The United States and Iran paused hostilities at the end of July 2026, briefly reducing tensions in the Middle East and causing oil prices to fall sharply [1, 2, 3, 4, 5, 6]. Brent crude dropped below $90 per barrel, declining about 6-7% in early trading on July 26 and 27 [1, 2, 3, 4]. This decline helped Wall Street indexes surge on July 27, with the Dow Jones rising 489.98 points (0.94%) as investors welcomed the calmer outlook [1, 4, 5, 6].
US crude inventories fell by 3.3 million barrels in the week ending July 24, applying upward pressure on oil prices despite the pause [7]. However, on July 28 and 29, the South Korean stock market suffered sharp selloffs amid fears over AI-related semiconductor investments. The KOSPI index triggered circuit breakers two days running, with SK Hynix shares plunging nearly 20% on July 29 after a 15% drop the day before [8, 9]. The selloff was driven by investor concerns over whether large AI investments would generate expected returns [8]. Around the same time, China announced a breakthrough in domestic advanced photolithography technology, adding pressure on regional tech stocks [9].
Renewed US and Saudi strikes on Iran-aligned forces in Iraq and Iranian missile attacks on US bases in Jordan at the end of July escalated tensions and pushed oil prices higher on July 29 [10, 7]. Iran's Islamic Revolutionary Guard Corps claimed it struck two oil tankers passing through the strategic Strait of Hormuz on July 31, causing other tankers to turn back [11, 12]. The strait has remained largely closed to shipping since hostilities resumed five months ago, severely disrupting global energy shipments [11, 12]. Brent crude prices rebounded to about $87 per barrel after these renewed attacks, though sources conflict on the exact level [s1,s5,s6,s7 vs s11].
Investors remain focused on upcoming US Federal Reserve interest rate decisions scheduled for July 29-30 and major corporate earnings reports, especially from tech companies [1, 2, 3, 4, 5, 6]. The Fed, now led by Chair Kevin Warsh, is widely expected to keep rates unchanged this week but signal possible hikes later in 2026 [1]. Thomas Hayes, chairman of Great Hill Capital, said, "The Fed is not going to move this week. It would be difficult to justify a hike based on a short-term spike in oil prices" [1].
US President Donald Trump commented amid rising tensions, stating, "All you can do is keep winning, then eventually something will happen" [12].
Market watchers are awaiting the Fed announcement later today, while regional geopolitical dynamics remain volatile following the Iran attacks on July 31 and ongoing disruptions in the Strait of Hormuz.
