KHAMENEI DRAWS A LINE, CENTCOM DRAWS UP PLANS

• The Pentagon's $25 billion war cost figure is fiction, and Congress knows it. Defense Secretary Pete Hegseth faced his first Capitol Hill grilling since the war began, where the Pentagon's official estimate fell apart in real time 7RTN Pentagon lowballing Iran war cost, CNN 9AJE $25bn or $1 trillion: How much has Iran war really cost the US?. CNN cited three sources putting the real figure at $40-50 billion once base repair costs are included 7RTN Pentagon lowballing Iran war cost, CNN. Iranian strikes damaged at least nine US military sites across the region, destroying radar components, THAAD battery elements, and an Air Force E-3 Sentry aircraft at a Saudi base 7RTN Pentagon lowballing Iran war cost, CNN. Hegseth refused to say whether the $25 billion includes base repairs. It does not. The $25 billion figure covers munitions and operational costs only. And separately, Trump's new defence budget request, $1.5 trillion for 2027, is a 42 percent increase and the largest military spending expansion since World War Two 9AJE $25bn or $1 trillion: How much has Iran war really cost the US?. That number is the honest accounting of what this war is going to cost structurally, even if the supplemental request is not yet filed.

• The US is shopping for an international coalition to reopen Hormuz, with limited enthusiasm from potential partners. A State Department cable sent to US embassies, reported by the Wall Street Journal, solicits support for something called the "Maritime Freedom Construct," asking allies to join information sharing, diplomatic pressure, and sanctions enforcement to restore strait navigation 16AAM US seeks new international coalition to reopen Strait of Hormuz: Report. This is the same diplomatic pattern as previous US-led maritime coalitions in the Gulf, which drew mixed participation. The timing is significant: it suggests Washington is not confident it can reopen the strait unilaterally and needs political cover. Notably, Trump previously declared the strait "completely open and ready for business," which was not true then and is not true now 16AAM US seeks new international coalition to reopen Strait of Hormuz: Report.

• The US Army's hypersonic Dark Eagle weapon may be heading to the Middle East. Bloomberg reported that CENTCOM has requested deployment of the Long Range Hypersonic Weapon, a system that only reached initial operational capability in December 2025, because Iranian ballistic missile launchers have been moved beyond the range of existing US strike systems 2FOX US eyes first-ever hypersonic Dark Eagle deployment as Iran pushes beyond strike range. Individual missiles cost around $15 million each, and a full battery runs approximately $2.7 billion. The stated reason for the request is operationally candid: existing US weapons cannot reach some of the targets CENTCOM wants to be able to hit 2FOX US eyes first-ever hypersonic Dark Eagle deployment as Iran pushes beyond strike range. No deployment has been officially confirmed.

• Pakistan formalised overland trade routes into Iran, quietly reshaping the blockade's economics. Islamabad issued the Transit of Goods through Territory of Pakistan Order 2026 on April 25, opening six road corridors through Balochistan to Iranian border crossings 14AJE Pakistan opens up road trade routes into Iran amid Hormuz blockade. The move came during Iranian Foreign Minister Abbas Araghchi's visit to Islamabad. With around 3,000 containers stranded at Karachi and more backed up across the region, the land corridor is not a fix for Iran's oil export problem, but it blunts the blockade's effect on civilian goods. The Gwadar-to-Gabd corridor gets cargo to the Iranian border in two to three hours 14AJE Pakistan opens up road trade routes into Iran amid Hormuz blockade. This is Pakistan playing both roles simultaneously: mediating the conflict diplomatically while practically helping Iran survive it economically.

• Israel intercepted the Gaza aid flotilla near Crete, detaining around 175 activists from more than 20 vessels in international waters roughly 1,000 kilometres from Gaza 10BBM Israel intercepts Gaza flotilla near Crete and detains 175 activists 12CRD Apartheid without borders’: Israel abducts dozens of Gaza flotilla activists in international waters. Italian Prime Minister Giorgia Meloni demanded the immediate release of 24 Italian nationals and called for "full respect of international law" 10BBM Israel intercepts Gaza flotilla near Crete and detains 175 activists. The EU echoed her. UN Special Rapporteur Francesca Albanese called it "apartheid without borders" 12CRD Apartheid without borders’: Israel abducts dozens of Gaza flotilla activists in international waters. Israel described it as a lawful blockade enforcement operation and said inspections found drugs and contraceptives on board. The practical consequence is another European diplomatic flashpoint for Israel at a moment when transatlantic tensions over the Iran war are already elevated.

Brent crude hit $126 a barrel on Thursday, a level not seen since 2022 15GDN Oil price tops $120 a barrel after Trump warns Iran blockade could last ‘months’. The 13-percent single-day spike was the sharpest move since the war began 15GDN Oil price tops $120 a barrel after Trump warns Iran blockade could last ‘months’. German government bond yields hit a post-2011 high, UK gilts hit their highest since 2008, and Japanese 10-year yields touched their highest closing level since 1997 15GDN Oil price tops $120 a barrel after Trump warns Iran blockade could last ‘months’. Those bond market moves matter more than the oil number in the long run: they signal that sophisticated investors are pricing in sustained inflation and, increasingly, the stagflation scenario that Deutsche Bank's Jim Reid flagged explicitly 15GDN Oil price tops $120 a barrel after Trump warns Iran blockade could last ‘months’. Oxford Economics has warned that a six-month strait impasse could push oil to $190 by August 15GDN Oil price tops $120 a barrel after Trump warns Iran blockade could last ‘months’. The UAE's exit from OPEC takes effect today, formally giving Abu Dhabi the freedom to pump whatever it likes once the strait reopens. Trump publicly welcomed the move. Markets should treat that as a medium-term stabiliser, not a short-term one.

The Bank of England, in its latest assessment, is now explicitly modelling rate rises rather than cuts as its central scenario 5BBC Five key takeaways from the Bank of England meeting. In its most adverse case, six rate rises could take the base rate to 5.5 percent, driven by oil above $120 a barrel and inflation topping 6 percent early next year 5BBC Five key takeaways from the Bank of England meeting. Over seven million UK homeowners with fixed-rate mortgages coming up for renewal face an average monthly payment increase of around £80 5BBC Five key takeaways from the Bank of England meeting. Household energy bills are heading toward £1,900 per year by July, up from £1,641 now, and will stay there for the rest of 2026 according to the Bank's projections 5BBC Five key takeaways from the Bank of England meeting. The Bank is at pains to say this is less severe than the 2022 post-Ukraine spike, and that more households are now on fixed energy tariffs than then. That is true. It is also cold comfort for the 53 percent of UK mortgage holders who will see payments rise.

Meanwhile, two Jewish men were stabbed in north London in what British police have declared a terrorist incident 18SKY UK police declare terrorist incident after two Jewish men stabbed in north London, suspect arrested. Prime Minister Keir Starmer called it "not an isolated incident" and linked it to a pattern of antisemitic attacks in recent weeks. The conflict's domestic security consequences in Western cities are not hypothetical.