Middle East Energy Risks Escalate as Fed Rate-Hike Expectations Rise Again

Daily News

Summary:

Iran steps up attacks on tankers in the Strait of Hormuz, with the impact on shipping volumes still unclear; Daly says further rate hikes may be needed if AI, tariffs and energy shocks persist...

Highlights

1. Qatar: Talks and exchanges of information on ending the regional conflict are ongoing

2. Saudi Arabia: East-West pipeline throughput has recovered to 5.8 million barrels per day

3. EIA raises its oil price forecasts for WTI and Brent for this year and next

4. Iran steps up attacks on tankers in the Strait of Hormuz, with the impact on shipping volumes still unclear

5. Vance: Iran must make substantive cuts to its uranium enrichment capacity; US will not accept empty promises

6. Daly: Further rate hikes may be needed if AI, tariffs and energy shocks persist

Details

Qatar: Talks and Exchanges of Information on Ending the Regional Conflict Are Ongoing

Ibrahim Al Hashemi, director of the Media and Communications Department at Qatar's Ministry of Foreign Affairs, said at a regular press conference on October 6 that negotiations and exchanges of information among the parties involved in the regional conflict were continuing through Qatar and its regional partners, as the parties sought to bridge differences through diplomatic efforts.

Al Hashemi said talks were ongoing and taking into account the concerns of all sides. However, he declined to comment on specific proposals, the main points of disagreement or other technical details.

He said the entire world was paying a heavy price for the conflict and that every effort must be made to end it immediately through solutions that can be reached at the negotiating table.

Saudi Arabia: East-West Pipeline Throughput Has Recovered to 5.8 Million Barrels per Day

Saudi Energy Minister Abdulaziz bin Salman said on October 6 local time that the country's East-West pipeline was currently transporting 5.8 million barrels of oil per day.

The pipeline was temporarily shut down in September after being targeted by drone attacks. The East-West pipeline connects Saudi Arabia's major oil-producing regions in the east with the Red Sea port of Yanbu. It has a maximum capacity of around 7 million barrels per day and serves as a key alternative route for Saudi crude exports that bypasses the Strait of Hormuz.

EIA Raises Oil Price Forecasts for WTI and Brent for This Year and Next

According to the EIA's Short-Term Energy Outlook, the agency expects WTI crude prices to average $88.21 per barrel in 2026, up from its previous forecast of $84.65 per barrel.

For 2027, the EIA expects WTI prices to average $79.74 per barrel, compared with its previous forecast of $69.74.

The EIA raised its Brent crude forecast for 2026 to $96.32 per barrel from $91.01, while its 2027 forecast was raised to $83.74 per barrel from $73.74.

Iran Steps Up Attacks on Tankers in the Strait of Hormuz, Impact on Shipping Volumes Remains Unclear

As oil shipments through the world's most important energy chokepoint approach prewar levels, Iran has stepped up attacks on tankers in the Strait of Hormuz.

The United Kingdom Maritime Trade Operations (UKMTO) reported that nine attacks had taken place in the waterway so far this month, accounting for half of the total number of attacks reported by the agency in the Strait of Hormuz and the Persian Gulf in September. The September figure was boosted by four attacks during the final two days of the month, highlighting the recent acceleration in attacks.

Throughout much of the US-Iran war, vessels in the Strait of Hormuz have come under attack, although the intensity has varied. Several previous waves of heavy attacks temporarily reduced shipping volumes, but traffic generally recovered in the following days as vessel movements increased.

Maritime security officials and shipping executives said it remains unclear whether the latest escalation will lead to a decline in traffic through the Strait of Hormuz. Seaborne gas shipments have also increased in recent weeks, and the impact of the latest developments on those flows remains uncertain.

Vance: Iran Must Make Substantive Cuts to Its Nuclear Enrichment Capacity; US Will Not Accept Empty Promises

US Vice President JD Vance said in an interview on Tuesday that Iran must make substantial reductions to its uranium enrichment capacity to meet US demands and bring an end to the seven-month-old war between the two countries.

Any agreement must require Iran to reduce its enrichment capacity rather than merely promise to do so in the future.

If Iran wants to demonstrate its commitment not to develop nuclear weapons, it must take meaningful steps to reduce its enrichment capabilities. The United States remains open to reaching an agreement, but it will require concrete nuclear concessions from Iran.

"We're not going to substitute empty promises for action," Vance said.

Daly: Further Rate Hikes May Be Needed if AI, Tariffs and Energy Shocks Persist

San Francisco Fed President Mary Daly said on Tuesday that demand for chips driven by the AI boom could spread from high-end AI chips to the broader semiconductor market. Some companies have already begun locking in memory-chip supplies in advance and even redesigning products to reduce their reliance on chips.

The price pressures generated by the AI boom may not be a one-off shock, Daly said, and it could take longer to ease than the one to three years typically assumed by the Federal Reserve.

Whether further policy action is needed will depend on whether shocks stemming from AI, tariffs and higher energy prices caused by the conflict in the Middle East begin to fade.

If these factors persist for longer or reinforce one another, further monetary tightening may be necessary. If the shocks prove temporary, however, additional rate hikes may not be needed.

Today's Key Events

15:30 (UTC+8) ECB Vice President Boris Vujčić Speaks

23:00 (UTC+8) US September New York Fed 1-Year Inflation Expectations

02:00 (UTC+8) Federal Reserve Releases FOMC Meeting Minutes

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