Saudi pipeline shutdown lifts crude as Fed rate bets boost dollar

  • Renewed attacks on Saudi energy infrastructure and ships kept crude prices elevated as the East-West Pipeline remained disrupted.
  • U.S. crude rose 1.27% to $102.68 a barrel, while Saudi Arabia said the earlier pipeline attack could affect up to 4% of global oil supply.
  • The rupee closed at 95.55 per dollar and India's 10-year yield reached 7.0233% as Fed and RBI policy concerns intensified.

Renewed attacks on Saudi Arabia and ships in the Middle East kept crude markets focused on supply risks after Saudi Arabia precautionarily shut its East-West Pipeline, a key route from eastern oil fields to the Red Sea port of Yanbu. Yemen's Iran-aligned Houthis launched a new attack on Sept. 15 after an earlier strike that Saudi Arabia said could disrupt as much as 4% of global oil supply. U.S. crude rose 1.27% to $102.68 a barrel and Brent gained 1.21% to $106.96, later remaining around $105. Higher energy prices and expectations of Federal Reserve tightening strengthened the dollar and pressured emerging-market assets. The rupee fell more than 1% last week to close at 95.55 per dollar, while India's benchmark 10-year bond yield ended at 7.0233% after rising for a fourth consecutive week. Markets priced a high probability, including 90% in one assessment, of a 25-basis-point Fed hike at the Sept. 15-16 meeting, although a Reuters poll listed no change as the expected outcome. The Reserve Bank of India announced 1 trillion rupees of open-market bond sales this fortnight.

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