West Texas Intermediate (WTI) oil price remains subdued for the third successive day, trading around $96.40 per barrel during the Asian hours on Friday. Crude oil prices have declined as concerns over Middle East supply disruptions ease, bolstered by growing hopes for renewed diplomatic efforts to resolve the conflict and restore stable energy flows.
Saudi Arabia is actively working to restore its energy infrastructure, targeting the recovery of roughly half the capacity of its East-West pipeline within days, with a full return to operations anticipated within six weeks. To maintain supply in the interim, the kingdom is rerouting a portion of its crude exports through the Strait of Hormuz. By utilizing shuttle vessels to transport crude through the strait before loading tankers waiting outside, Saudi Arabia is effectively limiting its fleets exposure to potential Iranian attacks.
Diplomatic pressure is also mounting behind the scenes. Reports indicate that China urged Iran to help restrain Houthi militants following an appeal from Riyadh, responding to the rebel groups intensified attacks on Saudi energy facilities. Concurrently, President Donald Trump stated he is evaluating whether to resume military attacks on Iran, speaking ahead of an upcoming meeting with Gulf leaders in New York.
Lower oil and gas prices temper post-Fed bond sell-off
Strategists at Societe Generale note that the bond market “received a helping hand from lower oil and gas priced at the open this morning” after a report by Axios that the US plans to resume Iran-related negotiations with Gulf States next week. They point out that “sellers initially pounced on the hawkish Fed hike last night,” with “10y UST yields dipped to 4.94% as risk assets retreated on the upward revision of the dot plot and the neutral rate, before recovering to 5.02% in Asia.”