{"id":71734,"date":"2026-09-13T21:38:15","date_gmt":"2026-09-14T01:38:15","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/global-markets-react-to-middle-east-supply-shocks-and-china-policy-shifts\/71734\/"},"modified":"2026-09-13T21:38:15","modified_gmt":"2026-09-14T01:38:15","slug":"global-markets-react-to-middle-east-supply-shocks-and-china-policy-shifts","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/global-markets-react-to-middle-east-supply-shocks-and-china-policy-shifts\/71734\/","title":{"rendered":"Global Markets React to Middle East Supply Shocks and China Policy Shifts"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong><a href=\"https:\/\/stockmarketwatch.com\/energy\/crude-oil\" data-internallinksmanager029f6b8e52c=\"12\" title=\"Crude oil\">Oil prices<\/a> surged<\/strong> following Saudi Arabia&#39;s decision to shut the <strong>East-West Pipeline<\/strong>, a critical 1,200-km conduit designed to bypass the <strong>Strait of Hormuz<\/strong>, after drone attacks linked to the ongoing regional conflict.<\/li>\n<li><strong>China\u2019s central bank<\/strong> signaled firm support for the yuan, setting the <strong>USD\/CNY reference rate at 6.7698<\/strong>, its strongest level since early 2023, to stabilize the currency amid global volatility.<\/li>\n<li><strong>U.S. diesel prices<\/strong> have exploded to record highs, now <strong>60% above pre-war levels<\/strong>, surpassing <strong>$6.00 per gallon<\/strong> and threatening to drive broader inflationary pressure across the American economy.<\/li>\n<li><strong>President Donald Trump<\/strong> signaled a potential policy shift by expressing openness to <strong>Chinese automakers<\/strong> establishing manufacturing plants in the U.S., provided they utilize American labor and localized production.<\/li>\n<li>The <strong>Euro (EUR\/USD)<\/strong> slipped below the <strong>1.1600<\/strong> threshold as traders ramped up bets on a <strong>Federal Reserve<\/strong> rate hike, with market probability for a September increase jumping to over <strong>90%<\/strong>.<\/li>\n<\/ul>\n<h2>Energy Markets Under Pressure as Saudi Pipeline Shuts<\/h2>\n<p>Global crude supply faces fresh uncertainty as Saudi Arabia temporarily shuttered its <strong>East-West Pipeline<\/strong> following drone strikes. The facility, which has a capacity of <strong>5 million to 7 million barrels per day<\/strong>, serves as the kingdom&#39;s primary alternative to the <strong>Strait of Hormuz<\/strong>, where tanker traffic has slowed significantly due to the six-month conflict between the U.S. and Iran.<\/p>\n<p>The shutdown is described as a &quot;precautionary measure&quot; by the Saudi Energy Ministry, but analysts warn it removes a vital safety valve for global energy markets. With the pipeline offline, approximately <strong>4% to 5% of global oil supply<\/strong> is at risk of further disruption, contributing to the sharp climb in crude benchmarks during early Monday trading.<\/p>\n<h2>Yuan Hits Multi-Year High as China Fixes Reference Rate<\/h2>\n<p>The People\u2019s Bank of China (PBOC) moved to strengthen the yuan on Monday, setting the midpoint rate at <strong>6.7698 per dollar<\/strong>. This fixing is the strongest since <strong>February 3, 2023<\/strong>, and follows a previous reference rate of <strong>6.7743<\/strong>. The move is widely viewed as a signal that Beijing intends to provide a floor for the currency as it navigates trade tensions and regional instability.<\/p>\n<p>Market participants noted that the offshore yuan (<strong>CNH<\/strong>) has remained steady near its 2023 peaks. Investors are increasingly utilizing the yuan as a funding option for carry trades, drawn by China\u2019s relatively low interest rates and recent currency stability compared to the volatile Japanese yen.<\/p>\n<h2>Trump Signals Softening Stance on Chinese Auto Manufacturing<\/h2>\n<p>Ahead of a high-stakes summit with Chinese President <strong>Xi Jinping<\/strong> scheduled for September 24, President <strong>Donald Trump<\/strong> indicated he would welcome Chinese automakers like BYD (<a href=\"\/stock\/BYDDY\">BYDDY<\/a>) and Geely (<a href=\"\/stock\/GELYF\">GELYF<\/a>) to build factories on U.S. soil. Trump emphasized that while he remains opposed to importing finished vehicles from Mexico or China, he supports &quot;Japan-style&quot; investment where companies &quot;hire our people.&quot;<\/p>\n<p>This potential shift comes as U.S. lawmakers and domestic automakers express concern over the rapid global expansion of Chinese electric vehicle (EV) brands. Currently, these companies face a <strong>25% tariff<\/strong> and national security restrictions, but a localized production agreement could fundamentally reshape the competitive landscape of the U.S. auto market.<\/p>\n<h2>Currency and Funding Markets: Euro Weakens on Fed Outlook<\/h2>\n<p>The <strong>Euro<\/strong> fell to approximately <strong>1.1585<\/strong> in early Monday sessions, extending a decline fueled by &quot;hotter&quot; U.S. inflation data. Markets are now pricing in a <strong>91% probability<\/strong> of a quarter-point rate hike by the Federal Reserve at its upcoming meeting. This hawkish outlook has boosted U.S. Treasury yields, making the dollar more attractive relative to the single currency.<\/p>\n<p>In regional funding markets, <strong>Taiwan\u2019s overnight funding rate<\/strong> opened steady at <strong>0.805%<\/strong>, matching the previous session. Meanwhile, the broader market remains on edge as the impact of record-high diesel prices\u2014now averaging <strong>$5.90 to $6.00 per gallon<\/strong>\u2014begins to ripple through transportation and logistics costs, adding to the Fed&#39;s complex inflation puzzle.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Oil prices surged following Saudi Arabia&#39;s decision to shut the East-West Pipeline, a critical 1,200-km conduit designed to 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