Iran, for its part, rejected an Omani proposal to jointly manage the Strait of Hormuz and said it had fired on ships in the strait and at U.S. bases in Jordan

International News via Reuters:

The United States and Saudi Arabia jointly struck Iran-backed armed groups in Iraq on Wednesday, the first U.S. airstrikes in the Middle East since President Donald Trump suspended the U.S. bombing campaign against Iran last week.

Iran, for its part, rejected an Omani proposal to jointly manage the Strait of Hormuz and said it had fired on ships in the strait and at U.S. bases in Jordan.

The renewed combat and diplomatic setbacks pushed oil prices up for the first time since last week, signalling no quick end to the war the United States and Israel started in February.

Iraqi men shouted Shi’ite sectarian slogans and “Death to America!” as they carried the bodies of slain fighters in body bags out of a hospital in Mosul in northern Iraq, footage from Iraq’s Al-Ahad television showed.

Washington and Riyadh said they had jointly struck the Iran-backed armed groups in Iraq in retaliation for drone attacks on Saudi oil targets launched from Iraq.

Iraq’s Popular Mobilisation Forces, powerful Iran-backed paramilitary groups incorporated into the formal Iraqi security forces, said at least 20 members were killed and 32 wounded in U.S.-Saudi strikes targeting several bases across Iraq.

It was the first major U.S. military action in the Middle East since last Friday, when Trump abruptly suspended an intensive bombing campaign after 13 days, having been advised by commanders that the strategy had run its course.

It was also the first time during the war that Saudi Arabia had publicly declared its participation in joint strikes alongside the United States. The joint strikes potentially widen the conflict by drawing Sunni Muslim Saudi Arabia into combat against Shi’ite proxies of Iran on a new front.

Iraq’s Shi’ite-led government, one of the few in the world to maintain close military and diplomatic ties with both Tehran and Washington, called an emergency meeting.

Washington has long called on the Baghdad government to crack down on Iran-backed paramilitaries, but efforts to do so in the past have provoked domestic unrest.

The deep ties between Iran and Iraq, the two biggest Shi’ite-majority countries, have been on display this week as hundreds of thousands of Iranian religious pilgrims visit shrines in Iraq for an annual holiday, crossing the border over land. Some carried portraits of Iran’s slain supreme leader Ayatollah Ali Khamenei, revered as a high-ranking cleric in both countries.

Saudi Arabia has also been drawn into the conflict on another front, with the Iran-aligned Houthi movement in Yemen announcing a blockade of Saudi oil exports in the Red Sea last week and firing on ships and oil facilities.

Hours before launching the joint attacks with Saudi Arabia on Iraq, the U.S. military said its air defences had averted a surprise Iranian attack on U.S. troops in the region.

Jordan’s military said its air defences had intercepted and shot down five Iranian missiles. Three of the four U.S. service members killed this month were killed in Jordan, where U.S. bases have become primary Iranian targets.

Iran’s Revolutionary Guards said they had fired several ballistic missiles at U.S. military installations in Jordan, and had struck three tankers that were attempting to transit through the Strait of Hormuz along an unauthorised route.

TEHRAN REJECTS OMANI PROPOSAL

Fighting had first resumed this month after a U.S.-Iran deal reached in June on a framework to end the war collapsed over the fate of the strait, the world’s most important energy shipping route, which Iran says it controls and where it aims to collect fees.

Oman proposed a plan for joint regional control of the strait this week, with the backing of Gulf states, that would allow the payment of voluntary service charges. But a senior Iranian official told Reuters on Wednesday that Iran had rejected the Omani proposal as “unreasonable”.

The official said a 50-50 joint control arrangement with Oman would not serve Iran’s interests, though Tehran considers Oman a valuable neighbour. Iran wants sole control over the inbound route and partial control over the outbound route.

The United States has been telling ships to use a route near the Omani shore rather than sailing close to Iran. The Revolutionary Guards Navy said in a statement it continued to maintain full control over the strait and would respond to “unlawful U.S. military interference”.

The renewed fighting sent oil prices rising 4.6%, with Brent crude futures trading at almost $88 a barrel at 1030 GMT. The price, which had briefly spiked above $100 last week for the first time since May, had tumbled into the mid-80s this week after it emerged over the weekend that Trump had called off the bombing.

Reporting by Timour Azhari, Parisa Hafezi, Doina Chiacu, Ahmed Tolba, Kanishka Singh and Reuters bureaux; Writing by Peter Graff, editing by Andrei Khalip

A pause in attacks in the Gulf has brought some relief as oil pulls back from the $100 mark, but it remains elevated enough to threaten a pickup in inflation

International News via Reuters:

Several crucial market warning signals are close to crisis levels as investors grapple with high oil prices and Middle East conflict, all while the AI engine that has powered the stock market sputters.

A pause in attacks in the Gulf has brought some relief as oil pulls back from the $100 mark, but it remains elevated enough to threaten a pickup in inflation, which is keeping long-term government borrowing costs at levels that typically spell trouble for risk assets.

At the same time, the seemingly unstoppable rally in shares with anything to do with AI is hitting a wall of concern about profitability, cash burn and erstwhile scarcity of things like semiconductor chips giving way to a damaging glut, further unsettling traders.

Here is a look at some of the market warning signs.

ON A KNIFE EDGE

Tech earnings are coming in hot, but investors are looking for revenue and profits that will justify the cost of the AI buildout well into the future.

With markets anticipating U.S. rate increases this year, AI hyperscaler bond yields are climbing faster than those on Treasuries and the cost of hedging a deterioration in creditworthiness has soared, right as the scorching rally in semiconductor stocks falters.

On the plus side, the ratio of bullish positions to bearish ones on Nasdaq futures is at a 17-year low, as investors have ditched tech stocks, suggesting room for money to return.

That said, the equity-market bull run is fuelled by record debt, which grows along with the market itself.

Margin debt — the amount investors borrow to invest — hit a record $1.5 trillion in June, according to the Financial Industry Regulatory Authority, leaving investors’ net balance with their brokers in a $1 trillion deficit for the first time.

Investors who owe more than they have in cash are far more likely to sell into declines in stocks than to buy them.

THE 5% TEST

U.S. 30-year Treasury yields have remained above 5% for the longest stretch since the early days of the financial crisis in 2007.

This level itself is not necessarily a trigger for a market selloff, but higher long-term rates can raise the costs of loans, such as mortgages, squeezing consumers and possibly undermining President Donald Trump’s affordability push ahead of the November midterm elections.

If investors expect more in return for lending to the U.S. government for 30 years, those higher borrowing costs could spill into other markets such as corporate credit.

Raymond James Chief Investment Officer Larry Adam says spreads on some of the riskiest corporate bonds had reached a 15-month high, suggesting markets are demanding more compensation to lend to weaker borrowers.

“Investors are increasingly more discerning as markets price in tighter Fed policy and a more challenging environment for the weakest borrowers,” he added.

THE COST OF OIL

Sure, oil has retreated from $100, but it is still up 27% in dollar terms on an annual basis — positive for U.S. producers, but punishing for non-U.S. consumers. Euro zone and UK importers are paying nearly 30% more than they were a year ago.

The weaker an importer’s currency, the worse the pain. Just look at Japan, where the value of its imports is at a record high.

Indian refiners, meanwhile, are paying 40% more for Brent-linked crude, although they have been big buyers of heavily discounted Russian oil for the past few years.

Argentinian and Turkish refiners are paying nearly 50% more. Shipping has also become far more expensive. Given the peril in navigating the Strait of Hormuz, and now the Red Sea, tanker rates for key routes to Asia from the Middle East are around 600% higher year-on-year.

FAVOURITE FUNDING CURRENCY FLASHING RED

The yen, trading at almost 164 per dollar, has slumped to four-decade lows and investors are on edge for potential intervention by Japanese authorities to shore it up.

Reports that the Bank of Japan is considering a faster pace of rate hikes and a flurry of warnings from Japanese finance minister Satsuki Katayama have done little to support the currency, battered by relatively low Japanese rates, the energy shock, and Prime Minister Sanae Takaichi’s expansive fiscal plans.

Low interest rates and historically low volatility have made the yen a popular funding currency for carry trades — borrowing in yen and investing in higher-yielding assets such as U.S. stocks and bonds. A sharp appreciation in the currency in the case of intervention could force investors to unwind those positions, quickly, as was the case in August 2024.

Reporting by Amanda Cooper, Johann Cherian and Niket Nishant; Editing by Dhara Ranasinghe and Tomasz Janowski

Oman has presented Iran with a plan backed by Gulf states to manage the Strait of Hormuz, including collecting voluntary fees for using it, a Gulf source and a Western diplomat told Reuters

International News via Reuters:

Oil prices dropped 5% on Tuesday to a two-week low, on cautious hopes for a resolution to the Iran war as traders assessed developments in the Middle East.

Brent futures fell $4.61, or 5.2%, to $83.75 a barrel at 12:01 p.m. EDT (1601 GMT). U.S. West Texas Intermediate (WTI) crude fell $4.06, or 4.9%, to $78.55.

After dropping about 17% over three days, both crude benchmarks were on track for their lowest closes since July 13.

Oman has presented Iran with a plan backed by Gulf states to manage the Strait of Hormuz, including collecting voluntary fees for using it, a Gulf source and a Western diplomat told Reuters.

A senior Iranian source told Reuters that Tehran had yet to respond to the Omani proposals, intended to serve as a basis to end the disruption to trade through the strait caused by the U.S.-Israeli war on Iran. Before the war began on February 28, about a fifth of global oil supplies flowed through the strait.

U.S. President Donald Trump, who abruptly called off a two-week bombing campaign over the weekend in his latest strategic U-turn, reported “good talks” underway with Iran but threatened to restart strikes unless negotiations deliver. Iran has denied seeking to resume talks with the U.S.

ELSEWHERE IN THE WORLD

In a move that would reduce crude demand, Saudi Aramco shut down its 400,000-barrel-per-day Jizan oil refinery in Saudi Arabia on July 27 following an attack by Iran-backed Houthi militants in Yemen on Saturday, a note from consultancy IIR seen by Reuters showed.

The Houthi conflict has disrupted shipping through the Bab el-Mandeb Strait linking the Red Sea to the Gulf of Aden, creating a second chokepoint for oil flows. Saudi Aramco has considered a new pricing mechanism for crude loading from Egypt’s Sidi Kerir port for Asia to reflect higher shipping costs after re-routing exports through the Suez Mediterranean pipeline.

On Monday, 28 vessels passed through the Bab el-Mandeb, a four-day high, while traffic through the Strait of Hormuz remained low, according to Kpler shipping data.

In Europe, Ukrainian President Volodymyr Zelenskiy said he and Trump had discussed reinvigorating peace talks with Russia.

A settlement in the Ukraine war could result in the lifting of some sanctions on Russia, which could allow Moscow to export more oil. Russia was the world’s third-biggest crude oil producer behind the U.S. and Saudi Arabia in 2025, according to U.S. energy data.

ECONOMIC WORRIES

The U.S. dollar held near a four-week high against a basket of other currencies, as traders grew more concerned the Federal Reserve might raise U.S. interest rates this week. Most major brokerages expect the Fed to hold rates steady, though a growing number said elevated oil prices could prompt a rate hike.

A stronger U.S. dollar makes oil more expensive for many global buyers. Central banks raise rates to fight inflation by boosting consumer borrowing costs, which can slow economic growth and dent demand for oil.

U.S. OIL INVENTORIES

The market awaited weekly storage reports from the American Petroleum Institute (API) trade group on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday.

Analysts estimated energy firms pulled 1.4 million barrels of crude from storage during the week ended July 24.

If correct, that would be the second week of declines in three weeks, after an increase of 7.7 million barrels in the same week last year and an average decline of 1.0 million barrels over the past five years (2021 to 2025). [EIA/S] [API/S]

Reporting by Scott DiSavino in New York, Anushree Mukherjee and Ishaan Arora in Bengaluru and Siyi Liu in Singapore; Additional reporting by Stephanie Kelly in London; Editing by Alexandra Hudson, Jan Harvey, Will Dunham, Louise Heavens and David Gregorio

Congo’s parliament in June approved a bill that would allow constitutional changes to be submitted to a referendum, a move that critics say could pave the way for Tshisekedi to seek a third term

International News via Reuters:

Thousands of people rallied in the eastern Congolese cities of Goma and Bukavu on Tuesday to protest against proposed constitutional changes that could pave the way for President Felix Tshisekedi to run for a third term.

• Goma and Bukavu have been under the control of AFC/M23 rebels since the group’s rapid advance across North and South Kivu provinces last year.

• Congo’s parliament in June approved a bill that would allow constitutional changes to be submitted to a referendum, a move that critics say could pave the way for Tshisekedi to seek a third term.

• Proposed constitutional reforms triggered opposition-led protests in the capital Kinshasa on June 12 that were dispersed by security forces.

• Demonstrators carried banners reading “No to constitutional change” and “No to a referendum and a third term”, according to two Reuters witnesses.

• Protesters also called for the U.N. to lift sanctions imposed this month on AFC/M23 leader Corneille Nangaa and the group.

• Congolese government spokesperson Patrick Muyaya accused the rebels of forcing residents to join the demonstrations in a post on X. An AFC/M23 spokesperson did not immediately respond to a request for comment.

• The demonstrations took place under police supervision, the witnesses said, despite a ban on gatherings introduced to curb the spread of Ebola.

• Rebel leaders declared territories under their control Ebola-free last month.

Reporting by Congo newsroom; Writing by Clement Bonnerot; Editing by Jessica Donati and Alison Williams