Iran-US tensions escalate in Strait of Hormuz

PARAGRAPH 1 --- What happened: Tensions between the U.S. and Iran escalated in the Strait of Hormuz, with the U.S. reportedly striking four Iranian oil tankers on June 24. On the same day, a Qatari LNG tanker traversed the Strait for the first time since the start of the conflict. Oil prices surged on June 28, with Brent crude reaching $102.19 and WTI at $90.15, due to these developments. On July 2, Iran vowed not to bow to U.S. demands, prolonging the standoff. Meanwhile, the U.S. struck seven Iranian "fast boats" in the Strait on July 3, as Iran attacked a UAE oil facility.

PARAGRAPH 2 --- Market impact: The escalating tensions drove oil prices higher, with global benchmarks Brent and WTI up 6.4% and 7.5% respectively on July 5. Indian shares slumped as Brent crude touched $105, reflecting the impact of higher oil prices on emerging markets. The closure of the Strait of Hormuz, through which around 20% of global oil supplies pass, raised concerns about global energy markets and supply chain disruptions.

PARAGRAPH 3 --- What to watch next: On July 10, the U.S. and Iran are due to hold indirect talks in Vienna, which could provide clarity on the prospects for a diplomatic resolution. On July 14, the U.S. Energy Information Administration will release its Short-Term Energy Outlook, which could provide insights into how the agency expects the situation to impact global oil supply and demand. Additionally, keep an eye on any further military actions or rhetoric from either side that could escalate or de-escalate the situation.