Oil Falls, Asian Stocks Rise Ahead of Fed Rate Decision — Update

By Megan Cheah

Oil declined but remained near multimonth highs, while Asian stocks gained as investors awaited the Federal Reserve's rate decision.

Crude prices fell Wednesday, likely reflecting technical repositioning amid a strong dollar and elevated Treasury yields.

Oil had surged in recent sessions as the Middle East conflict disrupted supplies. The closure of Saudi Arabia's East-West pipeline and Houthi threats to Red Sea shipping continue to pose further risks, while U.S.-Iran tensions remain high.

Saudi Arabia is trying to resume partial operations within days on the 750-mile pipeline, which allows exports to bypass the Strait of Hormuz, The Wall Street Journal reported. Damaged pumping stations could take six to eight weeks to fully repair.

The country's oil exporter is also reportedly delaying shipments to some European customers following attacks on the pipeline, forcing refiners to seek replacement cargoes, UOB Global Economics & Markets Research said in a note.

Crude oil is supported by geopolitical risks and physical supply disruptions, said Antonio Di Giacomo, senior market analyst at XS.com.

"As long as Brent remains around $109 and [West Texas Intermediate] stays above $106, the bias could remain bullish, particularly if repairs in Saudi Arabia take several weeks or additional disruptions emerge," he said.

Front-month WTI crude-oil futures fell 1.1% to $104.70 a barrel, while Brent dropped 0.7% to $108.00 a barrel.

The Fed is widely expected to raise its benchmark rate for the first time since 2023. Markets are heavily pricing in a 25-basis-point increase, said Commonwealth Bank of Australia's Harry Ottley, in line with the bank's view.

If the Fed raises its rates without further guidance from Chairman Kevin Warsh, stock and bond markets could react positively, said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, pointing to the potential for the yield curve to flatten while equities rise.

Asian equities gained around midday. Japan's Nikkei Stock Average rose 0.5%, while Hong Kong's Hang Seng Index edged 0.1% higher. China's Shanghai Composite Index advanced 0.6%. South Korea's Kospi added 1.2%, while Singapore's FTSE Straits Times Index gained 0.2%.

Meanwhile, gold reversed losses ahead of the Fed decision, with spot prices last up 0.7% at over $4,300 a troy ounce.

Gold seems to be caught between its traditional safe-haven role and the rising opportunity cost created by higher oil prices and tighter monetary-policy expectations, said Priyanka Sachdeva, head of market insights at Phillip Nova.

While a surge in energy prices could strengthen gold's appeal as an inflation hedge, this turns into a complicated trade when the oil shock becomes large enough to raise expectations of monetary-policy tightening, she said. A higher interest-rate environment typically weighs on nonyielding gold.

Write to Megan Cheah at megan.cheah@wsj.com

(END) Dow Jones Newswires

September 16, 2026 01:21 ET (05:21 GMT)