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2026-07-13 21:56:10
[Strait Traffic Plummets by 80%, US-Iran Conflict Escalates, Oil Prices and Inflation Risks Repriced] ⑴ The US-Iran military conflict escalated significantly over the weekend. The US Central Command struck dozens of targets in Iran, including its first use of a unidirectional attack drone. Iran retaliated by claiming to have attacked a US base in Bahrain. The frequency and depth of the clashes have increased significantly. ⑵ Navigation in the Strait of Hormuz has deteriorated drastically. Iran has officially closed the strait. Data shows that normally about 100 ships pass through the strait daily, but only 21 ships passed over the weekend, with some reaching zero port entries. This has substantially disrupted the crude oil transport route. ⑶ Crude oil prices have risen accordingly, with both Brent and WTI crude increasing. US gasoline retail prices have risen by about 10 cents per gallon in the past week. If the strait closure continues, energy prices will climb further, directly increasing transportation costs and inflationary pressures. (4) The transmission mechanism of conflict to inflation expectations is strengthening. The Federal Reserve is already facing the challenge of persistent core inflation, and rising energy costs will exacerbate the pressure to raise interest rates. The market has already priced in at least one rate hike this year, with a probability of about 71% in September. If oil prices continue to rise, this probability will increase further. (5) The previous memorandum of understanding between the US and Iran has essentially broken down. The two sides have completely opposing positions on control of the Strait of Hormuz. The US insists that it is an international waterway, while Iran asserts its jurisdiction through military actions. In the short term, the diplomatic channel for a solution has narrowed. (6) The market is facing the dual pressure of continuously rising geopolitical risk premiums and expectations of monetary policy tightening. This week's US CPI data and the Federal Reserve Chairman's congressional testimony will determine the direction of asset prices. If inflation exceeds expectations and geopolitical tensions continue, risk assets will face greater pressure, while energy and safe-haven assets may receive further support.
