Oil jumps after Iran attempts ‘surprise attack’; chip stocks slump further as AI sell-off continues – business live

Rolling coverage of the latest economic and financial news

The attempted attack by Iran on US forces have thrown “cold water on the idea of a swift de-escalation in the Persian Gulf”, analysts at the broker ING have warned.

Warren Patterson and Ewa Manthey wrote in a note this morning:

With Saudi oil infrastructure increasingly targeted, the risk of more prolonged supply disruptions grows. There are reports that the 400k b/d Jazan refinery in Saudi Arabia has shut following Houthi attacks over the weekend. If confirmed, this will only add to tightness concerns in the refined products market already dealing with disruptions from the Persian Gulf, as well as Russia.

…Meanwhile, tanker traffic through the strait of Hormuz remains essentially halted. While Iran and Oman have held talks on managing vessel transits through the strait, Iran has rejected Oman’s proposal for a 50-50 shipping plan. It would facilitate an inbound route on one country’s side and the outbound route on the other’s. Instead, Iran wants oversight of both inbound and outbound vessels.

QatarEnergy has reportedly extended its force majeure for buyers in Asia and Europe to as far as the end of September. There have also been reports of QatarEnergy looking to subcharter an LNG carrier until the end of October, given the ongoing disruptions to Qatari LNG exports.

EU LNG imports are on track to fall a little more than 25% YoY in July, which is making the job of refilling storage more difficult. EU gas storage is 56% full at the moment, below the 10-year seasonal average of 72%. Heatwaves across Europe will only add to the difficulty in filling up storage ahead of the winter. Tighter-than-usual storage at the start of the heating season suggests that gas prices will remain elevated through the winter, with the risk of spikes higher.

All that leaves a volatile backdrop ahead of today’s FOMC decision, which is the most finely poised in years in terms of market pricing. With a 32% chance of a rate hike today priced as of last night, this is the most uncertain that the market has been on whether the Fed will change rates going into a meeting since December 2018, when the eventual 25bps rate hike was about 65% priced the day before.

We’ve seen considerable volatility in the July hike pricing over the past couple of weeks, falling as low as 10% in mid-July following the soft June US CPI print but rising to as high as 38% on Monday. So with chair Warsh shying away from policy guidance, we’ve seen one regime shift compared to the past few years when markets received a steer from officials’ commentary or via the financial press.

7am BST: Aberdeen half-year (HY) results, Greggs HY, Airbus HY, Aston Martin Lagonda HY, Campari HY, Danone HY, Deutsche Bank Q2, Hermès HY, L’Oréal HY, Porsche HY, Procter & Gamble Q4/FY, Reckitt Benckiser HY, Rio Tinto HY, Standard Chartered Q2/HY, UBS Q2

9.30am BST: ONS workless households data

7pm BST: US Federal Reserve decision on interest rates

9pm BST: Microsoft Q4/FY

9.30pm BST: Meta Q2