Oil Prices Fluctuate as Traders Parse Middle East Developments — Update

By Ronnie Harui

Oil prices fluctuated in Asian trading Friday as investors assessed developments in the Middle East conflict, while government bonds fell on growing concerns about tighter monetary policy.

Iran-backed Houthi militants seized the port city of Mokha on Yemen's west coast Thursday, The Wall Street Journal reported, citing Yemeni and Saudi officials. The move strengthens their position near the Bab al-Mandeb Strait, a key passage for energy shipments through the Red Sea.

The seizure followed days of intense fighting with Saudi-backed Yemeni government forces in a conflict that has escalated since early July. Earlier this week, the Houthis launched a large missile-and-drone attack on energy facilities and a military base in southern Saudi Arabia.

The Houthis' advance "could give the group a foothold, which could enable them to almost fully control the Bab al-Mandeb Strait," ANZ Research analysts said.

Front-month West Texas Intermediate crude oil futures were little changed at $102.48 a barrel after swinging between a 1.9% gain and a 0.3% loss, ICE data showed. Front-month Brent crude oil futures were 0.2% higher at $107.84 a barrel after also fluctuating between gains and losses.

Government bonds across the Asia-Pacific region fell on concerns that rising oil prices could prompt central banks worldwide to raise interest rates more quickly.

"Its been an ugly session for markets," said Skye Masters, head of markets research at National Australia Bank, in commentary. "With central banks in the past week(s) communicating their determination to deliver on their inflation targets, rate-hike expectations have been added to amid a further rise in oil prices," Masters added.

Yields on Australia's 10-year government bonds jumped 13 basis points to 5.3740% after earlier touching 5.3993%, its highest intraday level since May 2011, FactSet data showed. New Zealand's 10-year government-bond yield climbed 16 basis points to 5.0360%, while Japan's 10-year government-bond yield rose 6.5 basis points to 2.975%. Bond yields move inversely to prices.

Bank of Japan policy board member Kazuyuki Masu on Thursday emphasized the need for further interest-rate increases and warned of higher inflation.

"To complete the normalization of monetary policy in Japan, I am convinced that the bank needs to raise the policy interest rate further," Masu said in a speech to business leaders in central Japan's Fukui Prefecture.

"What is most vital from now on is to ensure that the underlying inflation rate does not significantly exceed 2%," he said, adding that trend inflation is getting "very close" to the central bank's target.

Stock markets across the Asia-Pacific region fell, tracking Wall Street's overnight losses. South Korea's Kospi dropped 1.9%, Japan's Nikkei Stock Average lost 2.1% and Hong Kong's Hang Seng Index declined 0.9%. China's Shanghai Composite declined 1.8%, Taiwan's Taiex shed 1.4%, and Malaysia's FTSE Bursa Malaysia KLCI was down 1.0%.

"The main theme was energy-driven risk-off as the Middle East conflict escalated further," Commerzbank Research analysts said in a research report.

--Megumi Fujikawa contributed to this article.

Write to Ronnie Harui at ronnie.harui@wsj.com

(END) Dow Jones Newswires

September 11, 2026 01:28 ET (05:28 GMT)