Middle East Conflict Risks Escalate as Energy Prices and Global Inflation Pressures Rise

Daily News

Summary:

Iran’s Revolutionary Guard warns that any further US attack will be met with new weapons targeting new US objectives; US diesel prices surpass $6.50 per gallon for the first time...

【Highlights】

1. EU Agrees to Extend Russia Sanctions for Three Years

2. UK Reportedly Set to Assist Saudi Arabia in Countering Houthi Attacks

3. Iran’s Revolutionary Guard Warns It Will Use New Weapons Against New Targets if the US Attacks Again

4. US Diesel Prices Surpass $6.50 per Gallon for the First Time

5. Goolsbee Says Strong Demand Is Driving Up US Inflation

6. Trump’s Approval Rating Falls to a Record Low of 32%

【Details】

EU Agrees to Extend Russia Sanctions for Three Years

On September 21 local time, EU member states reached an agreement after lengthy negotiations to extend sanctions against Russia for another three years.

Under the agreement, the EU will extend sanctions targeting more than 3,000 Russian individuals and entities for 36 months, while removing two Russian businesspeople from the sanctions list.

The extension is significantly longer than the six- or 12-month renewal periods typically used in the past. The EU hopes that the longer duration will prevent sanctions from becoming deadlocked again in the future due to differences among member states over renewal.

UK Reportedly Set to Assist Saudi Arabia in Countering Houthi Attacks

According to foreign media reports, the UK is close to agreeing to support Saudi Arabia’s military operations against the Houthi movement.

People familiar with the matter said British Prime Minister Burnham is leaning toward providing what the UK considers defensive assistance. The sources said the UK would also lobby other countries to take similar measures.

Some sources said Britain could provide aerial refueling support to Saudi Arabia. One person familiar with the matter said the Burnham government believes assisting Saudi forces in pushing back the Houthis would help stabilize the region and reduce the threat to vessels operating around the Strait of Malacca.

Iran’s Revolutionary Guard Warns It Will Use New Weapons Against New Targets if the US Attacks Again

Hossein Mohebbi, a spokesman for Iran’s Islamic Revolutionary Guard Corps (IRGC), said that if the United States launches another attack, Iran’s armed forces will begin using new weapons against US targets that have not previously been attacked.

The Fars News Agency quoted Mohebbi as saying that Iran’s targets would no longer be the same as before. “We have new targets that we have not previously attacked.”

He said the changes would involve the geographic scope of the conflict, the weapons used and military equipment deployed. “We will deploy new weapons with entirely new capabilities to the battlefield, and the world will be shocked,” he said.

US Diesel Prices Surpass $6.50 per Gallon for the First Time

US retail diesel prices surpassed $6.50 per gallon for the first time, extending a war-driven surge that is rippling across multiple sectors of the economy.

According to the American Automobile Association (AAA), the national average diesel price rose to $6.505 per gallon as of Saturday local time, less than 10 days after it last crossed the $6 threshold.

US diesel prices have accelerated sharply since the beginning of September, rising more than 87 cents per gallon so far this month. Prices have increased almost every day and have risen well above the previous record set in 2022.

Goolsbee Says Strong Demand Is Driving Up US Inflation

Chicago Fed President Austan Goolsbee said Monday that inflation may no longer be driven solely by tariff and energy-price shocks experienced over the past 18 months. Strong demand is now also pushing prices higher, which could require the Federal Reserve to accelerate the pace of rate hikes.

Supply-driven inflation has proved persistent, while a surge in investment in artificial intelligence could push prices higher across a broader range of the economy. Persistent inflation in the services sector also suggests that cost pressures are not solely the result of continued oil-price shocks.

If inflation is being driven by overheating demand, monetary policy may need to respond more aggressively and rely more heavily on front-loaded rate hikes.

Goolsbee said the Fed’s September rate hike, its first in three years, effectively reversed some of the rate cuts implemented in 2025. If inflation is demand-driven, he argued, the projections contained in the Fed’s September Summary of Economic Projections (SEP) may not be sufficient, as he remains concerned that services inflation may not ease.

Trump’s Approval Rating Falls to a Record Low of 32%

According to the latest Reuters/Ipsos poll, US President Donald Trump’s approval rating has fallen to 32%, the lowest level of his political career. Against the backdrop of the unpopular war with Iran, Republicans have become increasingly dissatisfied with Trump’s handling of the cost of living.

A week earlier, Trump’s overall approval rating stood at 35%.

In the latest poll, only 17% of respondents approved of Trump’s handling of the cost of living, while just 24% of Americans approved of his handling of the conflict with Iran.

Today’s Key Events

11:10 (UTC+8) RBA Governor Michele Bullock Speaks

20:15 (UTC+8) US ADP Weekly Employment Change for the Week Ending September 5

20:30 (UTC+8) ECB Governing Council Member Šlape Speaks

22:00 (UTC+8) Eurozone September Consumer Confidence Preliminary

22:05 (UTC+8) New York Fed President John Williams Speaks

22:20 (UTC+8) Fed Vice Chair Philip Jefferson Speaks

01:00 (UTC+8) Richmond Fed President Thomas Barkin Speaks

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