Oil Is the Trigger, but 5.2% Yields Decide This Week
Oil is no longer the main story this week; the price of money is. Brent sits near $100 and a Russian diesel deal is shaving the edges off fuel prices, but with the 10-year Treasury still around 5.2% after touching a 24-year high, Wednesday's U.S. inflation print matters more than any tanker headline.
Three things landed in about 72 hours. On Friday, Trump announced a deal for Russia to release up to 4.8 million tonnes of diesel, starting with 300,000 tonnes now, with Washington reportedly issuing a temporary Treasury licence to make the shipments workable. New York Harbor diesel futures fell about 4.5% to $4.67 a gallon on the news, while Brent still settled at $104.72, up 0.4% (per AP-syndicated reporting). Over the weekend, Trump also said Russia and Ukraine had agreed an energy ceasefire; Zelensky said he was still waiting for details and Moscow had not commented. Same story as September: an announcement is not an agreement.
Meanwhile the Gulf is not calming. Iran has stepped up attacks on shipping around the Strait of Hormuz since late September, called the latest U.S. proposal to reopen it insufficient, and Saudi-Houthi hostilities continue. A hurricane also came ashore on the U.S. Gulf Coast, with more than 60% of regional oil output reported offline. Monday morning, WTI was drifting lower near $90, testing the bottom of its recent channel (FOREX.com).
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