US-Iran Truce Collapses as Attacks Worsen and Blockade Returns
(…) Traffic through the all-important waterway has dwindled and oil has surged 20% since attacks rekindled, with Brent trading above $86 a barrel. (…)
Trump, late on Tuesday, said the strait was “open” but added to the chaos for energy companies and shippers by saying he would demand a reimbursement fee of 20% on all cargo shipped through. That would account “for any and all costs necessary to do the job of providing safety and security to this very volatile section of the World,” he said on Truth Social. (…)
That would add roughly $32 million to the cost of sailing the largest tankers, which can hold 2 million barrels, through Hormuz at today’s prices.
The comments counter months of US statements that there can be no tolls or fees for the chokepoint, through which one fifth of the world’s oil and liquefied natural gas were flowing before the war erupted, in late February. (…)
“POTUS is absolutely right,” Araghchi posted on X. “Whoever provides secure and safe passage of commercial vessels through the Strait of Hormuz should be compensated for this service. 20% is of course too much. We will be fair.” (…)
Iran has been talking of a $2M “insurance premium” per ship.
Windward:
Iran has formally closed the Strait of Hormuz. The IRGC declared the waterway closed until further notice following its strike on a Cyprus-flagged container ship for using what it described as an unauthorized route, marking the first formal closure declaration of the conflict.
The U.S. responded with a third round of strikes on July 11, hitting approximately 140 Iranian military targets. Iranian retaliation has now widened geographically to include Jordan, Qatar, Bahrain, and the UAE, with the IRGC targeting Prince Hassan Air Base in Jordan and air defenses activating across three Gulf states.
Qatar’s Transport Ministry issued an urgent advisory suspending all maritime vessel activity until further notice, the first blanket maritime suspension by a Gulf state since the conflict began. The suspension has direct implications for LNG export flows from Ras Laffan.
Iranian crude export volumes have not declined despite the escalation. What has changed is visibility and timing, with loadings spiking sharply on July 6 ahead of a feared return of the U.S. blockade before falling to near zero by July 9 to 11 as AIS transponder shutdowns spread across the sanctioned fleet.
Nine OFAC-sanctioned National Iranian Tanker Company vessels have gone dark off Port Klang, Malaysia, carrying approximately 14.59 million barrels of Iranian crude and condensate, worth an estimated $989 million, bound for Shandong teapot refineries under the established Iran-to-Malaysian-blend-to-China laundering route. (…)
The maritime picture is no longer about corridor selection or transit avoidance. It is about a formally declared closure, a widening regional strike exchange, and the collapse of any remaining commercial confidence in the Strait as a normal waterway.
The escalation is no longer confined to the Strait. Iranian retaliation has reached four Gulf states and Jordan.
Total mess!
Hormuz Tensions Put Commodity Supplies at Risk Far Beyond Oil
The Middle East is not only home to top OPEC nations, but also a leading producer of raw materials that play a crucial role in everything from the chips that power artificial intelligence to food staples in the supermarket.
The Persian Gulf is home to major fertilizer producers including Qatar Fertiliser Co., Fertiglobe Plc and Saudi Basic Industries Corp., and the Strait of Hormuz acts as the vital artery connecting their exports to agricultural powerhouses around the world. (…)
Any disruption to fertilizer supplies risks reducing crop yields, with knock-on effects for global grain supplies and food prices at a time when extreme weather is also a threat. (…)
The energy infrastructure needed to produce ammonia and urea is at risk (…). (…) wary shipowners are now avoiding the region, threatening not only exports but production itself. Urea prices in New Orleans — a key global benchmark — climbed 6.2% over the seven days to July 10, the biggest weekly increase in more than three months.
Middle Eastern oil and gas majors also produce vast quantities of sulfur, and supply disruptions have added to the pressure on the global agricultural supply chain. The element is a key feedstock in the production of phosphate fertilizer, with shortages forcing plants in Brazil, the US and Morocco to cut output.
Surging prices thrust buyers in the agricultural sector into a bidding war with other industries that rely on sulfur and derivatives like sulfuric acid, which is crucial in some methods of copper and nickel production.
Traders have said that sufficient supplies of sulfur are available for those who can pay the price, and so far the main impact for miners has been an erosion of production margins.
The Middle East accounts for nearly a 10th of global aluminum production, and smelters there have an even more outsized role as suppliers of specialized aluminum products used extensively in car-making, construction and aerospace.
While the overall supply impact on the market for commodity-grade aluminum has been blunted by logistical workarounds in the Persian Gulf and rising exports from China and Indonesia, buyers are still facing a major squeeze on supplies of products like aluminum billet. (…)
Qatar’s Ras Laffan industrial complex, best known as the world’s largest liquefied natural gas export facility, was also responsible for around a third of the world’s helium supply before the Middle East turmoil erupted at the end of February.
Obtained as a by-product of natural gas, helium has a range of industrial applications, from car airbags to MRI scanners. But by far its most important use is in semiconductor manufacturing, where it’s a key input in building the chips powering the AI boom. Because of its unique qualities that help cool and protect silicon wafers, it’s difficult to replace, and chip manufacturers have been seeking alternative suppliers and drawing down inventories to offset the shortfalls.
As helium isn’t exchange-traded, the impact on its price from the closure of Hormuz is difficult to discern. By the estimates of Phil Kornbluth, a helium market consultant with over 40 years of experience in the industry, the spot price has at least doubled since March, and the market has been characterized by a “significant” supply shortage.
Supply is also constrained by other factors. China introduced ad hoc export restrictions on helium last Friday to conserve its own supplies, while Ukrainian attacks have dented Russian output.
“The industry has some ability to replace the low supply from other places,” said Kornbluth in a phone interview. But if the Iran war drags on, the crunch “will get worse, because the inventory that folks are relying on right now will eventually deplete.”
- The global equity rally is losing momentum as geopolitical and inflation risks re-emerge. Renewed tensions in the Strait of Hormuz, Russia’s diesel export ban and mounting supply-chain pressures are reviving upside risks to inflation and bond yields. With valuations already elevated, markets will increasingly depend on ambitious earnings expectations being delivered.
- U.S. earnings remain supported by the AI investment cycle, but market concentration is becoming harder to ignore. Information Technology earnings estimates have been revised sharply higher, with sector EPS now expected to rise more than 40% over the next 12 months. Yet the growing dependence of the S&P 500 on a narrow group of technology companies leaves the market increasingly vulnerable to any disappointment.
- Traders Boost BOE and ECB Rate-Hike Bets After Oil Price Surge
- The Fed’s Q2 Monetary Policy Report
Released July 10, the first under Kevin Warsh (my emphasis)
- The economy’s productive capacity appears to be rising at a solid pace as historically subdued growth in the labor force has been offset by strong growth in labor productivity.
- Wage growth has declined gradually in recent years, and even though it remains at a solid level, it has been accompanied by strong productivity growth.
- The recent cooling in real wage growth is visible across all broad demographic groups, including among some groups for whom, up until a year ago, wage growth had remained robust. (…) current nominal wage growth is roughly consistent with 2 percent inflation over time.
- Most measures suggest that longer-term inflation expectations remain well anchored.
- Through the first five months of this year, household consumption rose at a modest average annualized rate of 1.3 percent.
- Among other measures of economic activity, real private domestic final purchases—which comprises consumer spending, business fixed investment, and residential investment and which is usually considered a better indicator of the underlying momentum in the economy than GDP— grew a modest 1.7 percent in the first quarter of this year, somewhat below its pace last year. In addition, gross domestic income—a measure of economic activity conceptually equivalent to GDP but estimated from the total income earned and the costs incurred in producing goods and services—increased a subdued 1.2 percent in the first quarter.
- Outside of AI-related categories, investment spending—particularly for offices and manufacturing structures—has been fairly weak on net.
China Exports Surged in June, Exceeding Market Expectations
China’s exports surged more than expected, defying forecasts of a slowdown and providing a vital boost to an economy still weighed down by weak domestic demand.
Outbound shipments rose 27.0% from a year earlier in June, accelerating from May’s 19.4% gain, according to data released Tuesday by the General Administration of Customs. The reading exceeded the 18.0% growth forecast by economists surveyed by The Wall Street Journal.
Surging semiconductor prices remained the main driver of China’s export growth in June, fueled by the artificial-intelligence boom, said Julian Evans-Pritchard, an economist at Capital Economics.
Exports of semiconductors and computing equipment jumped 122% and 53%, respectively, from a year earlier, largely because of higher prices, said Evans-Pritchard. Semiconductor export volumes contracted on year in June, marking their first decline in more than two years.
Demand for other Chinese goods also strengthened. Auto export volumes surged 72% from a year earlier, supported by robust demand for Chinese electric vehicles.
Exports have been the primary growth driver for the world’s second-largest economy. Economists expect China’s gross domestic product to have expanded 4.5% from a year earlier in the second quarter, slowing from 5.0% in the first three months of the year. (…)
Among China’s major trading partners, shipments to the European Union, its second-largest trading partner, surged 18.5% on year in June, accelerating from a 7.6% increase in May. The gain was likely supported by increased shipments of Chinese air conditioners amid severe heat waves in Europe.
Exports to the Association of Southeast Asian Nations, China’s largest trading partner as a bloc, jumped 34.6% from a year earlier in June, up from a 24.0% rise in May. Shipments to the U.S. also rose 13.8% on year in June, slowing from a 34.5% increase in May.
Domestic demand remains constrained by a prolonged property slump, though June’s import data showed faster growth. Imports rose 36.0% from a year earlier, accelerating from a 27.4% gain in May and beating the consensus forecast for a 24.5% increase. (…)
The stronger-than-expected import growth shouldn’t be taken as evidence that domestic demand is booming, Evans-Pritchard said, adding that higher semiconductor prices played a major role in lifting import values.
The FT has more:
- Shipments of cars rose 71.2 per cent from a year earlier to 1.06mn, putting the country on track to export more than 10mn cars this year, up from 7.1mn last year and more than double the 4.9mn in 2023.
- China’s exports of rare earths in June fell 34 per cent year on year and 6.4 per cent in the first half, following tight export controls on the minerals, which are essential for high-technology products. China dominates production of rare earths and its controls are a particular source of tension with trading partners.
- The NBS’s Wang said China’s exports of green energy-related products such as lithium batteries and wind turbines increased 37.6 per cent and 35.6 per cent, respectively, during the first half.
ING Charts:
Data-Center Builders Are Racing to Offload Stakes Worth Billions Unrelenting demand for computing power has investors looking for chances to own the physical infrastructure behind AI
America’s data-center developers are ready to cash in on the AI boom.
Data-center builders and operators across the U.S. are working with bankers to sell majority equity stakes worth tens of billions of dollars in their companies this summer, according to people familiar with the efforts.
Bankers are working to sell stakes in firms including Netrality Data Centers, DataBank, Edged, EdgeCore Digital Infrastructure and others with properties located from Phoenix to Atlanta. They are pitching private-equity firms on a hot asset class benefiting from unrelenting demand for computing power.
Sales of data-center operators are on the rise as owners of these firms seek exits and investor interest in owning the physical infrastructure behind advanced artificial intelligence grows. A massive backlog of demand for server capacity pushed companies to pursue novel strategies to secure more of it, from renting chips from direct competitors to launching data centers into orbit.
Shortages of everything from electricians and plumbers to gas turbines and memory chips have driven the cost of building new data centers ever higher.
Nvidia Chief Executive Jensen Huang recently estimated the cost of building a gigawatt of new computing power using his company’s architecture could soon reach $80 billion to $100 billion. Some operators have been forced to seek deeper-pocketed backers to fund their next phase of expansion, according to several people working on the deals. (…)
The potential stake-sale talks are at varying stages, and some might not result in sales, the people said. KKR’s newly formed Helix Digital Infrastructure is among those evaluating the assets, according to a person with direct knowledge, in addition to other firms. (…)
Ravi Purohit, the co-head of infrastructure at Paul Weiss, said that while plenty of investors want exposure to data centers, only a handful of firms can afford multibillion-dollar deals. (…)
Bankers and investors involved in data-center sales this summer say guaranteed access to electrical power is a major factor in deal valuations. Concerns around rising costs and delays might also drive some buyers to tie some of their payments to completion of milestones, they said. (…)
We now have numbers to validate my contention that there is a lot of price inflation in hyperscalers capex.
In October 2025, a Bernstein Research breakdown (summarized by Investing.com and Business Insider) estimated that building 1 GW of AI data‑center capacity costs about 35 billion USD, with GPUs (largely Nvidia) accounting for roughly 39% of total capex.
But, in its November 2025 conference call, Nvidia put the number at $50–60 billion.
In May, an Orennia analysis concluded that 1 GW gas-powered data center runs about $60 billion all-in. The split is roughly 70/30 between IT hardware and physical infrastructure.
It’s now $80-100B, a 60% jump that includes costlier more efficient chips but still contains a lot of inflated prices, some due to the AI boom itself, but some also due to war-induced shortages.
Meanwhile, compute demand keeps exploding but compute prices keep falli
Last week, OpenAI released GPT-5.623 and SpaceXAI, Grok 4.5,24 both with performance leaps, but perhaps more important, significant cost efficiencies. ARK Research says that GPT-5.6 Sol costs 30% less than Anthropic’s Fable 5.
The same pattern is evolving below the frontier model level. Grok 4.5 and the smallest GPT-5.6 variant (Luna) do not match the maximum reasoning capabilities of GPT-5.6 Sol or Fable/Mythos 5; yet, for tasks that do not require frontier reasoning, they can deliver performance comparable to previous frontier models at a fraction of the cost.
On Artificial Analysis’ Intelligence Index, for example, Grok 4.5 scored 54% at a benchmark cost of $601, while Anthropic’s Opus 4.8 scored 56% at a cost of more than $3,700, 84% less for a slightly higher score.
Preserving decent returns on capital is a challenge when capital costs and compute prices go different ways. Compute demand helps fill the gap currently but visibility beyond 2030 is not 20/20.
- New York Set to Temporarily Ban Large New Data Centers Yearlong ban on construction comes as anti-AI movement spreads
Gov. Kathy Hochul is banning large data-center construction for up to a year, making New York the latest state to confront the rollout of sites powering the artificial-intelligence boom.
The governor, a Democrat, was set to sign an executive order Tuesday halting construction of big, new data centers, her office said. The moratorium would give the state time to create regulations for data centers that can help the environment and energy grid.
No other state has enacted a similar freeze. Maine Gov. Janet Mills, a Democrat, vetoed a bill earlier this year that would have halted construction of new data centers. The legislature voted against an exemption she wanted for a project in one town. Dozens of cities and counties across the U.S. have issued temporary halts on data-center construction. Many states have proposed similar bans. (…)
New York’s temporary ban applies to construction of large data centers with capacities of at least 50 megawatts. The ban wouldn’t extend to hospitals, universities and other facilities that have smaller data centers, Hochul’s office said. Data centers tend to be in areas with open land and power connectivity.
The governor’s freeze will last as long as it takes to create data-center regulations but no more than a year, her office said. She has ordered state officials to analyze how communities can financially benefit from data centers. The freeze would halt any projects still awaiting a permit, the governor’s office said. (…)
New York matters, especially for finance, edge, and specialized workloads, but AI and cloud capacity can and will continue to grow rapidly in other states, particularly in regions like Northern Virginia (“Data Center Alley”) and emerging hubs in the Midwest and Southeast.
Researchers worry a Trump rule could end U.S. scientific dominance Under the proposed rule, political appointees would have more power over hundreds of billions of dollars in discretionary grant funding.
(…) The changes would give White House political appointees more power over hundreds of billions of dollars in discretionary grant funding, diminishing the traditional role of scientific peer reviewers.
The rule released in May would require political appointees to review grants before they’re awarded to ensure projects advance the president’s priorities. Specifically, the Trump administration opposes research for projects that “fund, promote, encourage, subsidize, or facilitate” diversity, equity and inclusion principles or “deny the biological reality of … the sex binary.”
The rule change marks a departure from the system created in the wake of World War II, in which independent peer reviewers, experts in the field, determine whether scientific proposals are worthy of federal funding. OMB said it intends to finalize the rule by Oct. 1. (…)
The Post analyzed more than 50,000 public comments submitted to the federal government about the rule through Friday, and at least 88 percent opposed it, according to the analysis, which used artificial intelligence to classify each comment, with reporters checking a sample for accuracy. By comparison, roughly 6 percent expressed support, though the overwhelming majority of that came from a single form letter submitted more than 2,300 times.
The proposal would also give agencies the power to temporarily suspend grants or end them at any time, create new restrictions on collaborations with researchers in certain foreign countries, including China and Russia, and add new requirements for foreign researchers working in the United States. (…)
The rule has moved scientific and educational organizations to lobby lawmakers on Capitol Hill, organize letter-writing campaigns and stage protests to raise awareness of the potential impact. Some 300 leading scientific organizations sent a letter to the administration requesting more time to review the proposed regulation, which they say would have a “vast” scope and impact. (…)
Delawalla said her group has estimated that 49 percent of active clinical trials that currently receive federal funding would immediately be ineligible once the rule goes into effect. (…)
OMB Director Russell Vought told members of Congress during a hearing last month that the administration doesn’t intend to cancel grants “in a heartbeat.” But “when we find something that’s problematic that our policy officials would not have caught, we need to be able to turn it off,” (…)
Researchers point out the change could impact not only science but also grants to states, localities and nonprofit organizations for housing, transportation and infrastructure projects.
A lot of workers get supported in states when grants come through to build additional housing stock or upgrade it, said Toby Smith, senior vice president for government relations and public policy at the Association of American Universities, which represents research universities. Some transportation funding for roads and bridges comes through infrastructure grants. “So there are industries that probably don’t even know they’ll be impacted that will be impacted,” Smith said. (…)
Multiple scientists who spoke with The Post said they’re concerned about elevating political appointees’ decisions over the professional opinion of nonpartisan peer reviewers.
Steven Farber, a biology professor at Johns Hopkins University, and one of thousands of experts who reviews research grant proposals for the National Institutes of Health, said the rigorous review process — including hours of research, discussion and blind voting — ensures that the most potentially groundbreaking projects receive funding. That process would be undermined by political appointees without scientific training making the final decision, he said.
“The whole thing is really creating a self-inflicted wound,” Farber said. “I’m heartbroken.”
The proposed process would introduce a new political lens to grant-making regardless of party, creating whiplash on scientific priorities as administrations change, said Sudip Parikh, CEO of the American Association for the Advancement of Science.
“If we’re in a race with China, if we’re trying to cure disease, if we’re trying to build the next great product that’s going to create the next trillion-dollar industry, that’s not going to happen if we’re ping-ponging back and forth about priorities, who’s going to do them, and how they’re going to do them,” Parikh said.
Researchers are also worried that the rule gives the administration new opportunities to pull funding mid-project.
Universities have already seen from executive orders that when grants are terminated midstream, “whole programs and laboratories shut down overnight. That will continue,” Smith, of the Association of American Universities, said.
Farber of Johns Hopkins described the rule as the latest in a “multiyear attack on our infrastructure” in scientific research. Many of the best PhD-trained scientists in the world have spent years in the United States as part of their training, he said, and they used to make the U.S. their home so they could continue doing cutting-edge research. Now he fears they’re much more likely to go elsewhere. (…)
