Good morning. Tehran’s ability to control the Strait of Hormuz, through which one-fifth of the worldwide oil supply used to pass, has become Iran’s biggest leverage against the U.S., its Gulf neighbors and the global economy. Whether the war ends in a success or defeat for Iran depends first and foremost on whether Tehran emerges from this conflict still holding the strait—and, with it, the keys to the worldwide energy markets.

• Looking for leverage: The Iranian regime has announced very ambitious plans for the Strait of Hormuz. The Iranian Parliament’s national-security commission has already advanced new legislation that would require passing vessels to pay for the privilege, and that would bar from the Persian Gulf any non-friendly countries. This is a lever through which Tehran hopes to force European nations, Japan and others to drop economic sanctions against it—while also permanently expelling the U.S. Navy from the Gulf’s waters.
   
• Catastrophe looming? Ending the war in the near future while Iran still controls the crucial waterway would be a geopolitical disaster for America’s allies and partners in the Middle East and beyond, said Hasan Alhasan, a senior fellow at the International Institute for Strategic Studies and a former national-security official in Bahrain.
   
• Sanctions issue: There is also a practical difficulty. Currently, Iran’s Islamic Revolution Guard Corps is considered a terrorist organization by many states, including the U.S. and members of the European Union. Financial transactions with Iran, including paying for the passage of Hormuz, are subject to U.S. sanctions that would deter major global shipping companies.
   
• Important islands: Iran’s fortifications on small islands near the strait boost its power to control the key waterway, and reopening shipping there might require U.S. or allied forces to capture some of those same dots of land.

U.S. regulator sues three states in defense of prediction markets.

The Trump administration ratcheted up its defense of prediction markets Thursday, with a federal regulator suing Arizona, Illinois and Connecticut over their attempts to ban sports and elections-related betting on Kalshi and other platforms.

The suits are the latest front in a growing battle between the administration and states over prediction markets, which let people bet on everything from Major League Baseball games to the reopening of the Strait of Hormuz. Several states have sent cease-and-desist orders to the platforms, saying their operations violate state gambling laws.

Trump ousts Attorney General Pam Bondi.

President Trump ousted Attorney General Pam Bondi, ending a yearlong tenure atop the Justice Department marked by failed efforts to prosecute his favored targets and a view by the president and his advisers that she mismanaged the Jeffrey Epstein scandal.

Trump is considering nominating Lee Zeldin, head of the Environmental Protection Agency, as her successor, although no final decision has been made, according to people familiar with the matter.

• Five Moments That Defined Pam Bondi’s Tumultuous Tenure Atop DOJ

• Maine is poised to freeze large data-center construction, which would make it the first state to enact such a measure as communities across the U.S. grapple with fallout from the boom in artificial intelligence.
   
• The Environmental Protection Agency on Thursday said it has started a process that could lead to restrictions on microplastics and pharmaceuticals in drinking water down the road.
   
• Federal regulators are weighing a ban on air-bag components from an obscure Chinese supplier after finding the parts were to blame for 10 deaths in a dozen crashes over the past three years.

China is building another massive base in the South China Sea.

After a hiatus of nearly a decade, China is jump-starting its island-building campaign in the South China Sea—and turning a once-obscure reef into what could be its largest military base in the disputed waters.

The status of the South China Sea has long been disputed between China and countries in the region. Beijing’s island-building campaign has strengthened its hold on the waterway and given it control of a thoroughfare that would be vital in any conflict over Taiwan, the self-governing island that Beijing claims. The U.S., meanwhile, has supported other countries such as the Philippines in pushing back against the Chinese claims.

How Trump rewrote the rules of global trade in one year.

President Trump proclaimed Liberation Day one year ago today—rewriting trade relations for virtually every U.S. trading partner.

In the year since, Trump has used tariffs to remake U.S. trade policy, moving from a model of cooperative trade agreements to one that relies on overt economic coercion of allies and adversaries alike.

• The U.S. State Department and the Federal Maritime Commission warned that China appears to be using port state control inspections as a retaliatory tool against Panama over the removal of Hong Kong-based CK Hutchison from its concessions to operate terminals on both ends of the Panama Canal.

You can listen to new episodes every Friday on Apple Podcasts, Spotify and Amazon.

• In the tokenized future for stock markets, the closing bell never rings and investors can swap quiet weekends for the opportunity to trade through a news cycle that never sleeps.
   
• American companies are flailing in China.
   
• Lina Khan, the antitrust enforcer who challenged tech giants, wants to shape another generation of legal scholars to join her crusade.
   
• President Trump said he would sign an executive order to pay all Department of Homeland Security employees amid a congressional funding standoff.

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