U.S.-Iran Tensions Escalate Sharply as Risks Surrounding the Strait of Hormuz Persist

Daily News

Summary:

The informal ceasefire collapsed as Iran launched missiles at a U.S. military base in Jordan; Oman proposed a new mechanism for jointly managing the Strait of Hormuz......

【Highlights】

1. The informal ceasefire collapsed as Iran launched missiles at a U.S. military base in Jordan

2. U.S. and Israeli leaders met to discuss Iran's nuclear issue

3. Oman proposed a new mechanism for jointly managing the Strait of Hormuz

4. U.S. says Iran launched multiple missiles in an attack on a U.S. military base

5. Consumer confidence unexpectedly declined, with limited expectations for improvement in business conditions

6. U.S. June goods trade deficit narrowed by 4.2%

【Details】

The informal ceasefire collapsed as Iran launched missiles at a U.S. military base in Jordan

According to foreign media reports, U.S. officials said Iran launched multiple ballistic missiles at a U.S. military base in Jordan. This marked Iran's first missile attack on a U.S. base in the region since the United States suspended military strikes against Iran last Friday. U.S. Central Command subsequently confirmed that the attack occurred at 5:45 p.m. Eastern Time on July 28. Iran attempted to launch a surprise attack against U.S. forces stationed in the Middle East, but all incoming missiles were successfully intercepted. Central Command said U.S. forces remained on high alert and maintained a heightened state of readiness.

U.S. and Israeli leaders met to discuss Iran's nuclear issue

On the 28th local time, U.S. President Donald Trump met with visiting Israeli Prime Minister Benjamin Netanyahu at the White House. Israeli officials said the meeting lasted approximately one hour. The White House subsequently described the talks as “positive and constructive.” A senior official in the Israeli prime minister's office said the meeting was held in a positive atmosphere, with the two leaders discussing a range of regional issues, with Iran's nuclear program emerging as a central topic. Following the meeting, the United States and Israel reaffirmed their shared commitment to preventing Iran from acquiring nuclear weapons and exchanged views on strengthening the U.S.-Israeli alliance and expanding opportunities for regional cooperation in the Middle East.

Oman proposed a new mechanism for jointly managing the Strait of Hormuz

A Gulf regional source revealed on the 28th that Oman had proposed to Iran a regional mechanism for jointly managing shipping through the Strait of Hormuz, under which vessels transiting the strait could make voluntary contributions. Neither Oman nor Iran has officially confirmed the report.

The unnamed source said the proposed mechanism was modeled on the management of the Strait of Malacca, under which users would voluntarily contribute to a fund supporting the maintenance of the shipping route, including environmental protection and search-and-rescue operations. Oman's latest proposal has reportedly received support from several regional countries. It remains unclear how Iran will respond. On the 27th, Iranian Foreign Minister Abbas Araghchi held separate phone calls with the foreign ministers of Oman and Saudi Arabia to discuss the Strait of Hormuz.

According to a statement issued by Iran's Foreign Ministry, Araghchi emphasized the need to strengthen cooperation during the calls. An Omani diplomatic delegation arrived in Tehran, the Iranian capital, on the 24th. The visit was reportedly aimed at establishing an appropriate mechanism for managing shipping through the Strait of Hormuz. According to Iranian sources on the 26th, Iranian Foreign Ministry spokesman Esmaeil Baghaei said Iran and Oman had discussed common principles and operational mechanisms for managing safe navigation through the Strait of Hormuz. He said the talks had been productive and had made some progress. The Omani delegation left Tehran on the 25th, but technical and political consultations between the two sides would continue.

Data from global market intelligence firm Kpler showed that despite the suspension of mutual attacks between the United States and Iran, the number of cargo vessels transiting the Strait of Hormuz remained in the single digits per day from the 24th to the 26th. According to an Iranian official familiar with the matter, six vessels with their navigation and positioning systems switched off attempted to transit an “illegal and unsafe” route in the southern part of the Strait of Hormuz early on the 27th. One of the vessels was involved in an accident, while the others were directed back into the Persian Gulf.

U.S. says Iran launched multiple missiles in an attack on a U.S. military base

U.S. Central Command said that at 5:45 p.m. Eastern Time on Tuesday, Iran's Islamic Revolutionary Guard Corps launched multiple ballistic missiles from Iranian territory in an attempt to attack U.S. forces stationed in the Middle East. All of the missiles were successfully intercepted.

Earlier, President Trump met with Israeli Prime Minister Benjamin Netanyahu at the White House to discuss Iran's nuclear issue. Trump also held a closed-door meeting with Ukrainian President Volodymyr Zelenskyy, who was visiting Washington. The two sides discussed Ukraine's production of interceptors for the Patriot air defense system and efforts to revive diplomatic efforts to end the Ukraine crisis, among other issues.

Following Trump's meetings with the leaders of Israel and Ukraine, Iran reportedly launched missiles targeting a U.S. military base in Jordan. Iranian media outlet Press TV reported that Jordan came under missile attack and that explosions were heard.

Consumer confidence unexpectedly declined, with limited expectations for improvement in business conditions

A survey released by the Conference Board on Tuesday showed that U.S. consumer confidence unexpectedly declined in July, with respondents expecting only limited improvement in business conditions over the next six months. The consumer confidence index fell to 90.8 this month from an upwardly revised 92.2 in June, below the 92.4 expected in a Bloomberg survey. Dana Peterson, Chief Economist at the Conference Board, said consumer confidence edged lower in July, continuing the overall downward trend that has been evident since the end of 2021. Consumers' assessments of current business conditions and the current labor market both weakened.

Peterson said consumers expected only limited improvement in business conditions over the next six months, although their expectations for the labor market became slightly less negative. Expectations for household income growth also moderated but remained broadly optimistic. The survey showed that consumers' average and median one-year inflation expectations were “less elevated” this month, while consumers planned to increase spending on services over the next six months. A survey released by the University of Michigan earlier this month showed that U.S. consumer sentiment rose to its highest level since February in July as oil price pressures eased. However, renewed tensions in the Middle East could weigh on consumer confidence going forward.

U.S. June goods trade deficit narrowed by 4.2%

The U.S. goods trade deficit narrowed in June, mainly due to a decline in imports. Despite the narrower deficit, trade was still expected to weigh on second-quarter GDP growth. The goods trade deficit stood at $101.5 billion in June, narrowing 4.2% from the previous month, compared with the market estimate of a $100 billion deficit. In the three months through the end of June, the average goods trade deficit remained above the first-quarter average.

In June, goods imports fell by $8.2 billion from the previous month to $306.2 billion, remaining at a relatively high level and still up 16.6% year over year. Goods exports declined by $3.8 billion month over month to $204.7 billion.

【Today's Focus】

09:30 (UTC+8) Australia June CPI

16:00 (UTC+8) Switzerland July ZEW Investor Confidence Index

01:30 (UTC+8) Bank of Canada releases the minutes of its monetary policy meeting

02:00 (UTC+8) U.S. July interest rate decision

02:30 (UTC+8) Federal Reserve Chair Waugh holds a monetary policy press conference

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