Oil traded in subdued fashion on Thursday as reports suggested Iran and Oman were close to finalising a deal on the Strait of Hormuz, with the two sides reportedly agreeing on the coordinates of shipping routes through the waterway. The strait is one of the world's most critical energy transit chokepoints, carrying roughly a fifth of global oil consumption.

The tentative diplomatic progress was offset by renewed security concerns. Reports on Wednesday evening said Houthi forces had targeted another Saudi oil vessel in the Gulf of Aden. Separately, the United Kingdom Maritime Trade Operations agency said the master of a tanker transiting the Strait of Hormuz reported hearing two explosions during the passage. UKMTO said the vessel and crew were safe and that no environmental damage had been reported.

Gold also eased, falling back to below US$4,270 after earlier trading above US$4,300.

Federal Reserve Governor Lisa Cook took a hawkish line in remarks after the U.S. regular session close. She said she is prepared to support a rate hike if inflation does not continue to ease, adding that the bar to act could be low. Cook said she backed last week's decision to hold rates steady because she sees the potential for price pressures tied to tariffs, the war and the AI investment buildout to fade over time, but warned that the Fed is running out of room to keep waiting for disinflation to return. She said, "if I do not see signs of continued disinflation soon, I am prepared to act." Cook also said that after several years of inflation above target, "while we might be able to afford to wait for longer in a different environment, we do not have that luxury in this one."

San Francisco Fed President Mary Daly offered a more measured view, saying she was "completely supportive" of the decision to hold rates steady last week. Daly said the central bank still needs more data before its September meeting to determine whether current inflation reflects fading supply shocks or something more persistent. She added that she is prepared to see the Fed act aggressively if inflation momentum starts to rebuild.

Foreign exchange markets were broadly quiet, but Asian equities came under renewed pressure. Japan's Nikkei declined, dragged lower by heavyweight technology names following overnight weakness in U.S.-listed chip and AI-related stocks. The selloff was even sharper in South Korea, where the KOSPI extended losses through late Thursday morning, falling 4.52% to 6,299.88. Large-cap technology shares led the decline as concerns about the sustainability of AI-related spending continued to weigh on sentiment across the region's chip-heavy markets. Both indices carry heavy weighting in semiconductor and memory-chip manufacturers that sit upstream in the global AI infrastructure supply chain, leaving them particularly sensitive to shifts in investor confidence about the pace and durability of AI capital expenditure.