Oil holds above US$102 as US-Iran uncertainty supports prices, dollar firms

Brent crude oil remained above US$102 a barrel on Thursday, buoyed by ongoing uncertainty surrounding US-Iran negotiations. Iranian President Masoud Pezeshkian, speaking at the UN General Assembly, vowed Iran would not compromise on its nuclear program or relinquish the right to economic development.

The Trump administration, meanwhile, collaborated with refiners on a voluntary decrease in US diesel exports, aiming to circumvent a formal ban on overseas shipments. Saudi Arabia was also making progress in resuming oil exports via its primary East-West pipeline, while Ukrainian President Volodymyr Zelenskyy revealed discussions with US President Donald Trump regarding a potential energy ceasefire.

The US dollar exhibited strength, surging over 0.4% to surpass 101 points on Wednesday, reaching an eight-week high after evidence indicated U.S. business activity reached its most rapid growth in over five years. The S&P Global flash US Composite PMI for September rose to 58.4, marking its strongest reading since July 2021 and signaling a significant uptick in economic activity.

Market participants were pricing in roughly a 60% probability of an additional 25-basis-point Federal Reserve rate hike next month, following last week's increase, with a 48% chance of another move in December.

The US dollar index stood at 101.153 on Thursday, up 0.01% from the prior session, having gained 2.26% over the last four weeks and 2.64% over the past 12 months. Against the Malaysian ringgit, the US dollar was at RM4.0941, marking a 0.35% increase from the previous day, although it remains 2.88% lower than a year ago. Analysts project the US dollar to reach RM4.0799 by quarter-end and RM4.0107 in one year.

Investors continue to monitor developments in US-Iran talks, the situation at the Strait of Hormuz, and attempts to reestablish disrupted oil supply, alongside gauging the impact of stronger U.S. economic data on Federal Reserve policy decisions.