Oil declines as US and Iran engage in Qatar-mediated UN talks

At a glance:

• Crude prices declined during the session after the U.S. and Iran engaged in discussions via a Qatari intermediary at the UN General Assembly sidelines.
• Iran's Foreign Minister Abbas Araghchi met with American envoys Steve Witkoff and Jared Kushner for a three-hour session. U.S. President Donald Trump described it as a very good meeting, despite the administration's earlier statement that no such meeting was planned.
• Tehran's terms involve a cessation of hostilities on all fronts, an end to the U.S. naval blockade and economic sanctions, and the unfreezing of its assets.
• Witkoff noted that a round of discussions was concluded, which Washington anticipates will be constructive and promising, with mediation ongoing.
• The greenback strengthened while gold prices slipped.
• Australia's S&P Global flash composite PMI dropped to 50.8 in September. The Asian Development Bank maintained its growth projections for China but lowered its inflation forecast.
• Australia's August employment figures are scheduled for release at 0130 GMT on Thursday, with expectations ranging from 15,000 to 30,000 jobs added. Japanese markets resume trading on Thursday following a three-day holiday.

During the session, crude fell following the most significant talks between the U.S. and Iran in several months, held on the sidelines of the UN General Assembly in New York, with Qatar serving as mediator.

Iranian Foreign Minister Abbas Araghchi held a three-hour meeting with U.S. envoys Steve Witkoff and Jared Kushner in a session mediated by Qatar. After addressing the General Assembly, President Trump confirmed the meeting to journalists, calling it a very good meeting, contrary to earlier denials from the administration that no meeting was planned. In an X post, Witkoff wrote that the discussions were lengthy and indirect, with mediators shuttling between the two delegations throughout the day. He added that the sides concluded a round of talks that Washington hopes will prove constructive and promising, and that the mediators will continue their work.

Tehran used the meeting to outline its demands. Araghchi communicated terms for reopening the Strait of Hormuz, which include an immediate halt to the U.S. naval blockade of Iranian ports, the unfreezing of Iranian assets, and a stop to the war on all fronts, including those involving groups Iran refers to as the resistance. Foreign Ministry spokesman Esmail Baghaei told IRNA that Iran's terms also include a cessation of what Tehran labels U.S. acts of aggression and an end to economic warfare against Iran.

The drop in crude added to recent losses fueled by improving supply, as Saudi Arabia resumed operations on its East-West pipeline and transit through the Strait of Hormuz recovered. Even as oil fell, the U.S. dollar strengthened, while gold declined, as the precious metal was weighed down by dampened energy inflation concerns and expectations that major central banks will maintain higher rates for an extended period.

Regional data showed Australia's S&P Global flash composite PMI fell to 50.8 in September from 52.7, marking the weakest expansion in the third quarter. Manufacturing entered contraction for the first time since March, firms reduced staffing for the first time since May, and output prices increased at a quicker rate.

The Asian Development Bank left its China growth projections unchanged at 4.6% for 2026 and 4.5% for 2027, while lowering its 2026 inflation forecast for China to 0.9% from 1.2%, attributing the revision to weaker demand. The ADB also raised its 2026 growth forecast for developing Asia to 5.0% from 4.9%.

Market focus now shifts to Australia's August labor force figures, scheduled for release at 11:30 a.m. Sydney time on Thursday (0130 GMT, 2130 US Eastern on Wednesday). The consensus anticipates an employment increase of around 20,000 following July's decline, with CBA predicting 15,000 and Westpac 30,000, while the unemployment rate is expected to hold at 4.5%. The data come just days before the Reserve Bank of Australia's decision on September 29, where a rate hike is widely anticipated.

Otherwise, news flow was limited. Japanese equity markets were shut for a third consecutive day and will resume trading on Thursday.