Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.
Today, we’re looking at why the Iran ceasefire isn’t a return to pre-war oil markets, what the US blocking Anthropic’s models means for AI labs, and why Russia’s appearance in British waters is sharpening the need for defence spending.
But first, our number of the week…
3.75%
That’s where the Bank of England held interest rates this week as falling oil prices eased the inflation outlook. The vote wasn’t unanimous, but it does show officials hesitant to risk disrupting the UK’s growth despite price pressures.
Sidekick Takeaway: For central bank officials, the looming question remains whether the energy spike resulting from the Iran War will prove transitory. With oil once again flowing through the Strait of Hormuz, policymakers may have some additional breathing room.
Only have a minute to read? Here’s the TL;DR:
- The US-Iran ceasefire has taken effect, and oil is once again moving through the Strait of Hormuz. However, the deal only guarantees toll-free passage for 60 days, after which Iran is preparing to charge for transit through a chokepoint that was previously free. Energy markets could be left in a structurally worse position than before the war.
- The US has ordered Anthropic to obtain a licence before offering its most powerful models to any foreign national, forcing the firm to disable them for every customer. The move reverses a June order that ruled out AI licensing in the US and could set a precedent for the wider sector ahead of hotly anticipated IPOs.
- A Russian frigate fired warning shots near a British sailboat days after the Royal Navy seized a Russian oil tanker in the Channel. Separately, the UK also issued its largest-ever Russia sanctions fine. The episodes sharpen the case for Britain’s pledge to lift defence spending towards 3.5% of GDP, despite stretched public finances.
It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
Toll Order: The Iran Deal Isn’t a Return to Pre-War Conditions
After months of uncertainty, oil is once again flowing through the Strait of Hormuz.
Trump’s interim deal with Iran has taken effect, and the relief has been swift. Vessels carrying nearly 10 million barrels are transiting or queued outside the strait.
But the reopening isn’t a return to normal.
Before the war, crude moved freely through the Strait of Hormuz. Now, Trump’s 14-point memorandum grants free passage for ‘60 days only.’
After that, Iran has warned that tankers hoping to make the crossing may have to pay for the privilege.
A free chokepoint may become an expensive one
Oil has seen moderate price relief on the Iran deal. However, the long-term consequences of the deal remain uncertain:
- The agreement commits Iran to de-mine and reopen the strait within 30 days. After 60 days, Iran will hold talks with Oman over the waterway’s future administration.
- Iran’s lead negotiator has said the strait will not return to pre-war conditions. He claimed that Iran has a sovereign right to charge fees for use of the waterway.
- The US, Europe, and Gulf states have rejected any toll. Nonetheless, with the US winding down military operations, it’s not clear what leverage negotiators have to prevent Iran from implementing one.
Trump’s deal may have stopped the shooting.
But there’s no dispute: Iran charging a toll would leave global energy markets in a structurally worse position than before the war started.
Sidekick Takeaway: For now, America’s 14-point deal remains provisional, with final negotiations pending. Elements like a Hormuz toll could be a serious sticking point preventing a lasting settlement.
Reversal of Fortune: US Turns Frontier AI Into a Controlled Asset
For years, AI models have been largely unregulated. Firms developed models in-house and released them to the public as they saw fit.
But a major intervention last week shows that the regulatory tide could be turning.
On Friday, US officials wrote a letter to Anthropic warning that the firm needed a government licence to release its most powerful models to foreign nationals.
In practice, Anthropic said the only way to comply was to disable those models for every customer – setting a precedent that could ripple across the industry.
From useful technology to strategic asset
The move is the most aggressive regulatory intervention into an AI company yet, and could extend well beyond a single company:
- In June, the Trump administration issued an order explicitly ruling out an AI licensing regime. The Anthropic directive is a stark reversal.
- The letter to Anthropic was apparently triggered by a ‘jailbreak’ that bypassed safeguards. Officials fear that the most capable models pose a national security threat due to cybersecurity risks.
- Several major AI firms are lining up for mega-IPOs this year, including Anthropic. The prospect of increased industry regulation is a growing risk factor for investors.
Because many of the top AI labs – including Anthropic, OpenAI, and Alphabet – are in the US, America’s regulatory stance has outsized influence.
As such, moves like the Anthropic directive could establish a precedent for global AI oversight.
Sidekick Takeaway: The tech industry has historically operated with a ‘move fast and break things’ attitude. With the government willing to switch off a commercial model overnight, that latitude is narrowing fast.
Home Front: Russia at Britain’s Doorstep Sharpens the Defence Debate
Geopolitical threats to the UK are usually discussed in theory. This week, they showed up in practice.
On Tuesday, a Russian frigate fired warning shots near a British couple’s sailboat off the Isle of Wight.
The incident took place just days after the Royal Navy boarded and seized a Russian oil tanker in the same waters.
Together, the episodes mark a serious escalation in UK-Russia tensions, underscoring the need for a credible deterrent at home.
The price of deterrence
This week’s incidents sharpen the need for military readiness – but haven’t resolved how to pay for it:
- Although officials called the sailboat encounter isolated, it points to geopolitical adversaries becoming increasingly comfortable operating in Britain’s backyard.
- These shows of force could test the UK’s resolve to keep up the pressure on adversaries. This week, the UK government handed down its largest-ever fine for Russia-related sanctions violations.
- Deterrence requires serious funding, and Britain has already pledged to lift defence spending towards 3.5% of GDP. However, that commitment is hard to square with stretched public finances.
There are no easy solutions to this funding dilemma.
But this week’s incidents show that the cost of inaction is rising, too.
Sidekick Takeaway: These budgeting questions have only become sharper in the context of Labour’s looming leadership crisis. A leadership contest tends to freeze big fiscal decisions, yet the urgency of funding defence commitments has only grown.
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