Games
Oil prices rose after Israel rejected a deal announced by U.S. President Donald Trump for Gaza. Brent crude, the international standard, gained 0.8% to $84.23 per barrel. U.S. benchmark crude advanced 0.7% to $78.72 per barrel. Investors were left to price in the fallout from a standoff driven by governments, militaries and sanctions regimes, not by anyone at the bottom of the chain.
World shares were mixed Monday as investors weighed the Middle East standoff and its market effects. In early European trading, Germany’s DAX rose 0.3% to 26,411.01, while the CAC 40 in Paris edged 0.1% lower to 8,703.73. Britain’s FTSE 100 lost 0.3% to 10,869.35. The future for the S&P 500 was up 0.1%, while that for the Dow Jones Industrial Average slipped 0.1%.
In Tokyo, the benchmark Nikkei 225 jumped 2.1% to 66,970.22, pulled higher by strong gains for technology companies. Computer chip equipment maker Tokyo Electron climbed 4.1%, while chip testing device maker Advantest rose 6.4%. In South Korea, the Kospi added 0.7% to 6,299.66 as shares in major chipmakers slipped. Samsung Electronics lost 0.4%, while its smaller rival, memory chipmaker SK Hynix, lost 0.1%.
What the Traders Are Calling Stability
Analysts said foreign investors were selling shares in the Big Tech companies to lock in profits from recent gains and rebalance holdings into other industries, such as defense contractors. That’s the market’s cold little rhythm: profits taken, money shifted, weapons firms rewarded, and the rest of the world left to live with the consequences.
Hong Kong’s Hang Seng gained 1.1% to 25,937.49, while the Shanghai Composite index picked up 0.7% to 3,966.59. In Australia, the S&P/ASX 200 lost 0.3% to 9,232.60. Taiwan’s Taiex surged 1.6% and the Sensex in India was nearly unchanged.
Bas van Geffen, senior macro strategist for Rabobank, said in a commentary, “Negotiators said that a deal to establish a safe shipping route was close, but Iran may now be exploring just how much it can extract from the U.S. in return.” That’s the language of state bargaining over a chokepoint that affects everyone else’s costs, while the public gets told to watch the numbers and wait.
This week, investors will get several important inflation updates for the U.S. The most closely watched will be the consumer price index, or CPI, which measures costs for consumers. Inflation in July is forecast to have risen at a 3.4% rate, easing slightly from 3.5% in June. Inflation has held stubbornly above 3% for most of the year.
On Friday, U.S. stocks rose and Treasury yields fell after the government reported that employers unexpectedly cut 23,000 jobs last month. A weaker jobs market raised hopes the Federal Reserve might wait longer before raising interest rates to fight inflation. The jobs report included a revision to the figures for June and May that involved slashing a combined 103,000 jobs from payrolls for those months. Slowing employment complicates the Fed’s effort to balance job growth with fighting inflation. Higher interest rates can help tame inflation by slowing economic growth, but businesses will find it more difficult to expand under increased borrowing rates. As usual, technology stocks did much of the heavy lifting for the broader market. Nvidia jumped 2.3% and Broadcom rose 1.7%.
In other dealings early Monday, the U.S. dollar rose to 158.72 Japanese yen from 157.71 yen. The euro fell to $1.15617 from $1.1568.