The yen sank to a two-week low against the dollar ​on Friday after two policy makers at the Bank of Japan dissented from a widely expected decision to raise ‌interest rates, extinguishing expectations for back-to-back hikes. Governor Kazuo Ueda now needs, at a minimum, to preserve expectations for a December move to prevent markets from unwinding most if note all of the tightening path already priced into rates.

While Japanese policymakers pushed rates to their highest level in 31 years at 1.25%, the move failed to boost the currency as traders felt there was a lack of explicitly hawkish guidance.

As a result of the dovish split, the yen tumbled and the US dollar rose more than 1.2% against the Japanese currency, hitting a a ​two-week high of 158.07 yen after wavering during BOJ Governor Kazuo Ueda’s press conference. It was set for its biggest daily increase versus the ​yen since December and the largest weekly rally since September 2024.

Traders had already discounted the equivalent of another hike by year-end before today’s policy meeting, leaving a high bar for any hawkish surprise. The presence of two dissenters signals that support for another rate increase in October is weakening, with OIS assigning around a 20% probability to such an outcome. That leaves Ueda’s press conference carrying the burden of preserving expectations for a December hike and keeping the BOJ on a tightening path that at least matches the Fed’s recent pace.

“They’ve just clearly underwhelmed versus expectations here,” ⁠said Ray Attrill, head of FX strategy at National Australia Bank in Sydney. “And I think that one of the more staggering aspects ​of it was that they couldn’t even get the unanimous vote for that,” he said. “That really raised eyebrows in the market.”

“The statement offered little additional hawkish guidance to support ​bullish Japanese yen positions,” said Frantisek Taborsky, currency strategist at ING. “The dissent from (Toichiro) Asada and (Ayano) Sato points to resistance against the fastest pace of rate ‌increases in ⁠more than three decades and suggests they may increasingly act as a brake on further tightening.”

According to Mizuho strategists, the dissenters raise concerns that further rate hikes become harder to deliver, potentially steepening the JGB yield curve. Senior strategist Masayuki Nakajima said that Friday’s two dissenters were appointed by Prime Minister Sanae Takaichi. Two more members are due to leave the board next year and could potentially be replaced by more dovish policymakers

“Should their successors come from the reflationist camp, four of the nine Board members would become dovish,” he says; “While that would still fall short of a majority, it could reinforce expectations that sustaining the tightening cycle may become more difficult in the future”

“If so, concerns that the BOJ is falling behind the curve could re-emerge, potentially leading to further curve steepening,” he added.

Commenting on the market reaction, Bloomberg’s Ven Ram said that the decision was: 

• marred by dissent from two policymakers who voted against the hike;
• there was none who called for a bigger margin of increase;
• and the accompanying statement, while vowing to continue raising rates, failed to signal a sense of urgency by not saying when they will come.

Japan’s benchmark rate still trails the neutral rate by a considerable margin, and without back-to-back interest-rate hikes, the yen will stay weaker for longer. Only the franc carries a lower interest rate in the G-10 economies, with the Swiss central bank due to meet next week. Should that monetary authority reiterate its preference for keeping rates at zero, it will engender low volatility in two of the major exchange rates that represent the preferred funding currencies.

After a slew of central bank meetings and with Brent crude headed for the first weekly decline this month, global bonds that were deeply oversold are finding some respite. Longer-dated gilts received a boost from the Bank of England’s plan to pause bond sales and stop selling securities that mature in 2049 or later. Gilts with a maturity of 30 years stand to benefit considerably, so an immediate follow-through of Thursday’s rally is likely even though the looming autumn budget realities may check the pace of gains.

Here are some other reactions to the split BOJ decision from Wall Street traders:

NAKA MATSUZAWA, CHIEF MACRO STRATEGIST, NOMURA SECURITIES, TOKYO:

“It’s (the yen’s decline) a knee-jerk reaction to the two dissent votes. The bottom line is I think it’s not too hard for the BOJ to keep the currency pricing for market expectations of rate hikes, basically every three months. And I do think that’s what the BOJ wants to keep, not necessarily suggesting an October hike.”

RAY ATTRILL, HEAD OF CURRENCY STRATEGY, NATIONAL AUSTRALIA BANK, SYDNEY:

“They’ve just clearly underwhelmed versus expectations here. And I think that one of the more staggering aspects of it ​was that they couldn’t even get the unanimous vote for that. I think that really raised eyebrows in the market. (There was) nothing to put the market more firmly on the sense of another increase in Q4. It’s clearly on Governor Ueda to put the market back more firmly on that stance. If he fails to do that, then I think dollar-yen is headed higher. It’s hard ‌to believe that just on the back of one quarter-point the (US) Treasury Secretary is going to be jumping for joy and as willing to replicate what they did in August (by intervening). The risk here is that we’re heading back up to 160.”

BART WAKABAYASHI, BRANCH MANAGER, STATE STREET, TOKYO:

“They raise rates and the currency loses 100 points – I think the market is looking at the BOJ versus the G3 and G10 central banks and the interest rate spread is what is in play. I think it’s important that the six-month cycle has been broken, and that leaves the market to say, hey, these guys are willing to act if they have to.”But there is a factor where they need to keep up (with other central banks)…if (Ueda) is not as hawkish as the Fed (at the news conference), dollar/yen could really take off higher.”

DAVID CHAO, GLOBAL MARKET STRATEGIST FOR ASIA-PACIFIC, INVESCO, SINGAPORE:

“The BOJ has finally shed its long-term status as a monetary policy outlier and is joining the ranks of the other major central banks. The market fully anticipated this rate hike, but it has to be taken in context with what’s going on with ​the rest of the world. The BOJ, Fed and ECB have all hiked rates in the same month.”

MASAHIKO LOO, SENIOR FIXED INCOME STRATEGIST, STATE STREET INVESTMENT MANAGEMENT, TOKYO:

“Markets should focus less on the statement and more on Ueda’s press conference. Expect a neutral-to-slightly hawkish tone, emphasizing that every meeting remains ‘live’ from here given resilient growth, persistent inflation risks and a policy rate (real yield) that remains accommodative even at 1.25%.More broadly, Japan is ​increasingly participating in a synchronized global tightening cycle. The debate is no longer whether the BOJ hikes, but how far rates ultimately go as major central banks continue to grapple with sticky inflation, AI-driven investment demand and rising term premium. Combined with higher domestic yields and growing confidence in the BOJ’s normalization path, more capital is likely to ⁠stay in Japan rather than flow abroad. The bigger story remains that Japan is gradually ceasing to be a marginal buyer of foreign assets, not because it is selling aggressively, but because domestic alternatives are becoming more attractive.”

CAROL KONG, CURRENCY STRATEGIST, COMMONWEALTH BANK OF AUSTRALIA, SYDNEY:

“The fact that two BOJ board members appointed by Takaichi opposed a hike today suggests the government still leans against BOJ rate hikes. This, together with the lack of guidance on the future pace of ​tightening in the statement, triggered a sell-off in the JPY. As usual, Governor Ueda’s post-meeting press conference will provide more insights into the rate outlook. The risk is Ueda fails to match markets’ hawkish expectations, fuelling further JPY weakness. We expect a follow-up hike in December.”

YUGO TSUBOI, CHIEF STRATEGIST, DAIWA SECURITIES, TOKYO:

“Overall, the decision is likely to be seen as dovish. There had been some concern, albeit limited, about a 50-basis-point rate hike, but that did not happen. With two dissenting votes, markets likely ​took the view that it would be difficult to assume the pace of rate hikes will accelerate rapidly. U.S. Treasury Secretary Bessent’s negative comments on reflationary policy had also raised concerns about the potential economic damage from the BOJ becoming more hawkish than previously expected. Those concerns have receded, prompting a rise in stocks.”

SHUN HONG LIU, CHIEF INVESTMENT OFFICER, HONG INVESTMENT ADVISORS, HONG KONG:

“Honestly, it is so hard to have a very strong view in this market, given things are so political everywhere else in the world. Just imagine Japan needing to get consent from the US for intervention—what can be done and what cannot be done will be coordinated by so many politicians. Last week, if you had asked me, I would have answered yes, it is the end of the yen carry trade (after the rate hike). But now I would answer no, as Takaichi confirms a 3.5% military spending target, while people suddenly believe that Warsh is an uber-hawk. So I just keep my eyes open and trade accordingly.”

KANAKO NAKAMURA, ECONOMIST, DAIWA INSTITUTE OF RESEARCH, TOKYO:

“The expected dissent by two members suggests political pressure ​on the BOJ has not entirely faded. The reappointment of Minister Kiuchi in the cabinet reshuffle also signals continued support for expansionary fiscal policy, raising concerns that fiscal stimulus could add to inflation pressures.”While the BOJ’s statement showed readiness to address upside inflation risks, Governor Ueda’s press conference will be key for assessing the future pace of rate hikes.With producer prices remaining elevated, oil prices rising on Middle East tensions, and a weak yen adding to inflation risks, we do ​not believe this rate hike alone will be sufficient. We expect the BOJ to accelerate rate hikes to roughly once a quarter.”

PRASHANT NEWNAHA, SENIOR RATES STRATEGIST, TD SECURITIES, SINGAPORE:

“No real surprises from the BOJ decision to hike the target rate 25bps to 1.25%, and neither was the 7-2 split, with recent Takaichi appointees Sato and Asada voting against the hike. The statement retains most of the hawkish tone from the July Statement noting ‘accommodative financial conditions are expected to be maintained’ even after the hike, and the ‌Bank ‘will continue to raise the policy ⁠interest rate’. The Bank reiterated its concerns that underlying inflation could deviate upwards from its 2% target, but we don’t see a smoking gun supporting a back to back hike in October. We stick with our call for rate hikes roughly every quarter with the next 25bps hike in December.”

TOHRU SASAKI, CHIEF STRATEGIST, FUKUOKA FINANCIAL GROUP AND FORMER BOJ OFFICIAL, TOKYO:

“It’s a little bit surprising to see that the yen weakened after the announcement. Maybe some market participants were expecting intervention like the last time before and after the BOJ’s decision.Probably some were surprised because two members opposed the decision and maybe some were expecting some mention of a 50 basis point hike. It’s a bit difficult to meet market expectations. Ueda-san has to be very hawkish to keep the yen from depreciating, but I think it’s a bit difficult for him to be so hawkish. He has to say that the BOJ will probably hike the policy rate again within this year. But I think it’s difficult for him to say, so the market will take it as a dovish press conference.”

ANTHONY MALOUF, EBURY, SYDNEY:

“The seven-to-two vote is a touch wider than a clean hawkish consensus would suggest. Dissenters Asada Toichiro and Sato Ayano argued that inflation and growth have not accelerated enough to justify tightening now. The more telling split, though, sits elsewhere. Board members Takata Hajime and Tamura Naoki opposed the outlook language from the opposite direction, arguing underlying inflation has already reached a level consistent with ​the 2% target, which points to appetite for a faster pace rather than a slower one. The yen sold off ​after the decision. We interpret this as markets focusing on the two dissents, suggesting the board is ⁠less united behind a faster pace than the vote count alone implies, rather than doubting the hike itself. That fits our own view that the BOJ will deliver further hikes at a steady quarterly pace, with the next move in December and another in the first quarter of 2027, taking the policy rate to its neutral level near 1.75%.”

KENTO MINAMI, SENIOR ECONOMIST AT DAIWA SECURITIES, TOKYO:

“The overall impression of the statement was dovish. BOJ’s new board members Ayano Sato and Toichiro Asada dissented from the decision. They were chosen by Prime Minister Sanae Takaichi, which suggests difficulties in raising rates in the future as the BOJ will have new board members going forward. “The statement indicated that the BOJ would raise rates at least ​once every six months, but this was in line with market expectations that the BOJ would raise rates every three months. These two dissenters were a dovish factor, which is why the yen started falling right after the decision.”

MASATO KOIKE, SENIOR ECONOMIST, SOMPO INSTITUTE PLUS, TOKYO:

“I think the statement was hawkish, but markets had expected something ​even more hawkish, which is why the yen weakened after the announcement. “What ⁠struck me as hawkish was the explicit reference to accommodative financial conditions, and the wording that the BOJ will continue to adjust the degree of monetary easing. It also clearly mentioned upside risks. In addition, the BOJ cited a range of factors — not just crude oil, but price increases linked to AI-related demand, the weaker yen, and the mutually reinforcing mechanism between wages and prices. Those elements made the decision look hawkish overall. I don’t think (Sato joining Asada in dissent) will have an impact when it comes to the pace of rate hikes being delayed. Sato’s dissent was in line with expectations, but I see it as opposition to the timing or pace rather than a blanket objection to rate hikes. It did not come across as outright opposition, which I think is positive for the BOJ as it proceeds with further rate increases.”

HIROFUMI SUZUKI, CHIEF FX STRATEGIST, SMBC, TOKYO:

“The rate hike itself was in line with market expectations, but the two dissenting votes came as a modest surprise, as only some market participants ⁠had anticipated them. The outcome has somewhat ​tempered expectations for further rate hikes and conveyed a dovish impression. The pace of future rate hikes is likely to depend primarily on the views of the BOJ’s leadership. We therefore do not expect the pace to differ significantly from current market expectations.The yen initially weakened following the ​decision, but attention now turns to Governor Ueda’s inflation outlook and policy stance at the press conference.”

FRED NEUMANN, CHIEF ASIA ECONOMIST, HSBC, HONG KONG:

“The tone of the statement, along with two dissenters on the decision to raise rates, leaves lingering doubts that Japan’s central bank will be cautious in tightening monetary policy further. In addition, new inflation numbers out this morning for August showed that price pressures remained unchanged in August, rather than accelerate. All eyes are now on the press conference to be held by Governor Ueda, with the market looking for hawkish reassurances that the BOJ is prepared ​to raise rates again soon. While back-to-back hikes appear unlikely, investors will look for clues as to whether officials are prepared to raise interest rates again in December. Given that the Fed has tilted into a more hawkish direction, the pressure remains for the BOJ to follow suit: Governor Ueda will have to follow-up today’s rate hike with by keeping the door open for another hike before the end of the year.”

Sellside reactions aside, Governor Kazuo Ueda said that with the price trend very close to the bank’s 2% target, authorities now need to ensure inflation doesn’t overshoot.

“It has become important to stabilize the rate of price increases at a level of around 2%,” Ueda said in a post-decision briefing. “In that sense, I believe the phase of policy has shifted to a new stage.” The bank should act preemptively to avoid being forced into a situation where rapid hikes might become unavoidable, he added.

Traders also remained ​alert to the risk of intervention to prop up the currency after Finance Minister Satsuki Katayama said Tokyo won’t hesitate to conduct further coordinated action, following a joint US-Japan move to boost the yen in late July.

The yen rallied sharply in early September to its highest since February as traders bet the BOJ ​would embark on multiple rate hikes, although those wagers came under question on Friday. 

The dollar rally against the yen helped the DXY dollar index climb 0.25% to 100.48, as broader currency markets remained focused on energy prices and the U.S. Federal Reserve. The index, which tracks the ​currency against six major peers, was ​up 1.4% for the week to ⁠around a six-week high after the US Federal Reserve hiked interest rates on Wednesday and signaled more increases could be coming.

Traders now see a roughly 55% chance of a quarter-point hike at the Fed’s next ​two-day meeting next month, up from 27% a week ago, according to the CME Group’s FedWatch ​tool.

Finally, it’s worth noting that the BOJ dissenters directly jeopardized the plan of Steve Bessent for a stronger yen (and thus less fears of TSY selling to prop up the yen through intervention). According to Bloomberg, Warsh should “seriously consider a little Friday afternoon intervention to ensure that this bounce in USD/JPY makes a lower high than the prior ascent to just over 160.”

Of course, the problem with constant meddling in market prices is the risk that the market tests you, forcing ever-more frequent action to keep things in line. At the very least anyone who stayed with the short-dollar trade has received a painful kick in the shin, which arguably will dissuade some punters from staying in the position the next time that the authorities step in. 

Via Decrypt.co,

The U.S. Treasury has sanctioned BitBank, naming the Iranian exchange it says carried the Bitcoin that shipping companies paid for safe passage through the Strait of Hormuz.

Since June, the Office of Foreign Assets Control said, the Hormuz Safe Marine Services Authority has used BitBank to pass the payments it collects on to the Iranian regime. That authority was the body charging vessels in Bitcoin for transit rights, a scheme Treasury designated in July.

Today, as part of Operation Economic Outcast, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated key components of the Iranian regime’s digital assets-based sanctions evasion infrastructure. Targets include BitBank, a priority digital assets…

— Treasury Department (@USTreasury) September 17, 2026

Between June and July, Treasury says, BitBank was used to move “hundreds of millions of dollars’ worth of Bitcoin” to the Islamic Revolutionary Guard Corps.

BitBank is controlled by Babak Zanjani, an Iranian financier OFAC designated in January. Sentenced to death in Iran in 2016 for embezzling from the National Iranian Oil Company, he had his sentence commuted in 2024 and resurfaced last year backing regime-linked ventures. Treasury says he has been advertising BitBank on his social media accounts since at least 2024.

Four more designations

The action also covers Pishtaz Simorgh Electronic Trade Company, which built BitBank’s software and is a subsidiary of the already-designated Dot One Value Creation Group, along with three Dot One executives: Hossein Ali Zaker Hossein, Mohammad Mahdi Zaker Hossein and Seyed Adel Heidari.

Treasury describes the first as involved in most of Zanjani’s sanctions evasion, including oil exports, and says he has brokered digital asset transactions that ended up with the IRGC.

All five were designated under Executive Order 13902, which the administration extended in August to cover anyone operating in Iran’s digital asset sector. It is the authority Treasury has been using since to work through the network, including the crypto exchanges it designated for laundering Iranian funds.

“Efforts to finance the Iranian regime using cryptocurrencies are not beyond OFAC’s reach,” said Treasury Secretary Scott Bessent.

“If you support the Iranian regime, the Department of the Treasury will sanction you.”

The designations fall under Operation Economic Outcast, the campaign Bessent announced on August 24 and dubbed Economic D-Day, which Treasury says is aimed at severing Iran’s remaining economic lifelines with help from the EU, the UK and Gulf partners.

U.S. assets belonging to the five are blocked, as are any entities they own half or more of, and non-U.S. firms dealing with them risk secondary sanctions.

Traders do not expect the pressure to lift soon. On Myriad, a prediction market developed by Decrypt‘s parent company Dastan, the odds of Washington announcing an end to its naval blockade of Iranian shipping by September 30 have fallen to 10%, down 30 points. Even a December 31 deadline is only a 60% shot.

US Industrial Production disappointed in August, unchanged MoM vs expectations of a 0.3% MoM rise.

Capacity Utilization was flat MoM (slight disappointment to expectations…

Worse still, manufacturing production seemingly hit an unexpected wall in August, falling 0.3% MoM versus an expectation of rising 0.3% MoM. That was the biggest monthl;y drop since Oct 2025 and dragged growth down to just 0.9% YoY…

This was ‘odd’ since ISM Manufacturing survey data has shown a sizable uptick this year…

…or maybe it’s just another useless survey signal?

Authored by Mary Gilleece via The Daily Sceptic,

Bunking off school used to be called truancy, but now ‘Emotional Based School Avoidance’, or EBSA, has joined the ever-growing list of supposed mental health conditions afflicting the nation’s youth…

What used to be known as ‘truancy’ has had a smart rebrand to EBSA. Pronounced ebbsah, EBSA stands for Emotional Based School Avoidance. It is the latest woolly mental health acronym to proliferate amongst education-dodgers and those seeking to profit from them.

As nearly nine million children return to school in September there are over 200,000 children who remain at home, generally in their bedrooms scrolling on their phone or gaming. In 2025, 2.12% of pupils were severely absent, missing 50% or more of school. It’s a troubling figure that continues to climb.

What was introduced as a term by West Sussex Educational Psychology Service (WSEPS) in 2018, has mushroomed across the education and mental health sectors. WSEPS defined Emotionally Based School Avoidance (EBSA) as: “A broad umbrella term used to describe a group of children and young people who have severe difficulty in attending school due to emotional factors, often resulting in prolonged absences from school.”

Professionals, GPs, parents and social workers now authoritatively state that so-and-so ‘has EBSA’ even though it is not an officially diagnosable medical condition. Though it does not appear in any medically approved diagnostic manual, EBSA has somehow gained the imprimatur of respectability.

Parents of school-avoidant children have enthusiastically embraced this new ‘condition’. Google searches for Emotional Based School Avoidance have increased by a breakout 5,000% in the past five years. The BBC has a parenting tips page dealing with the issue.

The theory around the pseudo-diagnosis of EBSA is that a child is anxious and upset about going to school; attending school is detrimental to his or her mental health; therefore he or she does not attend.

The local authority, however, is still legally obliged to provide education for that child. A wrap-around service of Alternative Provision, Non-School Education Providers or home tutors is arranged. The majority of Alternative Provision providers servicing the needs of so-called EBSA are privately owned, and their employment by county councils has escalated sharply, costing councils billions of pounds.

I work for one such operation. However, the figures for such children attending even these gentle alternatives are even worse than school attendance. Official figures report that overall absence rose in Alternative Provision to 41.35%, up from 40.94% in autumn 2024-25, with both persistent and severe absence continuing to climb.

This tallies with my experience. Every morning I will look at my timetable and see I am set to visit three children that day, but invariably I will receive such messages from parents as: “No session today, she’s feeling overwhelmed.” “He’s still sleeping so won’t be awake for session.” “Not feeling it today.”

The tragedy about the whole non-medical confection around EBSA is that there are indeed a great number of children who are anxious and do not enjoy going to school. They generally have a collection of conditions around them: ADHD (attention deficit and hyperactive disorder), PDA (pathological demand avoidance), ASD (autism spectrum disorder), anxiety and of course EBSA. The children that I work with live very narrow, limited lives within the terrifying space of the internet and their own minds. Their suffering is real even if the description of it is not.

The EBSA enthusiasts have it the wrong way round. The way to improve mental health is to attend rather than avoid school.

A widely ignored study conducted by Loughborough University and the Office for National Statistics revealed that absence from school causes deteriorating mental health. Based on a sample of 1.1 million children, the study reports:

The probability of presenting at hospital with mental health issues more than doubles (increases from 1.82% to 3.77%) when absences increase from 0% to 20%, and nearly triples (increases to 5.27%) at 30% absence.

Rather than saddling children with yet more spurious medical terms, it would be refreshing if educators, GPs, teachers, social workers and parents addressed the real issues that are enabling over 200,000 children to avoid school. Significantly: lack of sleep caused by phones and gaming kit in bedrooms, and insufficient exercise and nourishing food. Most importantly: lack of meaningful connections with real-life human beings. In other words: friends. These can be found at school.

A major refinery in the US Midwest went offline this week after a power outage, adding to global refining disruptions as US diesel prices reach record highs.

One of the largest diesel refineries in the Midwest is offline pic.twitter.com/JSwuHrNfBw

— zerohedge (@zerohedge) September 18, 2026

Exxon Mobil shut its 275,000-barrel-a-day Joliet refinery in Illinois on Sunday after a power failure triggered the facility’s safety flare, Reuters reported. A Thursday filing also disclosed that floodwater had overwhelmed a pump at the plant.

Exxon traced the power outage to ComEd’s primary and secondary lines supplying the refinery and said it had fully restored electricity by Thursday. Power restoration, however, does not mean fuel production has resumed.

Located about 40 miles southwest of Chicago, Joliet can produce about 11 million gallons of gasoline and diesel daily, primarily for Midwest consumers. Its processing capacity represents roughly 6% of Midwest refining capacity and 1.5% nationally. 

UPDATE: $XOM Joliet reported to have suffered a “total power outage”. this refinery capacity is 275kbpd, a large facility and it looks bad. https://t.co/IdAgfWhhUz pic.twitter.com/Sb52uXIviK

— Patrick De Haan (@GasBuddyGuy) September 14, 2026

A prolonged shutdown would tighten regional fuel availability and risk further price increases across Illinois, Indiana, Ohio, Wisconsin, and Michigan. 

“There’s an additional likelihood of further price increases in the Great Lakes. Gas: OH is at *high* risk of largest jump, WI, IN are at *med* risk of moderate jump, MI, IL at low/med risk but could go past $5/gal. diesel: will likely jump in most these areas mod/large jump,” Patrick De Haan, head of petroleum analysis at GasBuddy, wrote on X. 

⚠️there’s additional likelihood of further price increases in the Great Lakes. Gas: OH is at *high* risk of largest jump, WI, IN are at *med* risk of moderate jump, MI, IL at low/med risk but could go past $5/gal. diesel: will likely jump in most these areas mod/large jump

— Patrick De Haan (@GasBuddyGuy) September 17, 2026

He noted, “spot diesel prices in the Great Lakes are now the highest in the country… $240/bbl.”

Nationwide, the latest AAA data show diesel fuel prices at the pump have jumped to a record $6.45 a gallon.

Goldman Sachs commodity experts Yulia Zhestkova Grigsby and Daan Struyven warned earlier this week that the global diesel crisis could tighten gasoline supplies as refiners prioritize higher-margin diesel production.

Bloomberg Intelligence senior commodity strategist Mike McGlone warned on Monday that “$6 diesel echoes 2008 gasoline shock.”

Update(1755ET): While the White House has signaled it wishes to see ‘quiet’ in the Strait of Hormuz and de-escalation when it comes to Iran, it doesn’t seem heavily sanctioned-Tehran is yet willing to see it that way. Another foreign vessel has reportedly been hit, via Sepha News:

IRGC says Togolese-flagged tanker ‘Trend’ was hit and stopped after a fire, while it stated the tanker violated Hormuz rules and that the US instigated the transit.

Below is a machine translation of the IRGC statement that was released on Telegram:

Last night, the offending tanker Trend, flying the flag of Togo, attempted an illegal passage through the Strait of Hormuz under the instigation and deception of the child-killing U.S. military; it was struck and came to a halt after a fire broke out on board.

The IRGC Navy warns once again that illegal passage through the Strait of Hormuz will result in nothing other than the destruction of the offending vessel.

President Trump has still insisted the US can negotiate with the Iranians at any time, and that they are “begging” for it.

BREAKING: Just moments ago, Iran struck a tanker in the Strait of Hormuz attempting to cross via the Omani Route.

From Iran’s perspective, it is absolutely CRITICAL that they prove their ability to keep striking vessels transiting the Strait of Hormuz given the shutdown of the… pic.twitter.com/oZpxq3ZmIU

— Brett Erickson (@BrettErickson28) September 17, 2026

*  *  *

Update(1325ET): Some key lines of President Trump given to Axios on Thursday…

He told the outlet he is at a “critical juncture” regarding the war in Iran, weighing whether to launch massive new attacks or pursue a different path to end the conflict.

He has previously indicated his belief that war will continue through the November midterm elections. Trump has newly said:

“I have a big decision coming up. Do I want to go in and annihilate them [the Iranian regime] or do I not? It’s a big decision. Anything could happen with me.”

The war is increasingly unpopular among Americans, and Trump’s rhetoric has appeared a bit more honest on this of late. What’s the end game? After six months of conflict, Epic Fury has looked like a bombing campaign in search of a strategy. According to more of Trump’s talk with Axios:

• Trump declined to say whether he’ll decide on the path forward before or after the midterms.
• Trump and Hegseth have ordered the military to maintain its level of forces in the Middle East until the end of the year, to remain ready for a potential return to full-scale combat.
• The officials say Trump needs to decide soon on the way forward, partly because the US military can’t stay in its current holding pattern much longer. “At some point you have to decide what is the end game“

The situation of global energy transit has over the past week become much more complicated with the Houthis advance across Yemen’s Red Sea coastline, and drone damage to Saudi Arabia’s East-West pipeline. The US looks to be staying on the sidelines of Yemen fighting, for the time being. New via Al Jazeera:

A senior US official told Al Jazeera: We are focused on ensuring navigation in the Red Sea and allowing our partners to manage security challenges.

And yet “partners” like the Saudis and its government in Sanaa are clearly not doing so well.

BREAKING: Yemen’s Houthis have dug roughly 20 km of trenches in the mountains above the Bab el-Mandeb Strait, visible on Sentinel-2 imagery, with positions overlooking the strait’s narrowest point near Dhubab and Perim.

The Houthi fighter filmed on the Murad coast last week said… pic.twitter.com/0kgmg3FiPE

— The Hormuz Letter (@HormuzLetter) September 17, 2026

*  *  * Add two to cart

Oil prices are falling on Thursday on some headlines signaling potential de-escalation moves out of the Saudi-Yemen conflict, both via Reuters:

• China reportedly presses Iran to help rein in the Houthis after Saudi appeal, according to Retuers citing sources
• Oil prices fell on Wednesday after reports that Saudi Arabia was offering additional crude cargoes through Oman eased some concerns about Middle East supply disruptions, while a smaller-than-expected draw in U.S. crude inventories added further downward pressure. 

US crude futures have extended their drop to fall back below $100/bbl. This also comes amid continued reports of better-than-expected recovery in Gulf infrastructure, as Saudi Arabia is claiming it is able to restore half the capacity of its East-West pipeline within merely days. The optimism could prove just wishful thinking, however – and the coming week will tell.

Starting last week, when the Houthis made their lightning-fast advance along the Red Sea coast, fragmenting the positions of the Saudi-backed coalition government, Riyadh turned to Beijing for help, the Thursday Reuters report indicates.

“Chinese officials did not issue any explicit threats ​or indicate that Beijing would seek to pressure Tehran economically if it failed to use its influence over the Houthis, the three Iranian sources said,” the report adds.

The Chinese foreign ministry has responded to knowledge of the diplomatic maneuvering getting out that “China does not wish to see regional tensions further spill over into Yemen and the Red Sea. Escalating regional instability is not in the interests of ​any party”.

“The sovereignty and security of all countries should be respected, and facilities vital to people’s livelihoods must not be targeted. China calls for an end to actions that further complicate the situation and urges resolving issues through dialogue ​and negotiation,” it said.

A senior Western diplomat in the region was separately quoted as saying “Beijing is one of the few capitals that can still ​press Iran to rein in the Houthis.“

Given that the Iran-aligned Shia group has often shown a willingness to cooperate and coordinate action to Tehran’s benefit, Ansar Allah leadership may listen if it gets a signal to de-escalate from Iran.

🇾🇪🇺🇸 Ansar Allah fighters put American anti-tank missiles on display after seizing them in recent fighting.​ pic.twitter.com/DKs3QpjeUq

— The Saviour (@TheSaviour) September 16, 2026

According to to some Thursday and latest developments via Al Jazeera:

• Yemeni government forces are trying to prevent Houthi advances on several fronts, including the strategic Kahbub mountains near Bab al-Mandeb and Taiz, with Saudi Arabia providing support with air strikes in areas around the city.
• President Donald Trump has told reporters that the US is “hopefully toward the end” of its war on Iran and notes that he has spoken with Iranians “directly”.
• UN Secretary-General Antonio Guterres urges de-escalation and diplomacy in the Middle East as fighting intensifies in Yemen and between the Houthi group and Saudi Arabia.
• Iran’s national security chief Mohsen Rezaei says the US must take practical steps to earn Tehran’s confidence, stressing that the country harbours zero trust in Washington.
• A UN fact-finding mission has found “reasonable grounds” to believe the US was behind two attacks, including the strike against a school in Minab in February, which it says constituted war ⁠crimes. ​

On the Yemen front, Al Jazeera writes, “The fighting is continuing and government forces are claiming that the Ansarullah Houthis have suffered a lot of casualties in the clashes that are occurring on a number of fronts, mainly in western Taiz and also in Kahbub, which is a mountainous area with strategic importance as it overlooks Bab al-Mandeb.”

Throughout the conflict, both the Iranians and the Houthis have at various times said they are willing to grant China and other “friendly” countries like Russia “special considerations” when it comes to water transit and paying “fees” – the latter case related to the Strait of Hormuz.

Authored by Daniel Lacalle,

How taxes, regulation, refinery closures, sanctions and declining domestic production turned a geopolitical shock into a diesel-price crisis

Do not blame diesel prices on the Iran war or the disruption of the Strait of Hormuz. The geopolitical risk premium attached to oil prices is relevant, but the market was already weakened by policy choices.

Europe has taxed motor fuels heavily, imposed escalating regulatory and carbon costs across the supply chain, closed refining capacity, sanctioned major sources of refined-product supply, and discouraged investment in domestic oil and gas production. Today’s refined product system is smaller, less flexible and more import-dependent, and, as such, every geopolitical disruption produces a larger price shock.

Diesel prices rise faster than crude because diesel suffers its own supply constraints, and these are politically imposed, not due to a war.

In the United States, retail diesel reached an all-time high of $5.85 per gallon on 4 September 2026. At the same time, the U.S. Gulf Coast diesel crack spread, the benchmark measure of diesel relative to crude, surged to multi-year highs. Therefore, the problem was more the availability of middle distillates rather than crude alone. U.S. refineries were operating at about 98% utilisation, leaving little spare capacity to offset another outage.

Globally, the impact is significant. Current supply losses include refinery disruption in the Middle East linked to the Iran war and reduced Russian diesel availability following Ukrainian attacks on refining infrastructure and export restrictions. All these elements add to the geopolitical risk premium, but they are magnified by the absence of spare refining capacity and the limits to regional supply.

Middle Eastern refinery disruptions have risen to almost 3.0 million barrels per day. Saudi Arabia’s Jizan refinery, with a capacity of 400,000 barrels per day, was one of the facilities where exports slumped. Additionally, Russian exports have plummeted. Russia was one of the world’s largest diesel exporters, but its seaborne diesel exports in June 2026 fell to 426,000 barrels per day from 827,000 barrels per day a year earlier. Refinery damage, domestic-supply priorities and export restrictions all affected the stability of an already fragile market.

However, these disruptions explain the timing of the latest surge, but they do not explain why importing economies entered the shock with so little capacity to absorb it. That is where interventionist policies have created the biggest damage.

European motorists do not pay diesel prices driven by crude, refining and logistics costs. The biggest driver is a tax-and-regulation-heavy final price. Direct taxes alone represented an average of 52.1% of the final price of Euro-super 95 petrol in the European Union, with several countries above 55%. Consumers pay more in fuel taxation than for the crude oil, refining and logistical components combined.

Diesel taxation varies by country, but the same structural tax burden remains. When we add excise duties and VAT, governments have created a large, rigid fiscal floor to fuel prices. When crude rises, the tax-inclusive base increases the final bill. However, when crude falls, large fixed tax components mean that the price paid by households and businesses does not fall proportionately.

The real policy burden is wider than the excise duty displayed at the service station. Costs are accumulated throughout the chain. From royalties and taxes on production; environmental compliance; energy costs and carbon charges at refineries; corporate and local taxes; regulated fees for storage and infrastructure; labour levies; financing costs created by regulatory uncertainty; and compliance costs for distribution and retail, the energy chain is a massive cash machine for governments. Many of these costs are not always shown as “fuel tax,” but they are passed through to the final price. Furthermore, the effect is cumulative.

Europe has not merely taxed fuels at the point of sale, it has piled fiscal and quasi-fiscal costs from exploration and importation through refining, storage, transport and retail distribution. That makes the retail price structurally less responsive to lower crude prices and more vulnerable to supply shocks.

The second structural problem is the loss of refining capacity.

The United States did not lose refining flexibility because of one executive order or one EPA rule. It was a cumulative policy tsunami. Obama’s air-quality regulations and renewable-fuel mandates added compliance and capital costs, while Biden retained and expanded renewable-fuel obligations, restricted small-refinery relief and reinforced a policy environment in which long-lived petroleum investments faced greater regulatory risk and higher costs. The clearest consequence has appeared in California, where stringent state regulation, expensive compliance and mandated energy-transition policies have coincided with the closure of major refineries. The result is not lower dependence on fuels in the short term, but less domestic capacity to produce them, and greater vulnerability when global diesel supply is disrupted. Fortunately, the United States is not suffering an enormous diesel shortage problem as Europe’s, because total U.S. crude-oil refining capacity did not fall between 2008 and 2026, standing at 18.16 million barrels per day.

In Europe, on comparable tax-inclusive retail prices, the EU average is about $8.90 per U.S. gallon, versus $5.97 per gallon in the United States, or 49% higher. Several European markets were close to $10.70-$10.90 per gallon as of September 11th, 2026.

Between 2020 and 2024, European refining capacity fell from about 15.3 million barrels per day to 14.7 million barrels per day, a reduction of nearly 600,000 barrels per day. Europe has lost more than 20% of its refining capacity since 2009. Refineries have been shut, converted to import terminals or biorefineries, reducing conventional crude-processing capacity just when global diesel supply has become more problematic.

A refinery may appear unnecessary during periods of large imports and open trade routes. However, it becomes strategic when imported diesel is disrupted. Closing a refinery does not eliminate domestic demand for diesel. It converts domestic production capacity into an additional need for imported product and foreign refining capacity.

The EU’s decision to restrict Russian petroleum products did not eliminate Europe’s demand for transport, agricultural and industrial fuel. Now diesel must be delivered from more distant suppliers, with longer routes, high freight costs and more exposure to congestion in the Red Sea or the Strait of Hormuz. Sanctions may have created an indirect boomerang effect, making Europe more dependent. In January 2026, the EU also banned imports of petroleum products refined from Russian crude in third countries, closing the so-called refining loophole. That restricted available supply even more.

Sanctions are justified as a geopolitical tool. But they became very expensive, especially when the EU’s policy framework disincentivizes refining investment at home. Restricting a key supplier while shrinking local refining capacity is a dangerous combination, and governments cannot expect consumers and businesses to be shielded from a global refined-products shock. Thus, the EU has created a suicidal combination instead of a security of supply strategy.

Another important aspect is the limits to North Sea production. The North Sea is a mature basin, and its production decline is a reality. UK North Sea oil and gas production fell by 72% between 1999 and 2025. However, natural decline does not make policy irrelevant. High windfall taxation, uncertainty over fiscal terms, restrictions on new licensing and the broader political message that hydrocarbon investment is not desirable reduce incentives to maintain infrastructure, pursue incremental projects, explore and develop viable resources. Such policies may not change next month’s global diesel price by themselves, but they have an important impact on supply, investment and infrastructure available.

UK government policy confirmed a ban on new licences for new North Sea oil and gas fields, while allowing some exceptions linked to existing fields and infrastructure. The strategic impact is still clear. A country facing declining production and shrinking refining capacity becomes more dependent on imported oil and refined products at the time when global trade routes are closing.

Domestic crude is not the same as domestic diesel. However, domestic output is essential, as it reduces import needs, supports regional infrastructure and refining optionality, improves the balance of supply during disruption and limits exposure to external suppliers. Thus, abandoning this capacity without a truly scalable substitute is a policy decision with massive security-of-supply consequences.

Europe’s policy framework adds more restrictions. Refining is capital-intensive, energy-intensive and emissions-intensive. Carbon taxes, environmental mandates, compliance obligations, high electricity and gas costs, and regulatory risk make investment unviable and closures more likely.

Can it get worse? The next step of the EU framework could add another direct challenge. The ETS2 emissions-trading system is scheduled to apply to fuels used in buildings and road transport from 2027, subject to its implementation rules and safeguards. It is designed to place a carbon price on suppliers of those fuels. This makes a market already burdened by high excise duties, VAT and supply constraints will face another structural cost layer.

The Carbon Border Adjustment Mechanism does not directly tax diesel at the forecourt, but it will raise costs for carbon-intensive inputs such as steel, cement, aluminium, fertilisers, hydrogen and imported electricity. Those costs are essential for refinery maintenance, tanks, pipelines, and transport infrastructure. All these political decisions raise the cost of keeping Europe’s energy system functioning.

Diesel is not a discretionary consumer good. It is the engine of the real economy. Without affordable diesel, freight transport, farming equipment, construction machinery, industrial logistics, emergency services, parts of mining and maritime activity, and parts of distribution are going to add more inflationary pressures.

The diesel shock does not end at the service station. Higher diesel costs will raise the cost of moving food from farms to warehouses and supermarkets; carrying inputs to factories; delivering medicines and manufactured goods; and operating machinery at construction sites. Businesses already suffering weak margins will pass those costs into final prices. Policy-created diesel inflation creates an economically disastrous second-round effect. This will hit transport, food, goods and services even after the war ends.

A logical energy policy should be focused on affordability, availability, and security of supply. Dismantling the physical capacity that keeps the economy supplied during an energy transition just demolishes the economy and achieves the opposite of what politicians want. The West becomes more dependent and poorer.

Europe cannot tax, regulate and limit the energy system across every stage of the value chain, close the industrial assets needed to process fuels, limit investment in production and then act surprised when diesel becomes scarce and expensive. Developed economies should preserve and modernize strategic refining capacity rather than treating it as a disposable legacy asset, eliminate the cumulative tax, carbon and regulatory burdens that destroy energy competitiveness, and support domestic energy production.

A congressional report recently found that the US has “probably used” one-half to two-thirds of its missile-defense interceptors during its Iran conflict so far, intensifying new concerns about readiness for another major conflict.

The US industrial response is already taking shape to ramp up missile and bomb production to replenish depleted stockpiles as the West enters the early innings of a massive rearmament supercycle.

A Wall Street Journal report said Thursday that General Motors has begun supplying components for Lockheed Martin’s Patriot interceptors. This suggests that unused civilian production lines can be retooled for wartime, as they were during World War II, and shows why preserving the auto industrial base is critical in times like these.

Lockheed told the outlet that GM delivered its first batch of missile-housing components for PAC-3 MSE interceptors in August. The automaker produced the parts in three weeks, compared with the months major defense firms would have taken.

At the start of this year, the Department of War directed Lockheed to triple annual Patriot production to over 2,000 missiles by the end of 2030. Meeting that target requires additional output, including, as in this case, tapping automakers like GM.

For GM, retooling production lines for weapons offers another revenue stream during a difficult period for the global auto industry. The CEO told Wall Street analysts earlier this summer that she expected the company’s defense unit to generate $700 million in revenue this year with double-digit margins.

Meanwhile, the rearmament supercyclerearmament supercycle is colliding with a critical materials squeeze supercharged by Chinese export supply restrictions and resource nationalism. Missiles, data centers, and broader reindustrialization depend on many of the same constrained metals. Securing conflict-free and reliable supplies will be paramount for the West.

Via Middle East Eye

Israeli Prime Minister Benjamin Netanyahu has called for the stripping of citizenship from those who “defame” the Israeli army.

His comments reflect anger from the Israeli government over the documentary NAZA, which featured soldiers testifying to the commission of war crimes in Gaza. Netanyahu said he would introduce two bills to Israel’s parliament in a video posted on social media.

“The first would revoke the citizenship of anyone who defames [Israeli army] soldiers, and the second would hit them in the pocket by increasing twentyfold the amount in damages for which they can be sued for defamation,” Netanyahu said.

“We will hit them both in the pocket and in citizenship, because they have no place among us.”

Israeli ministers have already called for NAZA directors Yuval Abraham and Rachel Szor to lose their citizenship over the film.

On Monday, Culture Minister Miki Zohar called the film “despicable” and said its winning of the Special Jury Prize at the 83rd Venice International Film Festival on Saturday was “shocking”.

“The creators’ burning self-hatred, and their willingness to harm their homeland in order to receive applause from antisemites around the world, is beyond comprehension and constitutes a betrayal of the state,” Zohar said on X.

“I will act immediately to revoke the Israeli citizenship of these despicable creators on the grounds of treason against the state.”

Segment from the film:

“There was once approval to kill 500 people for one human target,” an ex-Israeli soldier says in the Gaza documentary NAZA, which features testimony alleging AI-assisted targeting and “mass killing on an industrial scale”. pic.twitter.com/ZcbwGkWjiz

— Middle East Eye (@MiddleEastEye) September 11, 2026

The film features interviews with 24 anonymized Israeli military and intelligence insiders who describe using AI-powered systems to identify targets and carry out remote bombings, often knowing that large numbers of civilians would be killed.

One military insider interviewed for the film said that, in one incident, the killing of up to 500 civilians was approved to kill a single high-value Hamas member.

The Israeli army rejected the allegations made in the film. 

The United States has publicly acknowledged that it already has weapons in orbit, adding a new dimension to a military competition increasingly defined by highly maneuverable satellites – and what they could be used for. Air Force Secretary Troy Meink revealed the space weapons in a Monday disclosure at the Air & Space Forces Association’s annual conference. 

Among other threats, China’s ‘dogfighting’ satellites have caught the attention of US officials. 

In March of last year, Gen. Michael Guetlein, then the Space Force’s vice chief of space operations, described five Chinese objects conducting coordinated maneuvers in low Earth orbit. The service subsequently identified three Shiyan-24C satellites and two Shijian-6 05A/B objects. He said they were “Dogfighting” (not that they had exchanged fire). 

More recent activity includes a Chinese spaceplane releasing a small satellite in June. The object looped around another Chinese satellite before moving back toward the spaceplane, according to LeoLabs tracking data reported by Reuters on September 2. That investigation also examined Chinese research into spacecraft pursuit and capture, while noting that the United States operates its own secretive uncrewed spaceplane. 

What changed this week was Washington’s willingness to explicitly acknowledge an orbital arsenal. According to Meink, the United States possesses “on-orbit space control weapons capable of defending the joint force against hostile adversary action.” He declined to identify the weapons or describe their technical characteristics, testing or employment.

In a subsequent statement to The War Zone, a Space Force spokesperson said the broader space-control mission includes kinetic and non-kinetic methods of disrupting, degrading or, when necessary, destroying an adversary’s capabilities. The spokesperson said those capabilities can serve offensive or defensive purposes, but would not specify which particular systems are currently deployed.

What we don’t know is whether the deployed weapons are physical interceptors, electronic warfare systems or something else. Nor does a description of the service’s overall mission prove that every type of capability mentioned is already operational in orbit.

This goes way beyond satellites too. Space infrastructure supports communications, intelligence collection, missile warning and weapons guidance, while disruption can also affect civilian and commercial activity. The War Zone’s reporting highlighted those dependencies alongside the service’s acknowledgment.

China has opposed the U.S. announcement, reiterating its position against the weaponization of space. American officials describe their capabilities as necessary to deter attacks and protect forces. Experts interviewed by Reuters warned that secrecy and uncertainty can encourage competing governments to make worst-case assumptions about one another’s intentions.

The 1967 Outer Space Treaty is not a blanket prohibition on conventional weapons in Earth orbit. Its central orbital weapons restriction concerns nuclear weapons and other weapons of mass destruction. Separate provisions prohibit military installations, weapons testing and military maneuvers on the moon and other celestial bodies. An acknowledgment of conventional orbital weapons therefore does not, on its own, establish a treaty violation.

Now for a ‘complicator’ – how do governments distinguish routine operations, surveillance, deterrent signaling and preparations for an attack when much of the relevant hardware and doctrine remains classified?