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Wednesday, October 07, 2026
What’s happening: Crude oil prices traded higher this morning amid risks to energy flows from tensions in the Middle East.
What happened: A surge in attacks on vessels in the Strait of Hormuz and a series of attacks claimed by Houthi rebels on Saudi Arabia intensified tensions in the region.
US hurricane forecasts suggest a storm developing in the Gulf of Mexico that could hit oil and gas producing facilities.
Why it matters: US President Donald Trump said that vessel transits through the Strait of Hormuz were reaching or exceeding pre-war levels, with “millions of barrels” of oil passing through the key waterway.
Markets grew concerned, however, on reports of attacks on Saudi Arabia’s airports in Jazan and Najran, amid an escalation in hostilities between the kingdom and Houthi rebels.
Tankers facing attacks in and around the key Strait of Hormuz waterway heightened risks for global crude shipments.
Meanwhile US forecasters said a storm would become the first Atlantic hurricane of the year within two days, with areas in the path of the storm represent around 15% of the country’s crude oil production. The storm is also expected to affect six refineries.
Data released by the American Petroleum Institute (API) showed that US crude oil and gasoline inventories declined last week. Crude stockpiles contracted by 2.09 million barrels during the week ended October 2, following a gain of 1.019 million barrels in the previous week.
Despite the recent developments, crude oil prices remained under pressure this week with Saudi Arabia increasing supply from its East-West oil pipeline.
Strength in the US dollar weighed on oil prices as a higher greenback makes commodities more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose around 0.1% to 101.98 this morning.
Spot price for WTI crude oil climbed 0.4% to $89.54 per barrel this morning, rebounding from five-week lows. Spot price for Brent crude rose around 0.2% to $100.31 per barrel.
In other commodities trading, gasoline jumped 2.1% to $3.3404, while natural gas rose 0.7% to $3.135 and heating oil gained 1.4% to trade at $4.6310.
What to watch: Investors will continue monitoring the Middle East situation.
Data on the US EIA (Energy Information Administration) crude oil stocks (1830 UAE Time) will be released today. US crude inventories jumped by 0.922 million barrels to 427.3 million barrels in the week ended September 25, while US gasoline stockpiles declined by 1.684 million barrels. US heating oil stockpiles contracted by 0.62 million barrels in the week, the most since mid-August, while distillate inventories declined by 2.251 million barrels during the same period.
Context: The Japanese yen fell versus the US dollar this morning as investors digested the latest economic data.
Details: The yen remained under pressure as a wide yield gap between the US and Japan continued to support the greenback.
Japan’s Prime Minister Sanae Takaichi announced plans to reduce consumption tax on food products, pushing ahead with her proactive fiscal policies.
Meanwhile, data released this morning showed that Japan’s real wages surged 1.5% year-over-year in August, recording gains for the eighth straight month and reinforcing speculations of the Bank of Japan hiking its benchmark interest rate.
Japan’s official reserve assets dipped by $29.1 billion to $1.178 trillion at the end of September. The Reuters Tankan index for Japanese manufacturers rose for the third straight month to +22 in October from +21 in September, recording the strongest reading since December 2021.
Strength in the US dollar weighed on the Japanese yen. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose around 0.1% to 101.98 this morning.
The USD/JPY forex pair rose 0.2% to 158.46 this morning.
What to watch: Data on current account (0350 UAE Time), foreign bond investment (0350 UAE Time) and Eco Watchers survey current (0900 UAE Time) from Japan will be released on Thursday. Japan’s current account surplus, which surged to ¥2,988.9 billion in July from ¥2,586.3 billion in the year-ago month, is expected to rise further to ¥3194.6 billion in August. Analysts expect Japan’s services sector sentiment index to improve to 46.8 in September from 46.4 in the previous month.
Investors also await the release of minutes from the latest Federal Open Market Committee meeting (2200 UAE Time), which could provide further insights into the the central bank’s monetary policy outlook.
Other Markets: US trading indices closed higher on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.49%, 0.58% and 0.48%, respectively.
Ukraine’s President Volodymyr Zelenskyy said that Russia is preparing another “massive” attack. The news sent the USD/RUB forex pair lower in forex trading this morning.
Australia’s Industry Index dipped to -24.2 in September from -1.6 in August, which exerted pressure on the AUD/USD forex pair.
Canada’s Ivey PMI declined to 58.2 in September from 64.3 in the previous month. The latest reading missing market estimates of 65.2 sent the USD/CAD pair higher in forex trading this morning.
Eurozone’s S&P Global construction PMI rose to 43.4 in September from 43.0 in the previous month. Construction remaining in the contraction zone exerted pressure on the EUR/USD forex pair.
UK’s S&P Global construction PMI climbed to 46.1 in September from 44.3 in August. Continued contraction in construction activity sent the GBP/USD pair lower in forex trading this morning.
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