Several Fed Officials Back Another Rate Hike This Year as Global Oil Supplies Face Mounting Strains

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Summary:

Saudi Aramco's CEO warns that global crude oil inventories are approaching dangerously low levels, while Fed officials collectively strike a more hawkish tone.

Headlines

1. Iran: We Are Waiting for US Warships to Approach So We Can Sink Them

2. Trump Accuses the Houthis of Deliberately Driving Up Oil Prices

3. Israeli and US Leaders Reportedly Discuss Joint Strikes on Iran

4. OPEC Raises Its Forecast for Global Oil Demand Growth in 2027

5. Saudi Aramco CEO Warns That Global Crude Oil Inventories Are Near Dangerously Low Levels

6. Fed Officials Collectively Strike a More Hawkish Tone

7. Iran Adjusts Tactics for Attacking Ships in the Strait of Hormuz, Seeking to Use High Oil Prices to Influence US Midterm Elections

Detail

Iran: We Are Waiting for US Warships to Approach So We Can Sink Them

On October 13 local time, Amir Azimi, commander of the Islamic Revolutionary Guard Corps (IRGC) Navy, said Iran was waiting for US warships to approach the entrance to the Strait of Hormuz so that it could sink them.

Azimi said Iran could establish economic, political, and military security arrangements with neighboring countries, adding that the region did not need the United States and that US forces must withdraw. He emphasized that Iran's equipment was now more advanced, that it had turned tactical weaknesses into advantages, and that its military personnel were better prepared than ever before.

Trump Accuses the Houthis of Deliberately Driving Up Oil Prices

On October 13, US President Donald Trump accused Yemen's Houthi movement in a social media post of attacking Saudi Arabia in an extremely vicious manner and suggested that the group was likely seeking to deliberately drive up oil prices ahead of the US midterm elections.

Earlier that day, before leaving the White House for Alaska, Trump told reporters that he had spoken with Saudi Crown Prince and Prime Minister Mohammed bin Salman. However, he declined to say whether he had decided to join Saudi Arabia's military campaign against the Houthis. He also said he would make a decision on Iran soon.

On October 10, Trump said he was assessing whether the United States should join Saudi Arabia's strikes against the Houthis and would make a decision as soon as possible.

Israeli and US Leaders Reportedly Discuss Joint Strikes on Iran

According to Israel's Channel 12 on October 13 local time, Israeli Prime Minister Benjamin Netanyahu had held several recent phone calls with US President Donald Trump to discuss the possibility of launching a large-scale joint military strike against Iran ahead of Israel's parliamentary elections on October 27 and the US midterm elections on November 3.

OPEC Raises Its Forecast for Global Oil Demand Growth in 2027

On October 13 local time, the Organization of the Petroleum Exporting Countries (OPEC) released its October 2026 Monthly Oil Market Report, raising its forecast for global oil demand growth in 2027 from 2.36 million barrels per day to 2.55 million barrels per day.

OPEC also said that OPEC and non-OPEC oil-producing countries would continue consultations under the OPEC+ framework. Participants emphasized that, in addition to balancing supply and demand, ensuring that energy transportation routes remain safe, accessible, and economically viable is equally important for maintaining market stability.

Saudi Aramco CEO Warns That Global Crude Oil Inventories Are Near Dangerously Low Levels

Amin Nasser, president and CEO of Saudi Arabian Oil Company (Saudi Aramco), said on October 12 at the 25th World Petroleum Congress that global crude oil inventories were approaching critically low levels and could take two years to return to normal.

The situation in the Strait of Hormuz continues to put pressure on global energy supply chains, exacerbating tightness in crude oil supplies.

Nasser said that global commercial onshore oil inventories had fallen below 6 billion barrels, leaving the market with only a limited remaining buffer. However, he noted that most of these inventories were effectively unavailable to the market.

According to Nasser, global crude oil consumption continues to rise. Even if the Strait of Hormuz were to reopen fully in the near term and market confidence were completely restored, replenishing depleted inventories would require at least two years of production running above normal levels.

Fed Officials Collectively Strike a More Hawkish Tone

New York Fed President John Williams said in a speech on Tuesday that the Federal Reserve might need to raise interest rates once more this year to curb inflation. As for 2027, he said there was currently no reason to believe further action would be necessary.

Boston Fed President Susan Collins believes the Fed needs to raise rates again before the end of this year to bring elevated inflation under control.

Fed Governor Christopher Waller said that the recent rise in US Treasury yields reflected faster economic growth rather than higher inflation expectations. He added that inflation expectations remained well anchored.

Chicago Fed President Austan Goolsbee said inflation was increasingly beginning to look like a symptom of broader economic overheating driven by spillover effects from the artificial intelligence (AI) investment boom, rather than primarily a byproduct of supply-chain shocks that would eventually fade on their own.

Iran Adjusts Tactics for Attacking Ships in the Strait of Hormuz, Seeking to Use High Oil Prices to Influence US Midterm Elections

Two senior Iranian officials said Iran was adopting new tactics to attack vessels transiting the Strait of Hormuz, with the aim of keeping oil prices elevated and attempting to influence the US midterm elections.

The officials declined to provide specific details. However, one said Iran had begun using different methods to attack vessels believed to have violated transit restrictions about 10 days ago, after which the number of related attacks increased. The decision was made by Iran's top leadership and was coordinated extensively within the governing system.

Iran has become less able to prevent oil exports through the Strait of Hormuz from recovering, as it is reluctant to risk deploying its remaining speedboats and US airstrikes have severely damaged the Iranian navy.

The two Iranian officials said the new strategy also involved expanding operations beyond the Strait of Hormuz into the Gulf of Oman and waters farther afield.

Today's Economic Calendar

10:10 (UTC+8) Remarks by ECB President Christine Lagarde

11:45 (UTC+8) Remarks by ECB Governing Council member Moulin

14:00 (UTC+8) Remarks by Bank of England Chief Economist Huw Pill

14:05 (UTC+8) Remarks by Bank of Canada Governor Tiff Macklem

16:00 (UTC+8) International Energy Agency (IEA) releases its monthly oil market report

16:00 (UTC+8) Remarks by ECB Executive Board member Elderson

16:30 (UTC+8) Remarks by ECB President Christine Lagarde

17:40 (UTC+8) Remarks by Fed Governor Michelle Bowman

20:30 (UTC+8) US Consumer Price Index (CPI) for September

00:15 (UTC+8) Remarks by ECB Executive Board member Isabel Schnabel

01:30 (UTC+8) Remarks by Richmond Fed President Tom Barkin

02:00 (UTC+8) Federal Reserve releases its Beige Book on economic conditions

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