10-year Treasury yield reaches 4.96%, nearing levels last seen in October 2023
Brent crude rose 2% to $107.70 a barrel and WTI gained 2% to $103.37 in European trade on Tuesday as traders weighed supply losses from an attack on Saudi Arabia’s East-West pipeline and Houthi territorial advances in Yemen.
ANZ analysts wrote that the true extent of the damage has not been confirmed and that the immediate impact on oil markets depends on how much crude can be drawn from storage at the Yanbu port facility. Saudi Arabia is expected to ramp up shipments through the Strait of Hormuz, the analysts said, but recorded traffic remains very low. Buffers — oil stored on the water in large ships and on land in strategic reserves — are disappearing and tightening immediate supplies, they wrote.
Stabilizers in the global oil market appear to be weakening, Commonwealth Bank of Australia analyst Vivek Dhar said in a note. China’s crude oil imports are edging higher, while non-OPEC+ supply outside the Middle East is likely only to come online in 2027, Dhar wrote. He said it was difficult to predict when oil flows through the Strait of Hormuz — which typically carries one-fifth of the world’s oil — would recover materially, given still-elevated U.S.-Iran tensions. CBA’s low estimate of global markets having five to 11 weeks of oil and refined product stockpiles is growing more likely, the strategist added.
Diesel futures reversed an early rally after Trump posted on Truth Social that “Ukraine has agreed not to hit Russian energy targets. Russia has agreed to do likewise!” He added that the rise in diesel prices is mostly due to the Russia-Ukraine war, not Iran. Mizuho analyst Robert Yawger said in a note that “neither country has independently said they are held to the deal,” and that “as far as I know, there is no dialogue between the U.S. and Iran.” Ukrainian drone strikes that have knocked out Russian refining capacity have contributed to global diesel shortages while U.S. exports have been at record highs.
Nymex diesel futures settled up 0.4% at $4.9771 a gallon, while gasoil futures on ICE Futures Europe were down 1.2% at $1,462 a metric ton.
European oil stocks were mixed at the open despite oil posting gains. Spain’s Repsol rose 1.5%, Italy’s Eni climbed 0.4%, Britain’s BP fell 0.3%, and Shell traded flat.
In Asia, South Korea’s SK Innovation is expected to improve its financial health in 2026 on sharply higher earnings, according to Yuanta Securities Korea analysts Hwang Kyu-won and Seo Seok-jun. They forecast the company’s operating profit will surge to 10 trillion won this year from 448.7 billion won a year earlier, driven by widening profit margins in its oil-refining and lubricant businesses amid global oil supply disruptions from the prolonged wars in Iran and Ukraine. Yuanta expects SK’s operating cash flow to reach 4.5 trillion won in 2026, with free cash flow turning positive after years in negative territory, and consolidated net debt to fall to 20 trillion won from 24 trillion won in 2025.
By the Monday close, oil futures had settled higher as the pipeline outage and Houthi advances in Yemen kept supply concerns intact, with West Texas Intermediate settling up 1.3% at $101.39 a barrel and Brent rising 1% to $105.68. Earlier in Asian trade, front-month WTI had been up 1.3% at $102.69 a barrel while front-month Brent was 1.3% higher at $107.01 a barrel.
Broader economic sentiment weakened in recent days following mounting warnings over an AI slowdown. The 10-year Treasury yield reached 4.96% on Sept. 15, approaching 5% for the first time since October 2023.