Oil prices climb on continued impasse in US-Iran talks

On September 28, oil prices surged and bond yields surged as well, signaling that Iran and the United States were still far apart in their negotiations to resume energy supplies from the Persian Gulf. The 10-year Treasury yield climbed above 5.2%, a level not seen in nearly two decades, while the 30-year yield hit a two-decade high, nearing its peak in 2002.

President Donald Trump publicly dismissed Iran's ceasefire proposal, deeming it "unacceptable". Iranian Foreign Minister Abbas Araghchi responded by stating that Trump's rejection was a "first reaction" and awaited further news through intermediaries. The conflict in the Middle East has driven up energy prices, causing frustration among voters facing a high cost of living.

A growing number of Republicans are criticizing the war, with some calling for its immediate cessation.

Brent crude, the global benchmark for oil, rose approximately 2%, reaching around US$106 per barrel. West Texas Intermediate crude, the US benchmark, was trading near US$95 per barrel. Ship operators in the Persian Gulf continue to be cautious about sending vessels through the Strait of Hormuz, a crucial waterway connecting Iran and Oman.

Advances by Iran-backed Houthi militia in Yemen have jeopardized oil shipments via the Red Sea, an alternate route utilized by Saudi Arabia to transport oil from the Persian Gulf to global markets. Saudi authorities had to temporarily halt the vital East-West pipeline due to a perceived drone attack by an Iranian-backed Iraqi militia.

The S&P 500 fell about 0.5% when US stocks restarted trading on September 28, with Asian stocks also declining. China's stocks dropped roughly 2%, while South Korea's KOSPI fell by 2.7%. The Nikkei in Japan also declined. The Hang Seng Stock Index in Hong Kong was the only index to rise, up 0.5%. In Europe, the Stoxx 600, a broad index tracking the region's largest companies, increased by less than half a percent.

Gasoline prices remained unchanged at an average of around US$4.48 per gallon in the US on September 28, reflecting a more than 50% increase since the war began. Diesel prices in the US rose to US$6.45 per gallon, a surge of over 70% since the conflict commenced.