• Oil Prices fall after Trump cited productive Iranian talks and ruled out military action before midterms, despite maintaining blockades.
• Leaked reports indicated the US had prepared three-day strike plans targeting Iranian military and energy infrastructure.
• Oil previously surged 5.6% following Strait of Hormuz tanker attacks and Gulf hurricane shutdowns.

West Texas Intermediate (WTI) oil price declines after posting nearly 2.5% gains in the previous day, trading around $90.30 per barrel during Asian hours on Friday. Crude oil prices fell following statements from US President Donald Trump on social media, where he announced that the US was engaged in “productive discussions” with Iran and would refrain from attacking the country prior to the midterm elections.

While asserting that record volumes of crude were currently passing through the Strait of Hormuz, President Trump emphasized that the US naval blockade of Iranian ports would remain fully operational. However, subsequent reports indicated that the US had already prepared plans for three days of targeted strikes against Iranian energy infrastructure, drone and missile stockpiles, and other strategic sites.

The sudden drop in oil prices followed a sharp rally on Thursday, during which oil prices surged by up to 5.6% due to escalating maritime tensions and weather disruptions. Tehran had intensified attacks on commercial shipping in the Strait of Hormuz, targeting nine vessels over the previous week. Concurrently, offshore production in the Gulf of Mexico faced severe threats from Hurricane Isaias, forcing regional producers to shut in approximately 1.3 million barrels per day of crude output.

Oil spike drives US yields toward multi-decade highs

Strategists at Scotiabank highlight that the latest flare-up in energy markets is feeding directly into rates, noting that “the impact on oil prices and global bond yields is clear, with WTI up $4/bbl on the day and trading back above $90/bbl as the US 10Y threatens fresh multi-decade highs above 5.35% nearing levels last seen in 2002.” They frame the move as a renewed test of investors’ tolerance for higher yields in the face of resurgent crude prices.