(The opinions expressed here are those of the author.)

By Anna Szymanski

July 10 (Reuters) -

From the Editor

Hello Morning Bid readers!

The Strait of Hormuz briefly faded from the spotlight in

recent weeks amid chip stock ructions, World Cup drama, and heat

waves, but another round of tit-for-tat strikes between the U.S.

and Iran this week put the narrow waterway back at center stage.

Markets' response to the latest attacks has been relatively

calm, however, suggesting investors have seen this movie before

and believe the ultimate result will be a return to talks - not

all-out war.

The first wave of U.S. strikes against Iranian targets came on

Tuesday, along with the revocation of sanctions waivers on

Iranian oil, after repeated attacks on shipping in the strait.

Tehran responded by launching strikes on U.S. bases in the

region, before the two sides traded further blows on Wednesday

and Thursday. President Donald Trump initially said at the NATO

summit in Ankara, Turkey, on Wednesday that the memorandum of

understanding to end the conflict was "over" but later added

that he did not expect a return to full-fledged conflict.

This latest escalation is another indication of how emboldened

Iran has become during the 60-day negotiating period kicked off

with last month's interim ceasefire deal - and how

important control of the strait remains to Tehran. Investors

should thus consider not only how this latest spat will be

resolved, but also whether sporadic eruptions of violence in the

Gulf could be the new normal - which could be a nightmare

scenario for the region's energy producers.

Oil prices jumped to a multi-week high on Wednesday before

easing the next day. Brent crude remains well under $80 a barrel

for now, having last settled above that level on June 19.

Still, traders are left weighing a complex set of

geopolitical and logistical factors to determine how the

supply-demand balance in the market will shape up in the coming

months.

On the one hand, tanker traffic through Hormuz was at a near

standstill once again on Thursday. That's yet another blow to

OPEC+, which recently announced that it would boost its

production quotas by 188,000 barrels per day. The big questions

now are how much of the oil can actually get out of the Gulf

- and who will buy it?

But if traffic through Hormuz recovers, then the market could

actually face a potential glut of supply as Gulf producers

battle for market share. Indeed, global demand does not seem to

be as robust as many expected - at least not in the short term.

That has already forced producers, including Saudi Arabia, to

offer significant price discounts. The big loser in this race

could ultimately be OPEC+ itself.

Staying on the geopolitical front, the NATO summit in Ankara

this week may have been dominated initially by Trump's

aggressive comments on Iran and pledge to cut off trade with

Spain, but his meeting on Wednesday with Ukrainian President

Volodymyr Zelenskiy included a significant revelation: a pledge

to grant Kyiv a license to manufacture Patriot missile

interceptors. That's a major win for Ukraine, which has long

sought permission to produce the defensive weapons.

Ukraine's drone attacks on Russia's energy infrastructure - its

Achilles' heel - are clearly having an impact on the Kremlin.

Russia announced on Wednesday that it was banning diesel

exports to support its domestic market. That could be a huge

blow for the global diesel market, which has limited buffers

following the war in the Middle East.

The volatility in crude prices in recent weeks could create

more complications for policymakers worldwide attempting to make

sense of the inflation outlook.

The Federal Reserve's meeting minutes from June, released on

Wednesday, showed that a "few participants" saw a potential case

for immediate rate hikes, while several pointed out that price

pressures were becoming "more broad-based" - a sign, perhaps,

that energy prices are far from the only source of rising

inflation on the radar.

Concerns about price pressures remain widespread, as suggested

by a spike in bond yields globally this week that saw Japan's

benchmark 10-year government bond yield hit a 30-year high on

Thursday.

However, Japanese government bond yields dropped and the yen

rose on Friday after the country's finance minister said that

the government is aiming to steer the country's vast state

pension funds to "substantially" lift investments in domestic

assets.

Over in equities, semiconductor stocks remained one of the

biggest stories this week, turning highly volatile after their

massive run-up in the first half of the year. Shares in Samsung

Electronics slumped despite flagging a 19-fold jump in

second-quarter operating profit on Tuesday. South Korea's

chip-heavy KOSPI index then entered bear market territory on

Wednesday, although it snapped out of that on Friday as chip

stocks rallied, and it remains up more than 70% on the year.

It remains to be seen whether we're seeing a genuine rethink

of the AI narrative or simply a rotation following a remarkable

quarter - or perhaps a combination of the two.

One sign that AI euphoria remains strong came from Samsung's

rival SK Hynix, whose $26.5 billion U.S. share sale was heavily

oversubscribed. The South Korean chipmaker will make its Nasdaq

debut today.

This week was light on economic data, but the same is not

true next week, as U.S. consumer price inflation data for June

is due out on Tuesday. The earnings season will also kick off in

earnest with many big banks reporting, including JPMorgan, Bank

of America, Goldman Sachs, Wells Fargo and Citigroup.

Let's see if geopolitics steals the show yet again.

For more data-driven insights on markets and commodities, check

out Reuters Open Interest. You can learn:

* What do TAMALES have to do with President Trump and his

impact on markets?

* How have batteries gone from a niche technology to being

at the heart of the global energy system?

* Why might increased defense spending be bad for European

economies?

* How long can global oil refiners' boom time last?

* What does the return of "zombie smelters" say about the

aluminium industry?

* How is China challenging the centrality of the London

Metals Exchange?

* Will the White House's latest attack on clean energy mean

higher prices for U.S. consumers? (Spoiler alert: probably yes.)

* How can investors survive a momentum crash?

* What is the next frontier of European climate

adaptation? (Hint, it's not wind or solar).

I'd love to hear from you, so please reach out to me at .

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