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Oil prices have roller-coastered overnight - higher on new Houthie attacks in the Red Sea and now lower on reports that a draft deal approval in imminent.

Up...

A Houthi military spokesperson said the group would escalate attacks on Saudi vessels in the northern Red Sea — the latest workaround for the kingdom’s exports to avoid the perilous Bab al-Mandab Strait off Yemen’s coast to the south. Exports from the Red Sea have become a vital lifeline for Saudi Arabia since the Iran war choked off shipping from the Persian Gulf.

Down...

Axios reported the US, Iran and Oman were nearing an interim, 60-day accord to reopen the waterway, with Washington aiming for an announcement later Wednesday. The proposal would involve no tolls or fees, with inbound vessels using a northern lane, and outbound traffic a southern one.

But in the short-term, and especially in light of the recent decline in refined product prices, all eyes are on the official inventory and supply data (which API reported a crude build and diesel draw).

API

• Crude +2.7mm (-2.1mm exp)

• Cushing +2.4mm

• Gasoline +200k

• Distillates -1.2mm

DOE

• Crude +2.48mm (-2.1mm exp)

• Cushing +2.36mm - biggest build since March

• Gasoline -1.64mm

• Distillates -3.47mm

After last week's huge crude draw, this week saw a modest (2.48mm) build in inventories while Cushing stocks soared 2.36mm barrels (the most since March). Products saw sizable draws...

The Trump admin drained another 2.84mm barrels (smallest since the start of the war) from the SPR last week, making a total decline of 110mm barrels since the start of the war...

Cushing stocks rose very marginally off 'tank bottoms'...

Seasonally, distillate stockpiles are now at their lowest since 1996, driven by a 5.2 million barrel draw on the Gulf Coast. That’s the largest pull on stocks for the region since February 2021.

US Crude production ticked up modestly last week - just shy of record highs...

US refiners are importing the most crude since May of this year as refiners continue to run hard, churning through over 17 million barrels of oil each day.

Bloomberg reports that Gulf Coast crude refinery runs fell but remained at the highest levels for this time of the year. The drop can be partly explained by a blip in operations at the Marathon Garyville refinery. The Louisiana facility shut down its 283,000-barrel-a-day crude unit and a vacuum distillation unit last week. The units were restarted on Monday.

Meanwhile, crude exports are holding below 4 million barrels a day, far from the nearly 6.5 million daily barrels earlier this year as the Iran war disrupted global supply.

WTI is lower and maintaining the decline after the official inventory data...

Even if a short-term deal to normalize commercial shipping is reached, however, it might still fail to end the war or resolve Trump’s concerns about the Islamic Republic’s nuclear program.

“It’s still very unclear who is negotiating with whom and what could come out of this agreement,” said Hamad Hussain, a climate and commodities economist at Capital Economics.

“As we’ve seen before, these deals can very easily collapse. That’s obviously a risk we’ll see persist, even after a deal may be announced.”

Meanwhile, Bloomberg reports that the Houthis remain a source of concern for shipowners. People familiar with the matter said this week that Saudi Arabia had held talks with the militants through Omani mediators in an effort to prevent the conflict from widening. They said the leading OPEC member is continuing to prepare military options should negotiations fail.

By Bas van Geffen, senior macro strategist at Rabobank

Phil Connors has woken up to another instance of the same day. The US, Iran and Oman are said to be close to a new deal to reopen the Strait of Hormuz. Axios reports that the US aims for an announcement today. So, Brent futures dropped to $79/barrel and equity markets rallied further, for the S&P 500 to set a fresh record high.

The reported deal could just as well have been written a couple of weeks ago. Axios prints that the deal includes an inbound shipping route through Iranian waters and outbound shipping via the Oman side, while parties work to clear mines from the middle of the strait. No tolls or fees would be charged for the 60-day period covered by this deal. That all looks very similar to the previous deal – that was torpedoed by renewed attacks on ships.

That wasn’t the only “agreement” in recent weeks that proved untenable (or completely non-existent). Will the groundhog see its shadow again today, or will the deal really hold this time? 

Even if this deal isn’t immediately sunk by a drone or missile strike, there is a long and risky road ahead. Negotiations are currently clearly focused on preventing new escalation, and the temporary deal does not offer permanent solutions for the key sticking points. 

For example, Reuters sources report that disagreement over transit fees after these 60 days persists. But that’s not the surprising part. Regional outlets suggest that the disagreement is over the amount charged. They claim that Iran demands a 7% fee, with exemptions for Chinese and Russian ships, whereas the US proposed 5%.

If this is even remotely true, that would mark a big shift from the US’ original stance that freedom of navigation is incompatible with any fees. Geopolitically, it would mark an even bigger defeat for the US. If the US cannot restore the status of the Strait of Hormuz, then surely Washington cannot expect to extract concessions on Iran’s nuclear programme.

So, President Trump may have to pick between a deal on Iran’s terms or escalating. That, in turn, suggests it could be matter of time before Trump expresses his frustration with the negotiations again, and we may be in for another few weeks of winter.

As we note in our Monthly Outlook yesterday, the danger is not repeatedly reliving the same trading day – in fact, that would make life a lot easier. The danger is that the cycle eventually breaks and the script changes. I would add that it may in part be up to traders whether that happens. As Phil realizes that he is reliving the same day over and over, he changes his behaviour – some days to the point of recklessness. 

Notwithstanding the decline in Brent, diesel and petrol prices remain high enough for governments to extend support measures. The Italian government announced an extension of the diesel tax cut through August 25, and Prime Minister Meloni said that the country would consider further financial aid if fuel prices continue to rise. 

High electricity prices add to the cost burden. The hot weather drives up demand for electricity while the drought forces Italy to substitute gas generation for hydropower (and various European countries have also temporarily shutdown nuclear power plants due to high cooling water temperatures.)

Accordingly, the Italian government has requested Brussels for leeway for its budget deficit today. EU rules include escape clauses for spending on defence and energy. Rome has indicated that it intends to use the full 0.3% allowance for energy measures and has requested 0.9% leeway for defence spending.

Elsewhere, the White House is reportedly drafting an import ban on Chinese transceivers, which are used to transmit data between servers within datacentres. 

Slowing the ascent of Chinese AI and related sectors may be part of the rationale. Chinese manufacturers dominate the market for these fibre-optics transceivers; its AI models are competing with American models; and China’s chip manufacturing is also improving. 

On top of supply chain security and protection for the domestic industry, cybersecurity may be another reason for this ban. The news follows a report from the House Committee that Chinese telecommunications companies remain connected to US datacentres, even though the FCC banned these companies from connecting directly to US networks. Experts warn that these components could potentially allow China to exfiltrate data or disrupt services.

Following the mixed picture from yesterday's Manufacturing surveys (ISM 4 year high, S&P Global 3 mo low driven by the bifurcated 'AI vs The Rest' economy), this morning's Services sector surveys were 'expected' to show the opposite (ISM down, S&P Global up) all in the face of fading hard data.

• S&P Global US Services PMI jumped from 51.2 (final June) to 53.6 (prelim July) to 54.6 (final July) - the highest since Oct 2025

• ISM US Services PMI rose from 54.0 to 54.1 (less than expected 54.5).

Source: Bloomberg

That was S&P Global's Services PMI's biggest monthly jump since May 2024...

Under the hood, S&P Global data shows that growth in new work strengthened to a 19-month high, while business confidence regarding activity over the coming 12 months was the strongest since last November.

Private sector employment rose for the first time since April.

But, input price inflation accelerated to the highest since November 2022, pushing composite selling prices up at the quickest pace in exactly one year.

But, the ISM Survey showed considerably differences with employment data tumbling back into contraction (below expectations), pries picking up (more than expected), but new orders rising more than expected...

• Prices Paid 70.3, Exp 65.0

• Employment 47.4, Exp. 51.2

• New Orders 57.2, Exp. 55.9

A somewhat stagflationary signal...

“The final July PMI has come in stronger than the earlier flash estimate, signaling an encouraging acceleration in economic growth at the start of the third quarter," according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

The Composite PMI points to GDP rising at an annualized rate of 2.3%, following a 1.5% increase indicated for the second quarter.

Business optimism has meanwhile climbed to its highest since last November, but Williamson warns:

“Some caution is needed in interpreting these improvements, as the stronger performance partly reflected temporary factors. We note that the biggest improvement in demand in July was reported among consumer-facing service providers, spending on which surged at a rate not seen for over four years linked to the FIFA World Cup and US Independence Day events.

More importantly, businesses benefited in early July from a tailwind of reduced geopolitical uncertainty and lower oil prices."

But, with hostilities in the Gulf escalating as the month progressed, the geopolitical environment is now likely once again acting more as a headwind to growth again while exacerbating already elevated price pressures.

...unless, of course, an actual deal is reached.

U.S. telecom stocks fell in premarket trading after SpaceX, during its first earnings call as a publicly traded company on Tuesday evening, outlined its vision for Starlink to challenge Verizon, T-Mobile, and AT&T.

This was the market reaction to discussions surrounding @Starlink Mobile during the SpaceX Earnings Call.

The big three telecom giants fell. The same thing happened when SpaceX acquired spectrum last year. https://t.co/4FfvFQdOTB pic.twitter.com/tAG7ywTxY7

— Nic Cruz Patane (@niccruzpatane) August 4, 2026

SpaceX President & COO Gwynne Shotwell told investors about its future impact on big telecom: "Roughly, between them, $600 billion a year. I anticipate us to be able to acquire quite a few of their customers. Our service will be better. We will eliminate dead zones leveraging the satellites in orbit. It will be better during any natural disaster. I'm quite excited about Starlink Mobile."

For readers, the emergence of Starlink Mobile and Musk taking on the big three U.S. wireless operators- Verizon, AT&T, and T-Mobile - is nothing new.

Elon going for the phone after all

SpaceX Plans New Starlink Mobile Service for US Consumers: FT

— zerohedge (@zerohedge) June 26, 2026

One of the clearest signals was SpaceX's $17 billion deal for EchoStar wireless spectrum last year, followed by a recent trademark filing for "Starlink Mobile."

Our note from June:

• Musk's Starlink Plots To Become A Mobile Carrier; TD Cowen Sees Possible T-Mobile Buyout

For more color on Starlink Mobile and its implications for US telecom operators, Bernstein analysts titled their latest note "US Telecom: Starlink Jabs... No Knockout Yet," offering clients a clearer view of what may come next.

US Telecom stocks traded lower in after-hours trading following SpaceX's Q2 results and earnings call (covered by Harned), with Telecom investor attention focused on management's comments regarding Starlink's BB and wireless ambitions. While much of what was said was not new, the call offered clearer articulation of SpaceX's long-term vision and the various building blocks underpinning it. Management reiterated those ambitions at a time when Starlink is scaling subs, enterprise revenue, spectrum holdings, and satellite capacity simultaneously, making their comments more interesting.

To us, the incremental takeaway was not that Starlink is suddenly becoming a threat to broadband and wireless incumbents. Rather, it was a reminder that SpaceX continues to invest toward that outcome, and that the debate could remain an overhang on the sector for years rather than quarters.

What was said? More than a jab.

On broadband, management's central message remains unchanged: a major capacity and performance inflection is coming with V3 satellites. They are roughly an order of magnitude more capable than V2 satellites in orbit today and that SpaceX expects to launch roughly an order of magnitude more of them, implying a roughly 100x increase in delivered bandwidth over time. Management repeatedly described V3 as a step-function increase in Starlink's addressable opportunity and revenue potential.

The company also continued to emphasize the growing importance of enterprise and government customers. Management noted that the segment has the potential to eventually match or exceed the consumer business in terms of revenue, and highlighted continued traction in aviation, government contracts, and enterprise connectivity, areas that generally carry higher revenue quality and stronger economics.

On wireless, management outlined a vision that extends well beyond the D2D services currently being introduced with carrier partners. The strategy appears to consist of four components: (1) satellite-based D2D coverage; (2) recently acquired 65MHz of spectrum from EchoStar; (3) Some form of terrestrial radio infrastructure; and (4) a distributed small-cell architecture leveraging installed Starlink CPEs. While each component is insufficient, the collective strategy is... interesting.

Our view: BB, yes. Wireless? Not so fast.

We continue to view Starlink BB as a credible and growing long-term competitive threat to incumbent operators, particularly at the lower-end of the market where "good enough" BB is often sufficient. In our view, that risk remains higher for FWA and value-oriented BB subs, segments where Cable operators generally have greater exposure (vs. Fiber). We can debate the extent of the potential impact, but the overhang will continue as Starlink continues to expand its capacity and price their products more competitively. As capacity expands and operating leverage grows, the company should become increasingly capable of competing aggressively on price while simultaneously improving service quality. The rapid growth of higher-value enterprise and government revenues coupled with global scale only reinforces that advantage.

Wireless is where our view diverges somewhat from the market reaction. We continue to see D2D satellite service, whether offered by Starlink or others, primarily as a complementary service to incumbent nationwide cellular networks rather than a substitute for them in the foreseeable future. The fundamental use case remains coverage enhancement, not replacement. D2D has yet to solve the indoor unlink challenge. While additional spectrum may improve capacity and performance, it does not eliminate the fundamental physics associated with transmitting from a handheld device to a satellite, particularly indoors.

Likewise, the distributed small-cell concept described on the call is intriguing, but we remain skeptical regarding practical deployment. Such a network would require a dense concentration of Starlink installations in precisely the areas where consumers live, work, and travel: urban cores, suburbs, and major transportation corridors. In many respects, the concept resembles prior visions of a facilities-based wireless network leveraging a broad Wi-Fi APs. Interesting in theory, but considerably more difficult in practice.

For now, we continue to believe Starlink BB represents the more immediate and credible long-term competitive risk. While Starlink wireless ambitions will likely remain an overhang on the sector, we do not believe Starlink Mobile is poised to take meaningful share from incumbent wireless operators anytime soon.

Professional subscribers can read more on SpaceX, Starlink, and Musk here at our new Marketdesk.ai portal.

Authored by Kimberley Hayek via The Epoch Times,

A California man carrying ammunition and with a gun in his car was arrested Sunday at President Donald Trump’s Los Angeles-area golf course after authorities say he was observed walking through the grounds, taking photographs as well as video, and appearing to monitor security preparations two days before a scheduled fundraiser there that will feature the president.

The Los Angeles County Sheriff’s Department announced the arrest Tuesday as Trump prepared to land in Los Angeles for a Republican National Committee fundraising dinner at the Trump National Golf Course. The event will take place in the coastal suburb of Rancho Palos Verdes, just south of Los Angeles.

Deputies said Jeanine John Taele, 38, of Downey was carrying a 16-round magazine with ammunition in his pocket when they contacted him. A loaded pistol was recovered from his car, which had been parked on the golf course’s property.

He was arrested on suspicion of carrying a concealed firearm and possessing prohibited ammunition. Authorities also said he had already been under investigation by the El Segundo Police Department in an unrelated robbery case from last year.

Taele’s bail has been set at $250,000. He faces possible charges related to a large-capacity magazine, short-barreled rifle/shotgun, and the 2025 robbery.

Detectives assigned to the FBI’s Joint Terrorism Task Force obtained and executed a search warrant Monday at Taele’s residence, where they recovered a range of items that included firearms, magazines, ammunition, body armor and notebooks containing what the sheriff’s department called “concerning statements.”

The department highlighted that there is “no credible threat to our communities.”

Trump has owned the Rancho Palos Verdes property for years. The course has held political and private events in the past.

Plainclothes federal agents first reported the suspicious individual on the golf course Sunday afternoon, and deputies from the Lomita Station responded. They made contact with Taele, and discovered the ammunition and the loaded firearm.

The totality of the circumstances—the photography and video activity, and the weapons—led to the detention and charges.

According to the sheriff’s department, agents saw Taele walking through the property apparently focused on security-related activities taking place ahead of Trump’s visit. They have yet to describe the writings in the notebooks. They also have not revealed whether Taele knew of the president’s forthcoming visit. Trump is also scheduled to stop in Nevada on the trip.

Trump properties have in the past been the scene of at least one Trump assassination plot. In a separate 2025 case, a jury found a man guilty of attempting to assassinate Trump at his Florida country club.

A federal judge on Feb. 4 sentenced Ryan Routh to life in prison for attempting in 2024 to assassinate Trump, who was at the time running for president. Routh was also sentenced to seven years behind bars on a gun charge and ordered to pay a $500 fine.

President Trump said late Tuesday that talks with Iran are "moving along very nicely" - in a highly fluid and ambiguous situation where it appears the two sides are only interacting indirectly at best.

But the Iranian side has continued to insist that there are currently no peace or ceasefire talks happening, but only the Iran-Oman negotiations which focus on reopening the Strait of Hormuz and setting terms of how it will be managed. Consistent with this narrative, Al Jazeera freshly cites Iran's state broadcaster IRIB which reports that talks between Iran and Oman over the Strait of Hormuz "have nothing to do with the United States". But Washington is presenting it as a US-Oman deal for the strait's reopening, even if it fundamentally remains an Iranian-Omani proposal.

Trump in his latest comments echoed his Treasury Secretary from the day prior, saying, "It could happen. Tomorrow or the next day." This was on the heels of traveling to Los Angeles yesterday for a fundraising event hosted by the Republican National Committee. "A lot of progress has been made."

He told Fox that the White House is now having "very good discussions" with Iranian officials as part of an "all-day negotiation" and that the Strait of Hormuz reopening "is going to be open very soon."

"If they back out again, they are going to get hit really hard," the president told the outlet. He had said the same by close of last week, but by the weekend reversed course and decided to refrain from attack Iran again.

According to Bloomberg, "The US, Iran and Oman are preparing to announce a 60-day agreement on shipping through the Strait of Hormuz" - but the Iranian side has not affirmed this.

So as it stands, Tehran says it is driving the Oman talks and that Washington has been sidelined, while the White House claims that it has directly involvement in shaping the outcome.

But all sides do seem in agreement that the technical details and mechanics of the deal are currently being worked on. According to the latest outline of what this is expected to look like via CBS:

Under the current proposal, ships entering the Strait would use the channel closest to Iran, with Iran coordinating inbound traffic, while vessels leaving the strait would use the Omani side, with Muscat managing outbound traffic. The proposal also includes a "service fee," with the revenue split between Iran and Oman.

According to the source, the broad outlines have largely been agreed upon, with the remaining discussions focused on implementation and timing. Axios reported something similar, in which the US is nearing a Hormuz deal. Axios added that no tolls or fees would be charged during the 60-day period and the parties would work on clearing naval mines from the median lane of the strait within 30 days.

As for the claim of 'no tolls', this could once again be just semantics, given the Iranian and Omani sides have consistently signaled the need for fund collection under the headers of safe navigation, logistics, and environmental protection.

There has also been some progress on agreements for third-party demining operations. But as Rubio reminded the world yesterday, Washington still insists resolving the nuclear issue - something which the Iranians still say can only be broached after the conflict is ended and there is peace.

Below is the version of where things stand via Axios:

• All inbound traffic of ships through the strait and into the Gulf would go in a northern lane through Iranian waters.
• All outbound traffic through the strait and into the Arabian Sea would go in a southern lane through Omani waters, in coordination with Iran.
• No tolls or fees would be charged during the 60-day period.
• The parties would work on clearing naval mines from the median lane of the strait within 30 days.
• After the median lane is cleared, it would be used for inbound and outbound traffic under the terms of a permanent arrangement to be negotiated between Oman and Iran.

More regional commentary serves as a reminder of the significant obstacles that remain toward reaching a final peace, much less the full reopening of Hormuz Strait:

But while Iranians are saying that, at this point, talks are limited to Iran and Oman, it goes without saying that the US is a key factor. We’ve got a report from state TV today citing an informed source who said that even if a deal were reached today, the breach of the Memorandum of Understanding agreement by the US means there won’t be a reopening of the strait. One of the key points of concern for the Iranians regarding the strait is the removal of the naval blockade by the Americans. They have been constantly saying that this is one of the pre-conditions.

If Axios and some other major MSM reports are to be believed, the scheme is advancing on the Iranian side. "Two regional sources said Araghchi agreed in principle over the weekend but still needed approval from Iran's Supreme Leader, Mojtaba Khamenei, and the Supreme National Security Council," writes the publication. "A U.S. official and a regional source said Iranian leadership completed its approval process on Tuesday."

An interim maritime arrangement, inside a Memorandum of Understanding, within a ceasefire.

It's a diplomatic turducken. https://t.co/WpXke2brda

— Ali Vaez (@AliVaez) August 5, 2026

If all the above comes into force, it will widely be seen as a victory for Iran. It will leave Iran with greater control over energy transit than before the war. Simultaneously this would be Trump essentially cutting and running in order to finally extricate American forces from the deepening quagmire, while approaching the six-month mark since Operation Epic Fury started.

For example, even the NY Times admits, "Iran and Oman are closing in on an agreement to reopen shipping traffic in the Strait of Hormuz, according to Iranian and American officials, but if the accord goes into effect it could come at a high price — ratifying Tehran’s control over what, before the war, was an open, international waterway." While markets would breath a sigh of relief, Tehran would be in the driver's seat geopolitically.

US officials cited in the same report have only said the Hormuz scheme would the "temporary" - and so the ongoing contrasting interpretations suggest another tenuous and shaky agreement in the works.

"But if, ultimately, Iran asserts continued control over the passageway, the opening might come with a geopolitical cost. Iranian officials say they are designing the accord to ratify their capacity to control the strait and therefore retain strategic leverage that they did not employ before the war," the NYT also wrote.

For yet another quarter, the Treasury's Quarterly Refunding offered no surprises, which considering the state of the US bond market is probably not a bad thing. 

In its 8:30am ET report, the US Treasury retained its previous guidance for future debt issuance, signaling no change in note and bond auction sizes well into 2027 even as federal borrowing needs balloon to stratospheric levels (and will explode once the AI bubble bursts leading to catastrophic consequences for corporate bonds). 

As for next week, the Treasury will hold $125 billion of refunding auctions, in line with estimates, which will be made up of:

• $58 billion of 3-year notes on Aug. 11
• $42 billion of 10-year notes on Aug. 12
• $25 billion of 30-year bonds on Aug. 13

The refunding will raise new cash of approximately $28.7 billion, the Treasury said.

Based on current projections, officials expect to maintain current sales amounts for nominal coupon securities and floating rate notes "for at least the next several quarters" - the same market-soothing language which the department has used in its quarterly debt-issuance strategy statement ever since the Janet Yellen "Activist Treasury Issuance" days of early 2024.

On bills, “based on current forecasts, Treasury expects to maintain current auction sizes in benchmark bills in the coming weeks”; and in "late-August, Treasury anticipates issuing a short-dated cash management bill."

The language and schedule is in line with the expectations of many dealers, who predicted Treasury Secretary Scott Bessent and his team would refrain from tweaks given that longer-dated yields have climbed in recent months. Benchmark 10-year yields hit their highest since he took office last week, making them all the costlier for the government.

The Treasury also retained its suggestion from May that it’s biased toward the shorter end of the yield curve for any future increase in coupon auctions. It said it’s monitoring growing bill demand and continuing to evaluate the situation “with a focus on trends in structural demand and potential costs and risks of various issuance profiles.”

Of course, the lack of boosting coupon debt means that the Treasury’s reliance on Bills and other short-term securities that mature in up to a year, will deepen even more, in a strategy dealers have dubbed “T-bill and chill.”

The ratio of bills to outstanding debt is now historically high, however, running the risk of debt-servicing costs becoming sensitive to shocks — at a time traders are betting the Federal Reserve will be forced to tighten monetary policy in coming months.

The problem is that current auction sizes won’t leave the Treasury in position to raise fresh cash as time goes on, which means the T-bill share of debt will climb inexorably if issuance isn’t changed. Borrowing needs, meantime, continue to swell. The Treasury on Monday stepped up its estimate for borrowing for the current quarter to $739 billion, up $68 billion from May, mainly due to lower projected cash flows. Meanwhile, total US debt will hit $40 trillion in two weeks.

According to Bloomberg, some strategists have linked Bessent’s reluctance to alter forward guidance to the looming November congressional elections, and preferring to avoid any debt-issuance tweak that risked sending yields higher.

Of course, the longer the Treasury holds off on signaling a change, the more dramatic and sudden the shift will need to be when it happens. But for now there is a market meltup to engineer until the midterms, at which point all bets are off. 

The Treasury Borrowing Advisory Committee in the past has advised the Treasury to seek an average of 20% for the share of T-bills, but officials haven’t offered their own clear guidance on where their tolerance level may lie. For now, demand remains robust for bills, from money market funds to the Fed - which has been recycling maturing mortgage securities into bills.