DUBAI – Oil prices slipped on Sept 11 but remained on track to end the week above US$100 a barrel for the first time since mid-May, as attacks along key Middle East shipping routes stoked fears of more supply disruptions.
The recent surge in oil prices sparked a spell-off in US markets that dragged Asian stocks and bonds.
Brent crude futures fell 1.53 per cent to US$105.98 a barrel by mid-afternoon. US West Texas Intermediate crude, meanwhile, fell 1.33 per cent to US$101.12 a barrel.
The benchmarks pared all early gains to trade lower after the Financial Times reported that foreign ministers in the Middle East were trying to work out a temporary deal with Iran to manage shipping through the Strait of Hormuz.
Both benchmarks rose more than 6 per cent on Sept 10 and were still trading more than 10 per cent higher on a weekly basis.
Brent is up more than 70 per cent in 2026, though it remains below its wartime peak of just above US$126 a barrel reached in April.
“Some headlines of possible new talks in the Middle East are weighing moderately on oil prices today,” said UBS energy analyst Giovanni Staunovo.
“I keep seeing near-term risks to the upside for oil prices, but we should expect ongoing high price volatility too,” he added.
Stocks and bonds across Asia fell on Sept 11, with all eyes on the latest US inflation data and a likely interest rate hike by the US Federal Reserve.
The MSCI Asia Pacific Index fell 1.8 per cent, led by declines in Japan and South Korea.
Bonds came under further pressure after the US Treasury bought back fewer securities than investors had anticipated, pushing 10-year yields to the cusp of 5 per cent.
Faster-than-expected producer price inflation data also boosted bets on a Fed hike next week.
Asian government bonds followed Treasuries lower.
Australia’s three-year yield jumped as much as 20 basis points to 5.05 per cent, its highest level since 2011, while New Zealand’s two-year yield climbed 24 basis points. The US 10-year yield was little changed at 4.96 per cent on Sept 11 after rising 12 basis points in US trading.
“It’s a broad risk-off move across Asian markets,” said Mohit Mirpuri, a partner at SGMC Capital Pte in Singapore. “The continued sell-off in bonds and the US 10-year yield now flirting with 5 per cent are naturally weighing on risk assets. With US (consumer price index) due later (on Sept 11), investors are understandably reluctant to take much risk.”
Oil’s surge has added another complication for central banks, as the conflict around the Strait of Hormuz threatens to keep energy prices elevated.
An increase in attacks on shipping in the waterway has pushed up prices for oil, natural gas and diesel, adding to concerns that energy costs will feed through to inflation.
War continues
Fighting has intensified across the Middle East over the past two weeks, with Houthi assaults on Saudi energy facilities forcing some operations to halt and US strikes targeting Iranian oil tankers.
“A resumption of a full-blown Saudi-Houthi war would be a potential catalyst for our high oil price scenario coming to fruition,” RBC Capital Markets analysts, including Helima Croft, wrote in a note.
Iran-backed Houthis advanced toward coastal areas bordering the strategic Bab al-Mandeb Strait, gaining ground in their push to seize Mokha near the southern end of the Red Sea.
Mokha is closer to the Bab al-Mandeb Strait, and “would allow the group to project its disruptive capabilities further south towards the narrowest points of the waterway”, RBC Capital’s analysts said.
Fighters loyal to the Houthi authorities march during a rally to recruit more fighters in Yemen’s capital Sanaa.
PHOTO: AFP
Some oil exports continue to cross the Strait of Hormuz, often on tankers sailing with their transponders switched off to evade detection, though vessels still face the constant threat of attack.
The UK Maritime Trade Operations received a report that two ships were struck by unidentified projectiles west of Khasab, Oman, on Sept 10, highlighting the continuing dangers to shipping.
Top diplomats from the six-member Gulf Cooperation Council plan to meet their Iranian counterpart on Sept 14 in a push by Oman and Iran to secure buy-in for a deal to temporarily manage shipping through Hormuz, the Financial Times reported, citing two people briefed on the matter.
Iran and the US are settling in for a prolonged conflict, with little sign of a near-term truce or normalised Middle East energy flows.
Houthi rebels opened up a new front in July, threatening vessels calling at Saudi Red Sea ports that had become a vital alternative after disruptions through Hormuz. Saudi Arabia said oil output fell again in August, reaching the lowest level since 1990.
Saudi Crown Prince Mohammed bin Salman called US President Donald Trump twice on Sept 10, urging him to launch strikes against the Houthis as the militant group gained ground in Yemen, Axios reported, citing US officials.
Trump declined the request, according to the report. BLOOMBERG, REUTERS
