International oil prices fell due to an increase in crude supply from Saudi Arabia and expectations of pipeline normalization. As concerns over high oil prices eased, stock markets in the U.S., Europe, and Japan also saw gains. However, uncertainties remain due to the potential for U.S. military action against Iran and trade tensions between the European Union and China, suggesting increased volatility in response to Middle Eastern dynamics, oil prices, and major countries' monetary policies.
According to the International Financial Center, on September 17 (local time), the price of Brent crude closed at $104.82 per barrel, down 0.95% from the previous trading day. The forecast that the Saudi East-West pipeline, which had been shut down due to drone attacks, would resume operations within days contributed to the decline in oil prices.
Additionally, Saudi Arabia has been increasing the volume of crude oil supplied to Asian refiners through ship-to-ship transfers in the Oman region, alleviating supply concerns. The International Financial Center reported that the volume of crude oil transferred between ships in Oman recently reached 2.7 million barrels per day, an 80% increase from the previous month's 1.5 million barrels.
Despite this, tensions in the Middle East persist. President Donald Trump stated on September 17 (local time) that the U.S. is at a "critical juncture" regarding the resumption of large-scale attacks on Iran. He also noted that Iran is seeking an agreement and has been in contact with the U.S. President Trump is scheduled to meet with leaders from six Middle Eastern countries, including Saudi Arabia and Oman, on September 22 to gather their opinions.
The decline in oil prices has somewhat eased inflationary pressures, leading to a generally positive performance in major stock markets.
The S&P 500 index in the U.S. rose by 1.14% compared to the previous trading day, influenced by reduced uncertainty surrounding monetary policy and falling oil prices. The volatility index (VIX), which reflects market anxiety, dropped by 12.82% to 15.44. The European Stoxx 600 index also increased by 0.86%, buoyed by gains in U.S. markets, while Japan's Nikkei 225 index rose by 0.33%.
Global bond yields also fell across the board. The yield on the U.S. 10-year Treasury note decreased by 9 basis points to 4.93%, driven by buying interest and the Federal Reserve's commitment to controlling inflation. Yields on 10-year government bonds in Germany and Japan also fell by 3 basis points and 1 basis point, respectively.
Looking ahead, market attention is likely to focus on the Federal Reserve's potential for further interest rate hikes. According to Bloomberg analysis, the market is pricing in the possibility of one to three additional rate increases by the end of next year. However, given the current high level of interest rates, there is also speculation that the rate hike cycle could end without further tightening, similar to 1997.
The Bank of Japan's monetary policy decision-making meeting is also a key variable for short-term financial markets. Prime Minister Takaichi has expressed respect for the Bank of Japan's monetary policy decisions, and market interest will likely center on how much the yen and Japanese government bond yields reflect potential changes in monetary policy.
* This article has been translated by AI.
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