Iran-backed Houthi militants fired missiles and drones at two Saudi Arabian oil tankers -- identified as the Encelia and the Layla -- in the Red Sea early Thursday, claiming the vessels violated a naval blockade the group declared against Saudi shipping earlier this week. UK Maritime Trade Operations reported that one tanker was struck by a projectile southwest of Al Shuqaiq on Saudi Arabia's Red Sea coast, causing a fire on board. Following the attack, the Encelia began broadcasting a 'not under command' signal, indicating possible loss of maneuverability.
The attacks drove Brent crude futures up as much as 4.6% to $98.44 per barrel, their highest level since late May, while West Texas Intermediate rose about 3.8% to $90.14, its highest since June 8. Brent's monthly advance of approximately 35% puts it on track for the third-largest monthly gain in a decade. The price surge compounded an already volatile energy market shaped by months of direct U.S.-Iran military exchanges and threats to Strait of Hormuz shipping.
President Trump escalated the confrontation, warning publicly that the U.S. would destroy an Iranian bridge or power plant each time Tehran attacks a ship in the Strait of Hormuz. Deutsche Bank analysts said in a morning note that fears of a widening conflict have 'fuelled speculation' that central banks could raise interest rates to tame a potential new inflation impulse. Oman's foreign ministry called for de-escalation, warning of threats to freedom of navigation in the region.
For businesses, the oil move carries direct cost implications across fuel, freight, and inputs linked to petrochemicals. Shipping insurers have already raised war-risk premiums for Red Sea transits, and tankers carrying Saudi crude to Asia have reversed course in recent days. With Section 122 import tariffs expiring tomorrow and successor Section 301 duties expected to follow, operators now face a dual cost-pressure event arriving simultaneously at the supply chain and energy line item.
Google parent Alphabet reported Q2 revenue of $119.8 billion, beating estimates, and Google Cloud grew 82% year-over-year. But the company's decision to lift its full-year capital expenditure forecast to a range of $195 billion to $205 billion -- driven by accelerating AI capacity demand -- sent shares down about 3.6% in premarket trading Thursday. CFO Anat Ashkenazi said the increase was 'primarily due to an acceleration in the delivery of capacity to meet growing demand.'
The European Central Bank was widely expected to leave its deposit rate unchanged at 2.25% at Thursday's July meeting, with market pricing showing a 95% probability of no change. The July session is a non-projection meeting, meaning no updated staff forecasts are published, raising the bar for any rate action. Analysts at ING described the expected setup as a 'hawkish-leaning hold,' with the ECB signaling readiness to act again at the September 10 meeting if energy-driven inflation persists.
MSCI's Asia Pacific equities gauge climbed 1% Thursday, with South Korea's Kospi rising 2.8% as investors bet regional chipmakers will benefit from surging AI infrastructure investment. Samsung Electronics and SK Hynix both gained more than 3%. The move followed Alphabet's capex raise and comes ahead of earnings this week from Intel, and next week from Microsoft, Amazon, and Meta -- all of which will reveal more about the scope of hyperscaler spending.
Intel is scheduled to report its second-quarter 2026 financial results after Thursday's market close, with consensus estimates of approximately $14.4 billion in revenue and $0.10-$0.22 non-GAAP earnings per share. The stock has risen roughly 163% year-to-date, driven by Data Center and AI revenue growth of 22% in Q1 and improving yields on its 18A manufacturing node, but shares have pulled back about 17% from their June all-time high. Options markets are pricing a 15% post-earnings swing, well above the historical average.
The Senate Commerce Committee unanimously approved the bipartisan Connected Vehicle Security Act of 2026, which would ban the import, manufacture, and sale of connected vehicles, software, and hardware linked to China, Russia, Iran, and North Korea. The bill, sponsored by Senators Bernie Moreno (R-Ohio) and Elissa Slotkin (D-Mich.), would take effect in January 2027 and also restricts vehicle sales by any automaker with more than 15% Chinese ownership -- a provision that would affect Mercedes-Benz. The legislation now heads to the full Senate.
The 10% Section 122 import surcharge, which replaced IEEPA tariffs after the Supreme Court struck them down in February, reaches its statutory 150-day limit at 12:01 a.m. Friday. The expiry could reduce the average effective U.S. tariff rate from roughly 13% to roughly 7%, but the administration is expected to roll out successor Section 301 duties of up to 12.5% on 46 trading partners. Small-business bankruptcies rose 67% in Q1 2026 versus a year earlier, a signal of how heavily the sustained tariff regime has weighed on smaller operators.
For small and mid-sized importers, Thursday is the last day to file protests on entries made under the Section 122 regime, which may generate duty refunds on liquidated shipments. The administration's Section 301 successor duties -- 12.5% proposed on 46 countries -- carry no statutory time limit and no fixed expiration, unlike Section 122. Businesses sourcing from Vietnam, India, Thailand, South Korea, Japan, or the EU face the highest uncertainty about what their landed costs will look like by next week.
Oil near $98 a barrel is not an abstraction for a business owner. Fuel surcharges from trucking and shipping carriers track crude with a lag of two to six weeks, and energy-intensive inputs from plastics to packaging will follow. Any operator who locked in fuel hedges or fixed-rate freight contracts recently has a cushion; those on spot pricing do not. This is the moment to recalculate the energy line in the budget and talk to logistics partners about exposure.
The Section 122 tariff expiry tomorrow sounds like relief, but operators should read it carefully. The flat 10% surcharge ending does not mean duties go away -- Section 301 replacement duties of up to 12.5% on 46 countries are expected to follow, without a sunset date. The window between the two regimes may be brief. Importers who have not yet modeled successor-duty scenarios for their primary sourcing countries should do so before purchase orders are released next week.