Good morning. In today’s Fortune:
- The war: Oil is at $113 and markets are in meltdown as Trump threatens to escalate the war in Iran tonight if Tehran doesn’t reopen the Strait of Hormuz. In response, Iran has threatened to start taking out its neighbors’ water supplies. The damage to the oil market is greater than that of 1974 and 2022 put together, the IEA says.
- Exclusive: Supermicro’s dark history of smuggling chips to Iran.
- AI isn’t replacing as many jobs as you’d think.
- Tim Cook’s likely successor at Apple.
- Aye, robot! Mark Zuckerberg is building an AI agent for himself.
THE MARKETS
Worldwide meltdown
Oil was above $113 per barrel this morning and there is another massive global selloff in the equity markets underway: S&P 500 futures were down 0.85% prior to the open in New York. The index closed down 1.51% in its last session, it is now down 5% year to date. The Stoxx Europe 600 fell 2.27% in early trading. That index is now down about 12% from its recent high, meaning that the market is now officially in a “correction.” In Asia, all the major indexes were down. South Korea’s KOSPI was down 6.49%, Japan’s Nikkei 225 fell 3.48%. Gold—supposedly a safe haven—was down 6.67% today. The metal has declined 20% from its recent high.
ONE BIG THING
Supermicro has a prior history of smuggling chips on the black market
Supermicro—accused last week of smuggling $2.5 billion in Nvidia chips and servers to China—has been here before, with Iran, writes Fortune’s Amanda Gerut. Court records, and the company’s own disclosures, show the latest allegations of smuggling to a restricted market bear striking similarities to a 20-year-old enforcement action also involving the company. In 2006, Supermicro pleaded guilty in federal court to illegally exporting computer equipment to Iran, and paid a $150,000 fine to the Department of Justice.
IRAN
Trump’s deadline for escalating the war expires tonight
President Trump gave Iran a 48-hour deadline to open the Strait of Hormuz which expires at 7.44pm New York time tonight. If Iran disobeys, Trump threatened to start destroying Iran’s power infrastructure. In response, Iran threatened to destroy the seawater desalination plants that its neighbors are dependent on, Fortune’s Jason Ma reports. Riyadh, in Saudi Arabia—a city of 8 million people—would have to be evacuated entirely within a week if it lost its water supply.
Lights out in Tehran: Israel has continued to bomb Tehran where there are already power blackouts.
Iran also threatened to mine the entire gulf, which would make reopening the strait an even bigger logistical nightmare than it is right now.
The “Strait of Hormuz is not closed,” Iranian Foreign Minister Seyed Abbas Araghchi said on X. “Ships hesitate because insurers fear the war of choice you initiated—not Iran. No insurer—and no Iranian—will be swayed by more threats. Try respect. Freedom of Navigation cannot exist without Freedom of Trade. Respect both—or expect neither.”
In reality, the strait remains closed to most shipping, with the exception of countries that are friendly to Iran or have done deals with the regime. Japan, India, and Pakistan have all successfully sailed freighters out of the gulf.
40 energy facilities damaged: Across the Middle East, at least 40 oil or gas sites have been hit in the war, according to International Energy Agency chief Fatih Birol. That damage to the energy market far exceeds the crises of 1974 and 2022 “put together,” he said.
Rebuilding could take years. Half of Shell’s Pearl gas facility in Qatar, one of the biggest on the planet, will be down for a year, the company told the Wall Street Journal.
WHAT TIM IS COOKING
Meet the man being groomed as the new CEO of Apple
At a recent all-hands meeting at Apple, CEO Tim Cook, 65, was asked about a recent spate of senior executive departures. “When people get to a certain age, some,” he said, pausing for effect, “are going to retire.” Cook said he was “obsessed” with succession planning at Apple. According to Bloomberg’s Mark Gurman, the next likely leader of the iPhone-maker will be John Ternus, the current senior vice president for hardware engineering. Ternus, not Cook, led the recent product launch event and media appearances for the MacBook Neo, Gurman notes.
- Also in tech: Interloom, a startup capturing ‘tacit knowledge’ to power AI agents, raises $16.5 million in venture funding, Fortune's Jeremy Kahn reports.
CHART OF THE DAY
AI is not replacing jobs…yet...
Pantheon Macroeconomics tracks payrolls in “Al-sensitive sectors”—such as credit intermediation, insurance, legal services, and call centers—along with jobs in the IT sector. Although both sectors have seen shrinking payrolls of late, the decline isn’t dramatic, the data shows.
NUMBER OF THE DAY
$3.17 billion
The total value of art sold by Sotheby’s, Christie’s, and Phillips (New York) in the most recent year, according to research from Bank of America Institute. Sales were up from $2.58 billion the year before.
MORE FROM FORTUNE
Apple CEO praises China partners as Beijing applies pressure, by Bloomberg
‘Project Hail Mary’ becomes Amazon’s highest-grossing film debut, by Thomas Buckley of Bloomberg
Natural gas prices in Texas plunge deep into negative territory and producers are burning it off, while the rest of the world braces for shortages, by Jason Ma
Warren Buffett admits his original philanthropic plans were not ‘feasible’—he’s instead left his three kids $500 million a year to give away, by Preston Fore
THE FRONT PAGES TODAY
Flights disrupted after crash at NY’s LaGuardia airport kills two people - FT
Trump to deploy ICE agents to airports Monday - Axios
The Iranian Prisons Where Bombs Are Threatening Dissidents and Americans - WSJ
‘I Am the News’: The Absurd Drama (and High Stakes) of the Don Lemon Affair - NYT
ONE MORE THING
Zuckbot!
Mark Zuckerberg is building an AI agent that will work with him as CEO of Meta, according to the Wall Street Journal. Zuck is hoping the bot will be able to find and retrieve information about his 78,000-strong company without the need for him to go through layers of management to get it, a source told the paper.
