The prospect of a new Hormuz deal was close as this brief was sent. We're sceptical. Even if a deal is made, the prospects of it holding are not great while the US and Iran trade insults and Israel and the Houthis continue to apply pressure elsewhere in the region. However, even a short-term re-opening of the strait would be welcome, and the prospect has already seen prices falling. Likewise, the renewed prospect of progress on Gaza is welcome. But delivering Hamas disarmament, and persuading Israel to take a step back, look beyond current US diplomacy.

A summer of heatwaves, forest fires and migrant boats is set to distract European leaders at a time when the Ukraine conflict is intensifying. Ukrainian action is now reaching into the heart of Russia's economy and impacting Central Asian energy and fuel supplies. Russia's response is killing more Ukrainian civilians than at any period since 2022. We're not convinced Western diplomacy is up to the various challenges on its plate right now. Geopolitical risk analysis is more valuable than ever...

Resource Security·Middle East & North Africa

US, Iran and Oman close on an interim deal to reopen the Strait of Hormuz

Signs are positive for a Hormuz deal, despite both sides trading insults in the media. Iranian leaders reportedly approved a deal yesterday, and Washington may announce an interim 60-day agreement later today. Inbound ships would use a northern lane through Iranian waters, outbound ships a southern lane through Omani waters. No transit fees would apply, and the middle lane would be cleared of mines inside 30 days. Routing inbound traffic through Iranian waters would give Tehran a stronger influence on Gulf shipping, though what that amounts to in practice is untested. Thirty-day demining sounds ambitious, so a best case scenario would be the 60-day deal holding and then rolling over. Brent prices have fluctuated with the public back and forth but in general the market is priced for a reopening. But with ship recovery, use of different lanes, and the remaining risks, transits are not likely to return to normal for some time. Firms rebuilding freight and fuel assumptions should price a partial reopening, with a significant risk of closure and conflict returning, as happened in July.

Conflict & Instability·Middle East & North Africa

Hamas agrees to disarm, but Israel not yet signed up

Trump announced on 30 July that the Board of Peace had reached agreement on disarming Hamas and all other armed groups in Gaza. Egyptian, Qatari and Turkish mediators dealt with Hamas directly. A schedule for an inventory of Hamas weapons is due within 14 days. A Palestinian National Committee would hold and store those weapons, starting with heavy weaponry, production sites, depots and the tunnel network. An international verification commission and a stabilisation force of around 5,000 would oversee each stage, and Israeli troops would pull back to agreed lines as each stage is verified. Officials put the full process at 200 to 300 days. Israel has not publicly agreed, and Hamas says it will implement nothing unless Israeli forces withdraw as promised. Israel's October election gives Netanyahu's coalition partners every reason to resist a withdrawal.

Sanctions & Export Controls·Global

US adds 43 Chinese firms to the forced-labour import blacklist

The Department of Homeland Security added 43 Chinese companies to the Uyghur Forced Labor Prevention Act entity list on 31 July, effective 3 August. The list now covers 187 firms, a 30% rise and the largest single addition since the law passed in 2021. The new entries work in aluminium, apparel, copper, cotton and tomatoes. US customs treats any goods containing inputs from a listed firm as made with forced labour unless the importer proves otherwise. The burden reaches sub-tier suppliers, so a company holding no direct Chinese contract can still have a consignment stopped at the border. Aluminium and copper are a new addition and could impact engineering and construction supply chains. More firms will likely be listed before December, with steel and lithium already named as priorities.

Also this week

US and Japan buy yen together for the first time since 2011. The US Treasury sold euros from its own reserves to buy yen alongside Tokyo on 31 July, lifting the currency to a three-month high of 155.20 per dollar. The 2011 joint action pushed the yen down. This one props it up. Washington's concern is that a weak yen drags other Asian currencies with it, pulling investment towards Asia rather than the US. Tokyo's solo attempts in April and May faded. Only a Bank of Japan rate rise will hold this one. Trade & Supply Chains · Asia-Pacific

Italy reintroduces border controls with Spain after Ceuta. More than 60,000 people crossed from Morocco into Ceuta, Spain's North African enclave. At least 72 died and most have returned to Morocco. Italy suspended free movement with Spain on 30 July, and 22 EU member states signed a letter backing Rome. EU disputes continue on how to manage their borders and free movement. Politics & Governance · Europe & Eurasia

OPEC+ completes its rollback of the 2023 supply cuts. Seven members agreed on 2 August to add 188,000 barrels a day in September, the last remaining of the 1.65 million barrel supply cuts agreed in 2023. Quotas are expected to hold flat from there. Further price moves will come from demand or from Hormuz. Resource Security · Global

Ukrainian drones push Russian oil refining to a 24-year low. Ukrainian drones struck 18 Russian refineries in July, a monthly record. Crude processing fell to its lowest level since 2002. Moscow has extended its fuel export ban to January 2027, tightening supply for Central Asia and the Caucasus. Resource Security · Europe & Eurasia

Trump falters on Patriot production licence for Ukraine. Trump said on 31 July that Washington had not agreed to license Ukrainian production of Patriot interceptors, three weeks after telling President Zelensky it would. A deal is still likely, but the uncertainty will cause frustration in Europe. Defence & Security · Europe & Eurasia

Hungary shuts its only nuclear plant as the Danube runs dry. Hungary powered down the Paks plant on 2 August, the first shutdown in its 44-year history, after the Danube fell to a record low. Paks supplies close to half of Hungary's electricity. Resource Security · Europe & Eurasia

Saudi Arabia forms a 14-state Red Sea maritime alliance. Saudi Arabia and 13 other states announced a maritime defence alliance on 30 July covering Bab al-Mandeb, the Red Sea and the Gulf of Aden. The Houthis, who blockaded Saudi shipping in late July, have promised escalation, so the Red Sea trade will remain hazardous even if Hormuz reopens. Defence & Security · Middle East & North Africa

Taiwan rehearses a Chinese naval blockade for the first time. The 42nd Han Kuang exercise began on 5 August, a ten-day drill of more than 20,000 troops. Alongside the blockade scenario it tests relocating weapons production. That concedes those plants would be early targets. Defence & Security · Asia-Pacific

Al-Shabaab takes a key road junction in central Somalia. Al-Shabaab seized Teedaan in eastern Hiiraan on 2 August, a junction linking three central regions. Holding the road lets the group tax vehicles and move fighters. With the US threatening to withdraw logistics funding for the African Union mission later this year, the prospect of an Al-Shabaab resurgence has increased. Conflict & Instability · Sub-Saharan Africa

DR Congo's Ebola outbreak becomes its largest on record. The Bundibugyo outbreak passed 3,600 confirmed cases and almost 1,600 deaths by 30 July, the World Health Organization reports. Conflict & Instability · Sub-Saharan Africa