AI Capex Boom Continues to Boost US Economic Growth
(…) June durable goods orders rose by 0.3% m/m, but the details were much stronger. Orders excluding transportation increased 0.6%, while core capital goods orders (nondefense ex-aircraft), a key gauge of business investment, rose 0.9% and 12.5% y/y, the strongest annual increase since November 2021!
Note that durable orders are in nominal dollars. Normally not a problem but now, AI, tariffs and wars combine to create a lot of inflation in the capex world:
Saudi Arabia Blames Iran-Backed Militias for Attack on Oil Facilities Yemen’s Houthis also claim to have hit the kingdom’s energy infrastructure
Saudi Arabia said Monday it had intercepted a “number of drones” that Iran-backed militias in Iraq had launched at the kingdom’s oil facilities.
Riyadh demanded in a statement that Iraq take “all necessary measures to ensure the prevention of the use of its territory as a launching point” for attacks.
Iraqi militias haven’t claimed responsibility for the attacks, and another pro-Iran militant group, Yemen’s Houthis, said it had attacked Saudi oil facilities, making it unclear Monday who was responsible for the drone strikes. (…)
Pro-Tehran Iraqi militias have conducted repeated drone attacks against Saudi Arabia and other Persian Gulf states since the U.S. and Israel jointly launched a war against Iran in February, drawing in some of the world’s largest oil producers. The militias operate independently of the Iraqi government and are often at odds with the central authorities.
A Saudi assessment concluded that up to half of the nearly 1,000 drone attacks on the Saudi kingdom have come from inside Iraq, according to a person familiar with the report. They included strikes on a Saudi refinery in the Yanbu oil hub on the Red Sea and on oil fields in the kingdom’s eastern province where Monday’s attacks took place, people familiar with the matter said.
Saudi Arabia has retaliated by carrying out strikes on Iran-backed militias in Iraq, people familiar with the matter said. (…)
From David yesterday morning:
The Iraq Story that’s Being Ignored, Mostly
Even as the US-Iran direct exchange has paused for two to three days, Iran’s proxy network across Iraq and Yemen is actively testing that ceasefire — with Erbil facing its most intense sustained assault since the war began, and Saudi Arabia absorbing attacks from two directions simultaneously.
Erbil Under Siege
Iran and its aligned Iraqi Shia militias — operating under the Popular Mobilization Forces (PMF) umbrella — have been attacking the Kurdistan Region since the war’s onset in late February 2026.
The campaign intensified dramatically in mid-July 2026 : Iran renewed strikes on Kurdish Iranian opposition groups near Erbil, targeting Komala party headquarters on July 20 with drones and missiles, striking PAK positions with three drones on July 13, and using white phosphorus in a July 19 attack that wounded nine Peshmerga fighters.
Eight one-way drones targeted Erbil in a single night, and the US — which maintains a consulate and military personnel in the area — shot down drones targeting the city on July 18. Reuters reported that drone attacks also struck camps housing Iranian opposition Kurdish forces in northern Iraq on July 26-27, alongside simultaneous attacks on Saudi Arabia and Jordan.
Saudi Arabia’s Two-Front War
Saudi Arabia is now genuinely fighting on two fronts:
– South (Yemen), Houthis (Ansar Allah). Threatened blockade of Saudi shipping through Bab al-Mandeb; fired on at least one Saudi tanker, setting it alight
– North (Iraq), Iran-backed Iraqi militias (PMF). Launched drones targeting petroleum facilities in Saudi Arabia’s Eastern Province and Riyadh on July 26-27The Saudi Defense Ministry confirmed Monday that air defenses intercepted and destroyed drones launched from Iraqi territory by “Iran-backed terrorist militias” targeting oil facilities in the Eastern Province and the capital, Riyadh, with spokesman Maj. Gen. Turki Al-Maliki stating Saudi Arabia “reserves the right to respond at the appropriate time and place”.
The coordination between these two fronts is not accidental. The Houthis publicly announced military coordination with Iraqi Shia militias in May 2024 as part of a “fourth phase of escalation,” and Iran has been engineering what analysts describe as a “ring of non-state militias surrounding Saudi Arabia” — activating armed groups from Yemen, Iraq, and even Bahrain .
Iraqi militias including Kataib Hezbollah and Harakat al-Nujaba have explicitly threatened Saudi Arabia, accusing Riyadh of allowing land routes to be used for war logistics and warning the “Kingdom of Evil” would “pay the price”.
The Great Missile and Drone War of the Middle East continues.
“Just a little excursion” he said. Five months and counting. No visible “elegant” way out.
Now, the whole Middle East is a boiling cauldron:
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Based on the three confirmed incidents in the Red Sea and the composition of tankers that crossed successfully, the Houthis appear to be targeting Saudi-flagged tankers, while Chinese-flagged tankers carrying Saudi crude can still cross Bab-al-Mandab. (GS)
Goldman also found that “China net crude imports rose over 3mb/d over the last two weeks (14DMA), mainly on higher Saudi crude imports”. That was confirmed by Windward: “Three Chinese-owned VLCCs transited Bab al-Mandeb without incident on July 23 to 24, consistent with the Houthis’ established carve-out for Chinese and Russian-linked vessels.” China bound ships also seem to be able to transit Hormuz.
This suggests that China’s surprising “contribution” to contained oil prices since May is over and that China is back buying crude.
