Oil prices fell on September 25, 2026, as reports emerged that US and Iranian negotiators were discussing a phased agreement that would involve Tehran reopening the Strait of Hormuz. Global benchmark Brent crude dropped towards $105 a barrel, while West Texas Intermediate (WTI) traded below $93. This comes after a volatile week for crude, with Brent still over 70% higher for the year, contributing to inflationary pressures. The Strait of Hormuz, a critical waterway for approximately a fifth of daily global oil and natural gas supplies, has been at the center of a nearly seven-month conflict between the two nations.
The potential deal, discussed on the sidelines of the United Nations General Assembly in New York, would see Iran reopen Hormuz if the US lifts its naval blockade, releases frozen Iranian assets, reinstates sanctions waivers on oil exports, and ends Israel's war in southern Lebanon. Iranian Foreign Minister Abbas Araghchi presented a seven-day proposal to Washington, remaining in New York to await a response. While a credible, phased deal could push Brent below $100, another disruption in the export or logistics chain could see prices rise to $120, according to Haris Khurshid, chief investment officer at Karobaar Capital LP. Ship-tracking data showed transits through the Strait of Hormuz at only 9, significantly below peacetime levels.
Simultaneously, a global bond sell-off continued, pushing US Treasury yields to multi-year highs. The US 30-year Treasury yield rose to nearly 5.5%, its highest since 2004, and the 10-year yield reached approximately 5.2%. This sell-off was fueled by stronger-than-expected US economic data and increased expectations for further interest rate hikes by the Federal Reserve. US mortgage rates also climbed to around 7%. Gold prices edged higher toward $4,290 an ounce, recovering some ground after being pressured by a firmer dollar and expectations of Fed tightening. In currencies, the Japanese yen found support from concerns raised by Japanese officials about its weak valuation, leading to USD/JPY slipping near 158.40.
The diplomatic efforts to de-escalate tensions were also a key topic during the US-China summit in Washington, where Chinese President Xi Jinping met with President Donald Trump. China's special envoy for the Middle East, Zhai Jun, indicated that the leaders reached a critical consensus on the Middle East situation. President Trump is reportedly seeking Beijing's assistance in pressuring Tehran towards a settlement. A deal before the upcoming midterm elections could benefit Trump by easing Gulf tensions, containing oil prices, and potentially lowering US gasoline prices.
