Postponed Hormuz Talks Leave Asian Shares Paying Twice

Brent crude last rose 2.6% to $107.36 a barrel on September 14 as Asian share markets sold off. Oman had just postponed talks on the Strait of Hormuz, and Saudi Arabia’s main pipeline around that waterway stayed shut.

South Korean shares fell 3.3% and Japan’s Nikkei 1.7%. Traders also priced an 86% chance the Federal Reserve lifts rates by 25 basis points on September 16, the first such move since mid-2023.

Oman Called Off the Only Talks on the Calendar

Omani Foreign Minister Sayyid Badr Albusaidi posted on September 13 that a regional meeting set for September 14 in Salalah would not go ahead. He gave no new date.

https://x.com/badralbusaidi/status/2099224052619735498

Iranian officials had said they would present an Iran-Oman plan on shipping routes through the strait, which has been disrupted since the United States and Israel launched a war with Iran in February. Iran’s foreign ministry said the delay came at the request of some regional countries and was a joint call with Muscat. Bahrain had already said it would not sit with Iranian officials. Iraq had planned to send a delegation, and a Gulf official said Saudi Arabia and Qatar would be represented by their foreign ministers.

Iranian Foreign Minister Abbas Araqchi said that even with an understanding with Oman, Iran would not reopen the strait until the United States meets Tehran’s demands. The British maritime security agency UKMTO said a vessel moving through the strait was hit by a projectile on September 13, causing a fire and forcing the crew off. Iran said one person was killed and four crew were wounded on an Iranian commercial ship struck off its coast.

The International Energy Agency’s Hormuz factsheet, last updated in February, puts average shipments at 20 million barrels a day in 2025, about 25% of seaborne oil trade, with about 80% of that oil headed for Asia. Japan and Korea are called out as particularly reliant. China and India together took 44% of the crude that transited the strait that year. Those baseline barrels are why a cancelled Monday in Salalah showed up in Seoul and Tokyo before it showed up on Wall Street.

The East-West Line Was the Last Large Bypass

Saudi Arabia shut its 1,200-km (745-mile) East-West pipeline after drone strikes on September 10 in the Riyadh and Medina regions, strikes that Riyadh and Baghdad said originated in Iraq. The energy ministry called the closure a precaution. The line had been moving 4 million to 5 million barrels a day in recent months, about 4% to 5% of world supply, and it had become the main way Middle East crude skipped the strait.

Traders and Saudi oil buyers said stocks at the Red Sea port of Yanbu can keep exports going for only 5 to 7 days if the pipe stays dark. After that, as much as 4% of global supply is at risk on top of barrels already lost in Hormuz. Riyadh has not said how long repairs will take. People who described the damage to reporters gave estimates ranging from days to weeks. Satellite images showed heavy smoke along the route.

The IEA puts spare bypass capacity for the whole Gulf, including the UAE line to Fujairah, at only 3.5 to 5.5 million barrels a day against a 20 million barrel normal load through Hormuz. The Petroline system is designed for 5 million barrels a day. Aramco said in March 2025 it had raised that to 7 million, a rate the agency says has not been tested as a sustainable flow. An IEA note on how supply rerouted after the strait shock said Yanbu loadings above 5 million barrels a day in early June, up from about 2 million before the war. That workaround is what the drones hit.

THE WEEK THE BYPASS FAILED

1. February 2026: The United States and Israel launch a war with Iran, and traffic through the Strait of Hormuz breaks down.
2. June 2026: The Bank of Japan raises its policy rate to 1%, and Yanbu loadings climb above 5 million barrels a day as a Hormuz workaround.
3. September 10: Drones hit the East-West pipeline in the Riyadh and Medina regions.
4. September 11: Saudi Arabia shuts the line; the U.S. CPI report lands; Houthi fighters take Perim Island in the Bab el-Mandeb.
5. September 13: Oman postpones the Salalah meeting, and UKMTO reports a projectile strike on a ship in Hormuz.
6. September 14: Asian shares fall and Brent last trades at $107.36.
7. September 16: The Federal Reserve is due to announce its rate decision.
8. September 17-18: The Bank of Japan meets, with people familiar with its thinking expecting a move to 1.25%.

The stacked calendar is the point of transmission. Oil did not need a new war headline on September 14. It needed the last large bypass to stay offline while the only talks on the strait slipped off the diary.

THREE HITS ON THE SAME SUPPLY CHAIN

• Hormuz talks: The Salalah meeting that was meant to air an Iran-Oman shipping plan is postponed with no date.
• East-West pipe: The 4 million to 5 million barrel-a-day line that had been skipping the strait remains shut, with 5 to 7 days of cover at Yanbu.
• Bab el-Mandeb: Houthi fighters hold Perim Island at the mouth of the Red Sea, the water those Yanbu loadings still have to cross.

June Goh, senior oil market analyst at Sparta Commodities, told clients that if the outage outlasts crude buffers, the 400,000 barrel-a-day YASREF and SAMREF plants and the 245,000 barrel-a-day Yanbu refinery could later lose feedstock, tightening diesel further into Europe. Eastern plants in Korea and Japan that had been lifting Saudi crude from Sidi Kerir face the same prompt squeeze, even if some barrels can still be offered from the Gulf of Oman.

Gasoline Did More Than a Third of August Inflation

The Bureau of Labor Statistics said on September 11 that the consumer price index rose 0.4% in August after 0.1% in July, and was up 3.4% over 12 months. Gasoline rose 3.9% on the month and accounted for over one third of the all-items increase. The gasoline index jumped 27.4% over 12 months. Energy as a whole was up 2.1% in August and 16.3% over the year.

AUGUST CPI, OIL ALREADY INSIDE

• Headline: Up 0.4% on the month and 3.4% on the year, the same annual rate as July.
• Core: Up 0.3% on the month, above the 0.2% pace markets had built in, and 2.4% on the year after 2.5% in July.
• Gasoline: Up 3.9% in August and 27.4% over 12 months, more than a third of the monthly rise in the all-items index.
• Airfares: Up 2.7% in August and 23.4% over 12 months, another travel cost tied to fuel.

U.S. retail diesel rose above $6.20 a gallon on September 13, another record. Core inflation is not an energy print, and the 0.3% monthly core rise is why futures treated a hold as the long shot. The funds rate sits at 3.50% to 3.75%. A 25 basis point move would take it to 3.75% to 4%. Governor Christopher Waller had said a hot August report could lead him to back a rise at the September 15-16 meeting.

The Sharper Fall in South Korea

Asia’s session on September 14 split along import lines. South Korean shares dropped 3.3%. The Nikkei fell 1.7%. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.8%. In Europe, EURO STOXX 50 futures lost 0.5%, DAX futures 0.4%, and FTSE futures 0.1%. On Wall Street, S&P 500 futures lost 0.5% and Nasdaq futures 1.1%.

HOW THE SESSION PRICED THE SQUEEZE

The IEA’s Hormuz note is blunt on who drinks from that waterway. Japan and Korea rely on it in a way Europe does not: only about 600,000 barrels a day, or 4%, of the region’s crude was routed to Europe in 2025. A closed or throttled strait is an Asian industrial problem before it is an American gasoline problem, and Seoul’s 3.3% drop sat next to a 1.7% Nikkei decline in the same session.

People familiar with the Bank of Japan’s thinking said the board is set to raise the policy rate to 1.25% from 1% at its September 17-18 meeting, which would be the highest since April 1995. The last increase, to 1% in June, came three months earlier. Governor Kazuo Ueda said on September 1 that the bank would discuss a rise at every meeting, including this one, with oil, a weak yen, and AI-related demand on the price-risk list. Tokyo is hiking into the same energy shock as Washington, with a share market that already gave back 1.7% on September 14.

Why a Rate Rise Cannot Reopen a Strait

Markets put an 86% chance on a 25 basis point Fed increase on September 16 after the CPI report. Michael Feroli, chief U.S. economist at JPMorgan, said the bank now expects two increases this year, in September and December.

At this stage, failing to back up words with action could put the credibility of the institution at risk.

Michael Feroli, chief U.S. economist, JPMorgan

Feroli added that whether the moves are a limited recalibration or the start of a longer cycle will depend on incoming data, and that his base case is the former with risks of the latter. That is the fork oil now sits on. A 25 basis point step can answer a credibility question after a 0.3% core print. It cannot put tankers back into a 21-nautical-mile channel, and it cannot weld a pipeline in the Hejaz.

Yields on 10-year Treasury notes were a fraction lower at 4.967% on September 14, after a heavy selloff. In the week that ended September 11, 2-year yields rose 26 basis points and 10-year yields 19 basis points as the curve flattened. Ben Snider, chief U.S. equity strategist at Goldman Sachs, said strong company earnings should still support Wall Street if borrowing costs rise, and that his firm expects the bull market to continue even though equities typically struggle when the Fed starts to hike. The S&P 500 has generated an average three-month return of -2% at the start of seven hiking cycles over recent decades, he said.

Those two desks are not describing the same object. Feroli is talking about the Fed’s need to match words with a vote. Snider is talking about earnings power after the vote. Neither vote reopens Hormuz. The second-order path is the one Asia already printed: energy costs stay high, inflation stays sticky in the gasoline line, yields stay high enough to test equity multiples, and the importers who buy 80% of Hormuz crude pay the fuel bill while they wait on a strait the funds rate does not govern.

Perim Island Puts the Red Sea Under New Pressure

Houthi fighters captured Perim Island, in the middle of the Bab el-Mandeb, on September 11, the same day the East-West line was taken down. The group also claimed a strike on a Saudi military base. State media in the kingdom showed damage to homes and a mosque in Jazan from a cross-border attack. The advance along the Red Sea coast is the largest burst of fighting in Yemen in years, and it sits on the water that Yanbu exports still have to use.

Three people familiar with a call said Crown Prince Mohammed bin Salman asked President Donald Trump on September 10 for military help against the Houthis and was offered intelligence support for now. Trump said he had spoken with the crown prince and that the Houthis had also called, asking Washington to stay out of the Yemen war. The United States bombed the Houthis for two months in 2025, then halted that campaign after Trump said the group had lifted a threat to Red Sea shipping.

WHAT WE KNOW

• The meeting: Salalah is postponed with no date, and Araqchi has tied any reopening of Hormuz to U.S. demands.
• The pipe: The East-West line is shut, and Yanbu has 5 to 7 days of export cover at recent loadings of 4 million to 5 million barrels a day.
• The print: August CPI rose 0.4%, with gasoline up 27.4% over 12 months, and Fed funds futures implied an 86% chance of a 25 basis point rise on September 16.

WHAT IS UNCONFIRMED

• Repair time: Estimates for the pipeline run from days to weeks, and Riyadh has not given a return-to-service date.
• The cycle: Feroli’s two-hike year is a forecast, not a vote, and Goldman still treats a continuing bull market as the base case.
• Red Sea cover: Whether loadings from Yanbu can keep moving if Houthi control of Perim turns into a wider blockade is not established.

Brent had already gained almost 9% in the prior week and last stood at $107.36 on September 14. U.S. crude last rose 2.4% to $102.48. The next scheduled official acts are a Federal Reserve statement on September 16 and a Bank of Japan decision on September 17-18. Neither central bank can put crude back into the East-West line, and neither can put a date back on Salalah.

Disclaimer: This article is news reporting and market analysis for information only. It is not investment advice, a recommendation to buy or sell any stock, bond, currency or commodity, or a prediction of what the Federal Reserve or the Bank of Japan will do. Readers should consult a licensed financial adviser or other qualified investment professional before making any decision tied to oil prices, share markets or interest-rate odds. Figures, policy probabilities and pipeline or shipping statuses reflect the sources as of the article’s date and may change as talks, repairs and central-bank votes unfold.