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Wednesday, October 21, 2026
What’s happening: Crude oil prices traded higher this morning amid supply concerns in the Middle East.
What happened: Markets responded to mixed reports on the progress in talks between the US and Iran.
Meanwhile, investors remained concerned around attacks on oil infrastructure by the Houthis in Saudi Arabia.
Why it matters: Oil prices declined on Tuesday on reports of talks between Iran’s President and Pakistan’s Army Chief in Tehran regarding a potential diplomatic mediation.
Hopes of any US-Iran deal being struck in the near term quickly faded as reports mentioned Tehran’s possible intention to prolong talks till November’s US midterm elections.
Meanwhile, an oil supertanker caught fire south of the Strait of Hormuz after hitting a sea mine. The incident triggered concerns around persistent shipping disruption in the Middle East.
According to data published by ship-tracking platform Kpler, at least 18 vessel attacks were reported over a two-week period.
Yemen’s Houthi claimed responsibility for a series of strikes targeting key Saudi infrastructure, including Saudi Aramco facilities in Yanbu and the Shaybah oilfield, along with international airports in Riyadh and Abha.
Despite the pullback in oil prices this morning, crude benchmarks traded higher by more than 10% this month.
Data released by the API (American Petroleum Institute) showed that US crude oil inventories contracted by 4.93 million barrels in the week ending October 16, above market estimates of a drawdown of 1.3 million barrels.
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, gained around 0.1% to 101.81 this morning.
Spot price for WTI crude oil rose 0.7% to $98.67 per barrel this morning, while Brent crude climbed 0.7% to trade at $107.06 per barrel.
In other commodities trading, gasoline climbed 1.3% to $3.1574, natural gas rose 0.2% to $2.970 and heating oil prices jumped 1.5% to trade at $4.7862.
What to watch: Investors will keep an eye on the developments in the Middle East and progress in the US-Iran talks.
The Energy Information Administration’s (EIA) data on crude oil stocks change (1830 UAE Time) will be released today. US crude inventories, which dipped by 8.557 million barrels in the week ended October 9, are expected to decline by 0.3 million barrels in the latest week. US gasoline stockpiles jumped by 3.518 million barrels in the week ended October 9, while distillate stocks contracted by 2.527 million barrels. US heating oil stockpiles declined by 0.448 million barrels in the same week.
Context: The Japanese yen fell versus the US dollar this morning, as investors digested the latest trade data.
Details: Data released this morning showed that Japan’s trade deficit widened sharply to ¥536.6 billion in September from ¥277.7 billion in the year-ago month. The latest reading exceeded market estimates of a deficit of ¥181.0 billion.
The deterioration in reading came as growth in imports outpaced exports. Imports jumped 18.9% year-over-year to ¥11,508.8 billion, following a 28.0% surge in the previous month.
Crude oil imports surged 51.1%, signalling Japan’s efforts to secure alternative energy sources amid ongoing concerns in the Strait of Hormuz.
Meanwhile, exports from Japan climbed 16.7% to ¥10,972.2 billion, but came below market expectations of 20.1%. This marked the slowest growth in exports in five months. Ongoing demand for AI semiconductors sustained strong export growth, while supply disruptions due to the Middle East conflict created headwinds for supply chains.
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, gained around 0.1% to 101.81 this morning.
The USD/JPY forex pair edged higher to 158.23 this morning, while the Nikkei 225 jumped 1.19% to trade at 64,839.18 amid a surge in AI stocks.
What to watch: Data on Japan’s inflation rate, S&P Global manufacturing PMI and S&P Global services PMI will be released on Friday. Analysts expect Japan’s annual inflation rate to accelerate to 2.3% in September from 1.9% in August. The S&P Global Japan manufacturing PMI is expected to improve to 54.5 in October from 54.1 in the previous month, while the services PMI is projected to remain at 51.3 in October, unchanged from September.
Other Markets: US trading indices traded mostly higher on Tuesday, with the Dow Jones index and S&P 500 up by 1.02% and 0.28%, respectively, and Nasdaq 100 down by 0.13%.
Ukraine’s President Volodymyr Zelenskyy said that the US is delaying deliveries of interceptor missiles for its ongoing war with Russia. The news sent the USD/RUB forex pair lower in forex trading this morning.
Eurozone’s ZEW indicator of economic sentiment declined by 7.3 points to 18.5 in October, missing market estimates of 23.6. Investor morale falling to its lowest level in four months exerted pressure on the EUR/USD forex pair.
Taiwan’s export orders jumped 62.4% year-over-year to a record $114 billion in September, following 71.4% growth in the previous month, which sent the USD/TWD pair lower in forex trading this morning.
UK’s total average weekly earnings, including bonuses, climbed by 3.7% year-over-year to £757 in the three months to August, after rising 3.9% in the previous month, which exerted pressure on the GBP/USD forex pair.
Poland’s producer prices surged by 6.1% year-over-year in September, accelerating from the previous month’s 4.8% gain. The latest reading coming in above market estimates of 5.8% sent the USD/PLN pair higher in forex trading this morning.
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