U.S.-Iran Standoff Remains Unresolved, Fed’s Inflation Fight Continues

Daily News

Summary:

Sources say U.S.-Iran talks have made limited progress, with neither side willing to compromise; multiple Fed policymakers emphasized that current monetary policy should remain focused on curbing inflation......

【Key Developments】

1. OPEC+ likely to maintain November crude oil production quotas unchanged

2. Sources: Limited progress in U.S.-Iran talks, with neither side willing to compromise

3. Mediators push to restart U.S.-Iran talks, with draft proposal linking sanctions relief to reopening the Strait of Hormuz

4. U.S. consumer confidence index falls to a 12-year low in September

5. U.S. plans to release 40 million barrels from the Strategic Petroleum Reserve to ease fuel price pressures

6. Multiple Fed policymakers stress that monetary policy should remain focused on containing inflation

【Detailed Reports】

OPEC+ likely to maintain November crude oil production quotas unchanged

OPEC+ members, led by Saudi Arabia and Russia, are highly likely to keep their November crude oil production quotas unchanged, with delegates expecting the group to approve the current roadmap at Sunday’s meeting. Although crude oil flows have recovered, millions of barrels of production capacity in the Middle East remain offline. Meanwhile, OPEC+ members continue to face capacity constraints caused by insufficient investment, sanctions, and equipment shutdowns. The group’s policy direction for 2027 will depend on the capacity assessment scheduled for completion this week.

Sources: Limited progress in U.S.-Iran talks, with neither side willing to compromise

According to three sources familiar with the negotiations cited by Axios, Qatari mediators attempted this week to facilitate a diplomatic breakthrough between the United States and Iran, but made little progress as neither side was willing to compromise. The deadlock has further reinforced concerns on both sides that the military conflict could escalate again.

U.S. officials believe that Trump could order a resumption of large-scale military action after the midterm elections. Two sources said Qatari officials will continue their mediation efforts but are becoming increasingly frustrated with both Washington and Tehran. One source said Monday’s talks failed to achieve significant progress and had reached an impasse. Iran has put forward demands that the U.S. cannot accept, while Washington believes it holds the upper hand and sees no need to compromise. Other regional mediators, including Pakistan and Egypt, have also urged Iran to make concessions on the nuclear issue.

However, another source familiar with the matter said Iran has indicated that it would only consider further concessions after the U.S. agrees to restore the memorandum of understanding signed in June.

Mediators push to restart U.S.-Iran talks, with draft proposal linking sanctions relief to reopening the Strait of Hormuz

The Financial Times reported that mediators are working to revive efforts toward an agreement between the United States and Iran. Two officials briefed on the negotiations said mediators held discussions between U.S. and Iranian officials on Monday and are expected to present Tehran with an updated draft interim agreement on Tuesday.

Under the draft terms, Iran would allow vessels to pass freely through the Strait of Hormuz, while the United States would lift the blockade on Iranian ports. Mediators hope the interim arrangement could encourage both sides to resume negotiations on a final agreement to end the conflict. One official said progress has been made, but the parties are still negotiating the sequence of implementation steps. Potential follow-up measures could include the U.S. restoring oil waivers, allowing Iran to sell crude oil, enabling Tehran to access some frozen overseas assets, and arranging measures related to Iran’s nuclear program, including the return of International Atomic Energy Agency (IAEA) inspectors to Iran.

U.S. consumer confidence index falls to a 12-year low in September

The Conference Board reported that the U.S. consumer confidence index fell to 81.9 in September, the lowest level in 12 years, below the market expectation of 89.2 and down from the previous reading of 89.4. The report showed that consumers remain concerned about the rising cost of living, including elevated gasoline prices. Despite inflation concerns, consumer spending and the labor market have continued to show resilience. Dana Peterson, chief economist at the Conference Board, said in a statement that most of the economic factors mentioned by consumers in September surveys reflected a more pessimistic outlook.

In addition, U.S. JOLTS job openings declined by 256,000 in August to 7.079 million. A decline in voluntary quits kept the quits rate, viewed by policymakers as a measure of labor market confidence, unchanged at 1.9%. This could help ease wage inflation but may not prevent the Federal Reserve from raising interest rates further.

U.S. plans to release 40 million barrels from the Strategic Petroleum Reserve to ease fuel price pressures

The U.S. Department of Energy said on Tuesday that the Trump administration plans to provide energy companies with 40 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) to address rising fuel prices caused by escalating tensions with Iran and the Russia-Ukraine conflict. The department said the measure would be carried out through a “loan” arrangement, with companies required to return the SPR crude in the future.

Earlier in March, the United States reached an agreement with the International Energy Agency (IEA) and around 30 countries as part of a plan to release approximately 400 million barrels of global crude reserves. The U.S. committed to providing 172 million barrels from its strategic reserves. The Trump administration proposed releasing the remaining 40 million barrels under the agreement in June, but data at the end of that month showed that energy companies had agreed to borrow only around 500,000 barrels.

Multiple Fed policymakers stress that monetary policy should remain focused on containing inflation

New York Fed President John Williams and several other Federal Reserve officials said that price pressures remain the key focus of monetary policy. Williams said policymakers may need only one additional rate hike this year to put inflation back on a path toward the Fed’s 2% target.

Chicago Fed President Austan Goolsbee said that inflation remaining above target for five and a half consecutive years is “playing with fire.” St. Louis Fed President Alberto Musalem noted that the Fed should avoid leaving the public uncertain about its policy intentions, as excessive reductions in communication could increase market volatility risks. Fed Governor Michael Barr again argued in favor of further rate hikes, saying that the inflation-fighting process has moved off track.

【Today’s Focus】

09:30 (UTC+8) China September official Manufacturing PMI

09:30 (UTC+8) Australia August CPI

09:45 (UTC+8) China September Caixin Manufacturing PMI

14:45 (UTC+8) France September preliminary CPI monthly rate

16:00 (UTC+8) Switzerland September ZEW Investor Confidence Index

20:00 (UTC+8) Germany September preliminary CPI monthly rate

20:15 (UTC+8) U.S. September ADP Employment Change

20:30 (UTC+8) U.S. August PCE

23:45 (UTC+8) ECB Executive Board Member Isabel Schnabel speaks

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

03:25 (UTC+8) Fed Governor Lisa Cook speaks

05:10 (UTC+8) Chicago Fed President Austan Goolsbee speaks

06:00 (UTC+8) Minneapolis Fed President Neel Kashkari speaks

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