Yields edge higher amid renewed energy volatility. Treasury yields ended the day slightly higher across the curve as oil prices rose on energy tensions both in the Middle East and between Russia and Ukraine. The 2-year yield closed at 4.66%, up 3 bps on the day, while the 10-year closed at 4.99%, up 2 bps after breaking 5.00% intraday for the first time since 2023. Meanwhile, equities slid as technology experts called for a slowdown in AI development and heightened industry safeguards amid increasing safety concerns, with the S&P and Nasdaq closing 0.48% and 0.56% lower, respectively.
East-West pipeline closure further constricts oil flows. Saudi Arabia’s vital East-West oil pipeline was shut down late Friday following strikes by Iranian-backed Iraqi drones. The pipeline is a key alternative to the Strait of Hormuz, with its closure further threatening oil flows. Regional officials estimate repairs will take three to five weeks, while Houthi forces in Yemen continue to seize islands in the Red Sea near key oil shipping routes. Following the attacks, Saudi Arabia postponed talks scheduled for today between a handful of Gulf nations working to establish a temporary shipping lane through Hormuz. Reportedly the delay stemmed from Saudi frustration with continued Iranian strikes. Meanwhile, Tehran’s Foreign Ministry said the “request to postpone the regional summit and attribute it to developments in Yemen is a diversion from the root causes of this crisis.”
Trump declares Russia-Ukraine energy truce. President Trump today announced on social media that Russia and Ukraine had agreed to halt strikes on energy targets. The claim followed Trump’s weekend statement that he had warned Ukrainian President Zelenskyy to stop striking Russian oil refineries. Zelenskyy, however, said that no deal had been finalized but that there is a “strong US proposal for a mutual halt to strikes on critical infrastructure.” He added that if Russia stopped strikes on critical infrastructure, “Ukraine is ready to support de-escalation.” Alongside continued fighting in the Middle East, oil markets face growing strain, with diesel prices hitting an all-time high today of $6.23 per gallon, a 66% increase from the start of the US-Iran war. WTI and Brent crude both settled above $100 a barrel.
