Energy Supply Risks Compound Inflationary Pressures as Rate-Hike Expectations Rise in the US and Europe

FastBull Featured

Daily News

Summary:

Israel says renewed strikes on Iran are only a matter of time; Fed officials collectively strike a hawkish tone...

【Highlights】

1. France plans to convene G7 talks on releasing strategic oil reserves

2. Israel: Renewed strikes on Iran are only a matter of time

3. Iran briefs Pakistan on latest progress in Strait of Hormuz transit agreement

4. Saudi Arabia's July oil export revenue falls to a new low

5. US rejects Iran's proposal to reopen the Strait of Hormuz, questions its standing to make the proposal

6. UK consumer confidence unexpectedly rises to a more than two-year high in September, but inflation remains a concern

7. Fed officials collectively turn hawkish as rate expectations are rapidly repriced

8. Rajeev: Previous rate hikes must be given sufficient time to take effect

【Details】

France Plans to Convene G7 Talks on Releasing Strategic Oil Reserves

French President Emmanuel Macron said in a joint interview with two French television stations on the evening of September 24 that France plans to convene a meeting of G7 members to discuss releasing strategic oil reserves to stabilize global oil prices.

Diesel prices in the United States and several European countries have recently hit record highs. Macron said G7 members could explore coordinated releases of strategic oil reserves to the market in an effort to bring down oil prices. He said the situation in Iran is a major factor behind the surge in global oil prices and that France would work to help restore regional stability. The Russia-Ukraine conflict is also affecting oil prices, Macron said, calling on both sides to stop attacking each other's energy infrastructure.

Israel: Renewed Strikes on Iran Are Only a Matter of Time

According to Al Hadath, Israeli officials believe that renewed strikes on Iran are only a matter of time. The official told the media that Israeli intelligence has detected efforts by Iran to restore and restart its nuclear program in preparation for possible attacks.

Earlier reports from Israel said Iran had moved its remaining nuclear projects to a site known as "Houshan" near the Natanz nuclear facility. The report also quoted the official as saying that Israel is prepared both defensively and offensively and is ready to respond to the possibility of renewed conflict with Iran and on other fronts.

The official added that if Tehran crosses any red line, Israel will again strike Iran's nuclear facilities and all related targets, regardless of whether the United States participates.

Iran Briefs Pakistan on Latest Progress in Strait of Hormuz Transit Agreement

Iran's Foreign Ministry said the foreign ministers of Iran and Pakistan held a meeting. The Iranian foreign minister praised Pakistan's constructive efforts as a mediator in negotiations with the United States, while noting that repeated US violations of agreements had weakened its position as a mediator.

He stressed that US violations of the Islamabad agreement had contributed to greater insecurity and heightened tensions in the region, and that Washington should continue to bear responsibility for the consequences.

The Iranian foreign minister also briefed his Pakistani counterpart on the latest developments in bilateral talks and an agreement between Iran and Oman on identifying suitable routes for the safe passage of vessels through the Strait of Hormuz, as well as on interactions with the United States through Qatar.

Saudi Arabia's July Oil Export Revenue Falls to a New Low

Data released by Saudi Arabia's General Authority for Statistics on September 24 showed that the country's oil export revenue and total exports continued to decline in July, falling to their lowest levels since May 2025 and June 2021, respectively.

Russia's RIA Novosti cited the data as showing that Saudi Arabia's oil export revenue stood at 59.888 billion riyals (about $15.9 billion) in July, down 12.8% from a year earlier and the lowest level since May 2025.

Saudi Arabia's total merchandise exports stood at 84.379 billion riyals ($22.4 billion), down 17.2% year on year and the lowest level since June 2021. Oil accounted for 71.0% of total exports in July, down from 71.7% in June. Saudi imports also fell to 70.015 billion riyals ($18.6 billion), down 15.4% from a year earlier.

Industry analysts said the decline in Saudi oil export revenue was mainly attributable to the US-Israeli military conflict with Iran. Since the United States and Israel launched military strikes against Iran in late February, shipping through the Strait of Hormuz has remained disrupted, severely affecting Saudi crude exports.

Against this backdrop, Saudi Arabia has increased shipments through its East-West pipeline, transporting crude from its eastern oil fields to the Red Sea port of Yanbu for export through the Bab el-Mandeb Strait. However, the Houthi movement in Yemen announced a maritime blockade against Saudi Arabia on July 20, posing an additional threat to Saudi oil exports via the Red Sea.

US Rejects Iran's Proposal to Reopen the Strait of Hormuz, Questions Its Standing to Make the Proposal

According to Israel's Channel 12, US negotiators rejected an Iranian proposal to reopen the Strait of Hormuz during indirect talks held on the sidelines of the United Nations General Assembly in New York.

Washington reportedly told Tehran that Iran does not control the waterway and questioned its standing to make such a proposal.

Channel 12 disclosed that US envoy Steve Witkoff and Jared Kushner were in one room, while Iranian Foreign Minister Abbas Araghchi was in another, with messages passed back and forth through Qatari mediators.

According to people familiar with the matter, further indirect talks could take place before the UN General Assembly concludes. However, mediators are awaiting President Donald Trump's decision on whether to continue the process or pursue other options.

UK Consumer Confidence Unexpectedly Rises to a More Than Two-Year High in September, but Inflation Remains a Concern

The UK's consumer confidence index rose one point to -13 in September, according to data released Friday, reaching its highest level since August 2024. Greater optimism about household finances provided further evidence of recent economic resilience.

Neil Bellamy, consumer insights director at GfK, said the deteriorating inflation outlook could begin to put pressure on households.

He said that although the overall measure continues to improve, confidence remains firmly in negative territory. Rising inflation, energy and fuel prices could put consumer confidence under renewed pressure, he added.

Fed Officials Collectively Turn Hawkish as Rate Expectations Are Rapidly Repriced

The Federal Reserve raised interest rates last week for the first time in three years, lifting the target range by 25 basis points to 3.75%-4.00%. Since then, several officials have continued to stress that further action may be necessary if inflation fails to decline significantly.

On Thursday, Philadelphia Fed President Paulson and New York Fed President John Williams separately said the Fed may need to raise rates again to contain what they described as unacceptably high inflation. Fed Governor Michael Barr had also previously said that further monetary tightening was necessary.

Markets responded rapidly to the signals. The CME FedWatch Tool showed that traders were pricing in roughly a 69% probability of another rate hike at the Fed's October meeting, significantly higher than a week earlier.

The US Treasury market also underwent a sharp adjustment. The 30-year Treasury yield briefly rose to 5.5016%, its highest level since June 2004, before closing at 5.472%, up 7 basis points. The 10-year Treasury yield rose to 5.185% and touched 5.2251% intraday, approaching a 19-year high. The 2-year Treasury yield also climbed to 4.914%.

The steepening and broad-based rise in Treasury yields directly increased the opportunity cost of holding non-yielding gold, prompting some funds to shift toward US dollar assets offering positive yields.

Rajeev: Previous Rate Hikes Must Be Given Sufficient Time to Take Effect

ECB Governing Council member Rajeev said on Thursday that policymakers should not rush to take further action before determining whether previous rate hikes are effectively containing inflation.

He said this month's rate increase does not mean the European Central Bank has embarked on a predetermined policy path. Patience remains important, but vigilance should be slightly more important. This does not mean calling for automatic monetary tightening; rather, policymakers should allow previous policy decisions sufficient time to take effect while remaining prepared to respond if evidence shows that inflation is proving more persistent.

The ECB still cannot determine with certainty whether the surge in energy costs caused by the conflict in the Middle East will remain largely confined to the energy sector or spread to other parts of the economy. There is currently no evidence of broad-based second-round effects.

Inflation remains above the ECB's target, while the energy shock could last longer than initially expected. At the same time, the euro-area economy has demonstrated greater resilience than many had previously anticipated. The task now is to determine whether the shock will remain largely confined to the energy sector or become more persistent and widespread.

These comments suggest that, compared with some policymakers who have raised the possibility of taking further action as early as October 29, Rajeev may prefer to wait until the ECB's December meeting before deciding whether another rate hike is warranted. By then, the ECB will publish its quarterly economic projections, providing policymakers with more information on which to base their decision.

Today's Key Events

20:30 (UTC+8) US August Durable Goods Orders MoM

17:15 (UTC+8) New York Fed President John Williams Speaks

TBD RBNZ Chief Economist Conway Speaks

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data