The price of oil shoots upward as Trump demands tolls in the Strait of Hormuz

THE MARKETS

Oil spikes upward: Asian markets are largely up, but Europe and the U.S. go into the red

Oil rose about 12% to $86 per barrel and was continuing upward over the last 24 hours, but one question Wall Street is asking is: why not higher? Why not closer to $120, like at the beginning of the war? At the moment, traders are “showing reluctance to fully price back in another supply shock,” ING’s Francesco Pesole advised clients this morning.

• S&P 500 futures were flat this morning. The index closed down 0.79% yesterday. 
• In Europe, the Stoxx 600 was down 0.78% in early trading and the U.K.’s FTSE 100 was down 0.49% before lunch.
• Asia: South Korea’s KOSPI was up 0.73%. Japan’s Nikkei 225 was up 0.74%. India’s Nifty 50 was down 0.68%. China’s CSI 300 was up 2.15%. 
• Brent crude was $86 per barrel this morning.
• Bitcoin rose to $62.6K.

Chart via TradingEconomics.com

IRAN

No end in sight as Iran bombs tankers and Trump insists on a 20% toll on cargo in the Strait of Hormuz

The price of Brent Crude oil hit $86 per barrel this morning, up from $77 the day before, as traders realized the siege of the Strait of Hormuz will not end soon.

Iran hit two UAE tankers, plus U.S. sites in Jordan and Bahrain. The U.S. conducted a third night of strikes on the Iranian coastal cities of Bushehr, Chah Bahar, Jask, Konarak, Abu Musa, and Bandar Abbas, in hopes of degrading Iran’s ability to strike ships from the land-based sites. (Live coverage from the BBC here.)

In Yemen, the Houthis (an Iranian proxy group) bombed Saudi Arabia’s Abha International Airport.

President Trump said he would reimpose a U.S. blockade of Iranian vessels in the waterway and only allow ships through if they paid the U.S. “The U.S.A. will be, from this point forward, known as ‘THE GUARDIAN OF THE HORMUZ STRAIT,’ but as such, and as a matter of FAIRNESS, will be reimbursed, at the rate of 20% on all cargo shipped,” he said on social media. The blockade will resume at 4 pm ET, Centcom said.

• Context: A 20% toll would cost $32 million per tanker and add $16 to the price of oil, per the FT. During its blockade of the Strait, Iran had charged only $1-2 million per ship, payable in crypto.
• Iran mocked Trump on this point. “POTUS is absolutely right. Whoever provides secure and safe passage of commercial vessels through the Strait of Hormuz should be compensated for this service,” Iranian Foreign Minister Abbas Araghchi said on X. “Iran has always been the GUARDIAN of the Strait and will remain so FOREVER. 20% is of course too much. We will be fair.”

Heavy traffic. Today, the Strait was crowded with ships waiting to transit the gap between Iran and Oman, this snapshot from Kpler’s MarineTraffic.com shows:

The longer the war goes on, the less relevant the Strait of Hormuz will become

The Gulf countries aren’t just twiddling their thumbs while President Trump and the Islamic Revolutionary Guard Corps of Iran figure out how to let ships through the Strait of Hormuz. Instead, they’re building pipelines to give their oil an alternative way out to their customers. 

Alexandra Paulus and her team at Goldman Sachs have been tracking pipeline construction and estimate that 45% of exports from the region will be insulated from the Strait by 2027 and more than 60% (or 14 million barrels per day) by the end of 2028. Their most ambitious scenario has 75% of capacity leaving via a non-Hormuz route by the end of that year. Paulus thus concludes that its forecast for Brent Crude futures, at $76 per barrel, may go lower as time goes by.

The oil crisis has been really good for China’s renewable energy sector

One of the big unintended consequences of the U.S. war against Iran has been the benefits it has delivered to China’s green technology sector. As it dawns on both nation-states and the private sector that being dependent on energy sourced from a war zone comes with obvious flaws, China’s exports of greentech have picked up, according to Beatrice Tanjangco of Oxford Economics.  

“This crisis represents a unique opportunity for China, which has built the knowledge and industrial base to supply clean energy and electrification technologies after supportive policies seeded domestic demand and expanded manufacturing capabilities. Firms headquartered in China account for a majority of global solar module and battery cell manufacturing capacity, electric vehicles, wind turbine components, and heat pump assemblies,” she said in a note to Fortune.

MORE FROM FORTUNE

MassMutual CEO says Americans’ share of the U.S. debt is going up $10 a day – Diane Brady

McConnell’s absence could jeopardize Republicans’ defense spending agenda as the Iran war escalates – Sasha Rogelberg

Stolen laptops, data breaches, secret moles, and recruiting-as-espionage. Here are the wildest claims in Apple’s lawsuit against OpenAI – Emily Forlini

How Adobe’s CMO is preparing for the AI-powered era of brand discovery – Ruth Umoh

Americans hate AI so much that politicians are starting to lose their jobs over it – Laura Mullenbach

Gen Z’s analog obsession is reviving a film camera market that digital killed – Rotem Rozental 

Elon Musk and Sam Altman are accusing each other of scamming investors as SpaceX and OpenAI jockey to lead AI revolution – Marco Quiroz-Gutierrez

NO WAY EBAY

The extraordinary story of how eBay staff stalked and terrorized two bloggers, ending with the indictment of six of them

Must-read in the NYT: The auction company’s security unit, at the behest of its CEO, sent Ina and David Steiner a bloody pig mask akin to those worn in the “Saw” horror movie, a funeral wreath, and a copy of  the book Grief Diaries: Surviving Loss of a Spouse. The Steiners had no idea who was threatening them. Terrified, they slept in separate beds in the hope that one of them would be able to call the police if someone tried to kill them in the night.

CHART OF THE DAY

Spending on AI tokens correlates with the stock prices of hyperscalers

If you ignore the abuse of the vertical axes on this chart from Torsten Sløk at Apollo Global Management, you can see that the price per million AI tokens rises and falls with the UBS Hyperscalers Basket Index, which tracks the largest publicly traded providers of cloud services for AI.

The correlation implies that if the cost of AI falls, so does the value of equity in the companies that supply computing power for those AI models—presumably because lower compute revenues mean lower earnings per share.

NETFLOPS

Netflix stock is down 40% since Reed Hastings left—but the bears have got this wrong, Wedbush argues

Shares in Netflix are down 40% since Reed Hastings left the board, Alicia Reese and her colleagues at Wedbush said in an email. Audience numbers have plateaued and its CPMs—the amount it can charge advertisers per 1,000 eyeballs—are in decline. “Elements of the bear case are real,” she said. However, Netflix plans to increase the ad load on the platform and extract higher prices for its live sports offerings, she said. That could double ad revenue in 2026 to $3 billion. Hence her price target of $118 on a stock currently trading at $73.

NUMBER OF THE DAY

2053

The year in which the human population will reach a peak of 8.9 billion before declining toward 7 billion by 2100, according to Wood Mackenzie’s interpretation of the United Nations’ estimates of global birth rates. The UN will update its World Population Prospects report this month, and Peter Martin, head of economics at Wood Mackenzie, notes that some of the UN’s estimates from the last report are coming in low. “China’s population contracted by 3.4 million people last year and now stands at 1.40 billion, some 9.6 million below the UN’s 2024 projection,” he said in an email.

THE FRONT PAGES TODAY

RIP the US state department – FT

‘Nobody underwrote for that’: Private credit faces a key test as higher rates squeeze borrowers – CNBC

Trump gave Saudi crown prince his backing for risky strikes on Houthis – Axios

Putin was Xi’s role model. Now he’s the junior partner. – WSJ

Premier Radev pulls Bulgaria out of coalition of the willing – Bloomberg

Judge denounces Trump’s IRS suit as improper exercise in self-dealing – NYT

ONE MORE THING

HR is now officially OK with you dating your coworkers (just fill out the forms first, please)

People have always fallen in love with their coworkers and, for decades, going to the office was one of the main ways to find a life partner. But then along came the internet, followed by the #metoo movement, and suddenly it seemed that dating a coworker was at best risky and at worst abusive. Many companies banned the practice.  

So Fortune’s Kristin Stoller posed the question to D.V. Williams, chief people officer at Match Group, in the debut episode of Fortune Office Hours, a new video series. Is it OK to date coworkers? 

Transparency is key, Williams says. Employees who wish to enter into one should understand their company’s policy and speak with HR about any disclosure requirements. Just as important, he says, is keeping any resulting “relationship drama” out of the office. 

A workplace relationship “only gets messy when things are hidden or you haven’t had the right conversations to understand that company’s policy. Other than that, it should be fun.”