Oil heads for US$100-plus weekly finish, stocks slide as Mid-East fears flare
Asian stocks and bonds fell on surging energy costs, inflation fears and bets on Fed rate hike.
Oil prices edged higher on September 11, but remained on course to surpass US$100 a barrel for the first time since mid-May, amid fears of further supply disruptions from attacks along key Middle Eastern shipping routes. Brent crude futures dropped 1.53% to US$105.98 a barrel, while US West Texas Intermediate crude fell 1.33% to US$101.12 a barrel.
The decline followed a Financial Times report that Middle Eastern foreign ministers were attempting to reach a temporary agreement with Iran to manage shipping in the Strait of Hormuz. Both benchmarks had risen more than 6% on September 10 and were still more than 10% higher on a weekly basis. Brent has increased by over 70% in 2026, though it remains below its wartime peak of just above US$126 a barrel in April.
Energy analyst Giovanni Staunovo noted that recent headlines of potential new talks in the Middle East were moderately weighing on oil prices, but cautioned that ongoing high price volatility should be expected. Asian stocks and bonds declined on September 11, with the MSCI Asia Pacific Index falling 1.8%, led by Japan and South Korea.
Bond prices were pressured after the U.S. Treasury bought back fewer securities than anticipated, pushing 10-year yields close to 5%. Higher-than-expected producer price inflation data fueled speculation of an upcoming Federal Reserve interest rate hike. The surge in oil prices has added complexity for central banks, as the conflict around the Strait of Hormuz threatens to keep energy costs elevated.
Recent attacks on shipping in the waterway have driven up prices for oil, natural gas, and diesel, heightening concerns that energy costs could feed through to inflation. Ongoing fighting in the Middle East, including Houthi assaults on Saudi energy facilities and U.S. strikes targeting Iranian oil tankers, has intensified over the past two weeks.
If a full-scale Saudi-Houthi war were to resume, it could potentially trigger a high oil price scenario, according to RBC Capital Markets analysts. Iran-backed Houthis advanced toward coastal areas near the Bab al-Mandeb Strait, which could allow them to project their disruptive capabilities further south towards the narrowest points of the waterway.
While some oil exports still pass through the Strait of Hormuz, often with transponders switched off to evade detection, vessels continue to face the constant threat of attack. The UK Maritime Trade Operations received a report of two ships being struck by unidentified projectiles west of Khasab, Oman, on September 10, highlighting the ongoing dangers to shipping.
Gulf Cooperation Council diplomats plan to meet with their Iranian counterparts on September 14 to discuss securing buy-in for a deal to temporarily manage shipping through Hormuz. Iran and the U.S. are heading into a prolonged conflict, with little indication of a near-term truce or normal energy flows in the region. Saudi Arabia reported a fall in oil output in August to the lowest level since 1990, following a request from Crown Prince Mohammed bin Salman for President Donald Trump to launch strikes against the Houthis. Trump declined the request.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
