The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.

1239 ET - The IEA's latest estimate for a 2.5 million barrels-a-day drop in oil demand this year because of the U.S.-Iran conflict puts losses on a par with declines in 2008/09 combined during the global financial crisis, says Raymond James investment strategy analyst Pavel Molchanov. "In developed economies, oil demand destruction involves mostly mild effects, such as suspended airline routes. In lower-income countries, more painful impacts--factory closures, fuel rationing--are visible." The IEA sees demand barely recovering pre-conflict levels in 2027, "and a portion of demand destruction may be permanent," he adds.(anthony.harrup@wsj.com)

1111 ET - With U.S. diesel prices hitting new all-time highs above $6 a gallon, "many independent truckers are likely being forced to sideline rigs temporarily until prices drop back down to around $4 or below," Ritterbusch & Associates says in a note. That's even with some ability to pass on the increased costs to final goods, which bodes ill for inflation down the road, the firm says. "Diesel will remain as the strongest part of the energy complex as long as Hormuz remains clogged." The AAA reports the average U.S. diesel price at a record $6.0556 a gallon. Nymex diesel futures are off 0.7% at $5.0265 a gallon while WTI crude retreats 2.9% after an eight-session rally. (anthony.harrup@wsj.com)

0951 ET - U.S. natural gas futures are giving back yesterday's small gains and on track for weekly losses as summer ends and cooling demand is set to ease into the autumn. Futures "remain in a sell-the-strength type trade," Dennis Kissler of BOK Financial says in a note. "While the fundamentals still favor the bears, the market seems to be well supported near the $2.75-$2.70 area." Nymex natural gas for October delivery is off 0.7% at $2.813/mmBtu.(anthony.harrup@wsj.com)

0933 ET - Oil futures are lower in early U.S. trading, pulling back from nearly four-month highs reached on escalation of the Middle East conflict. "It appears that the market is extremely thin and subject to whatever flows it sees and news storiesit receives," Scott Shelton of TP ICAP says in a note. In its monthly report, the IEA said it expects the recovery in oil flows out of the Middle East to stretch into 2027. The agency said it expects oil demand to fall by 2.5 million barrels a day this year, steeper than its previous 1.6 million b/d estimate, and predicts a 2.6 million b/d increase in 2027. WTI is down 3.5% at $98.92, and Brent is off 3.1% at $104.30 a barrel.(anthony.harrup@wsj.com)

0841 ET - Brent crude could push through $110 a barrel, but that level might not prove a firm ceiling if traffic through the Strait of Hormuz remains depressed and shipping through the Red Sea and Bab al-Mandeb is disrupted by the Houthis, says Abhishek Kumar from Sparta Commodities. "Houthi control of Yemen's Mokha port has raised concerns around Red Sea and Bab el-Mandeb traffic, while attacks on Saudi energy infrastructure add another potential pressure point," the senior oil analyst says. "The market is increasingly pricing simultaneous risk across both major Middle Eastern shipping corridors." Diplomatic progress could ease the front-end premium, but recent experience suggests diplomacy alone is unlikely to materially shift the market without a sustained improvement in shipping flows and security, according to Kumar. (giulia.petroni@wsj.com)

0839 ET - Reckitt and Unilever are more exposed to higher oil prices than other consumer goods companies, analysts at Morgan Stanley say in a note as Brent crude remains above the $100 mark. The substantial home-care businesses of Reckitt and Unilever and sensitivity to oil-linked raw materials leave them more exposed than other companies, they add.Beyond pricing, Reckitt has highlighted improvements to its supply chain and says it is manageable, the analysts add. Reckitt shares are up 0.1%, Unilever shares are up 0.5%. (aimee.look@wsj.com)

0839 ET - European gas prices are expected to remain elevated, with the TTF benchmark forecast at 75 euros a megawatt-hour by year-end, up sharply from Commerzbank's previous forecast of 50 euros. A physical shortage is unlikely, but competition for LNG is expected to remain intense, particularly as Qatar, has sharply curtailed production and shipments, according to Norman Liebke, a commodity analyst at Commerzbank. Most remaining Qatari LNG cargoes are headed to China, India and countries around the Persian Gulf, while shipments to Europe have effectively halted. Unlike oil, LNG has limited alternative export routes, increasing Europe's vulnerability. The supply outlook could tighten further from 2027 as the European Union phases out Russian LNG and pipeline-gas imports, Liebke says. TTF gas currently trades around 81 euros a megawatt-hour. (giulia.petroni@wsj.com)

0804 ET - The cost of insuring Saudi Arabia's sovereign debt against default edges higher after Houthi militants captured a Red Sea port late Thursday, an important route for Saudi's oil exports. The militants earlier this week attacked energy facilities in Saudi Arabia, raising concerns about the spread of the Middle East conflict. Saudi Arabia's 5-year sovereign credit default swaps climb 1 basis point to 59bps, the highest in three weeks, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)

0801 ET - U.S. diesel prices extend their rally, hitting a fresh record high as severe disruptions in the Middle East and Russia keep global supplies tight ahead of winter. The national average price of diesel hit $6.0556 a gallon on Friday, the highest on record, according to the American Automobile Association. A year ago, prices averaged $3.705 a gallon. "The recent widening in the spread between the spot price of Brent crude and the front-month contract is evidence of rising strains in the physical oil market," says David Oxley from Capital Economics. "The recent upward leg in the oil price does not have the hallmarks of a risk premium-related move that could dissipate quickly but seems instead to be a reassessment that will only be soothed by a loosening in oil market conditions." (giulia.petroni@wsj.com)

0757 ET - European equity valuations are elevated on overly optimistic assumptions around the artificial intelligence-driven investment boom, Bank of America analysts write. Markets price record margin expansion and post-recession levels of earnings per share growth over the next three years, the analysts say. "We see ample scope for disappointment." Increased competition between model makers will reduce pricing power and lower margins--the same factor that has caused past tech booms to fall flat, they say. Moreover, the increased cost of money for hyperscalers, and the risk of insufficient electricity supply, will drag data center build-out on the continent. The analysts see potential for the Stoxx 600 to fall by 9% to around 580 into early 2027. The index rises 0.55% to 639.49 Friday.(josephmichael.stonor@wsj.com)

0750 ET - Oil price movements and U.S. Treasury yields are likely to be the main drivers of U.K. government-bond yields in the near term, ING economists say in a note. "For every $10 increase in oil prices, gilt yields rise by some 10 basis points to 15 bps," they say. The gilt market could stay highly volatile due to these external factors, they say. Ten-year gilt yields fall 2.5 basis points to last trade at 5.346%, after hitting a 19-year high of 5.381% on Thursday, LSEG data show. (miriam.mukuru@wsj.com)

0748 ET - Oil prices extend losses in afternoon European trading, but remain on track for weekly gains of nearly 9% as escalating attacks in the Middle East fuel fears of prolonged supply disruptions. "The key risk in the near term is that fighting causes the partial recovery in crude oil flows to go into reverse," says David Oxley from Capital Economics. "This could include affecting oil flows via the Red Sea, and/or disrupting the practice of ship-to-ship transfers, which have both been vital in allowing around 60%-80% of prewar crude oil flows to exit the Strait [of Hormuz] in recent months." Brent crude is down 3.1% to $104.33 a barrel, while WTI futures fall 2.8% to $99.63 a barrel following a Financial Times report of Middle Eastern diplomatic efforts to secure temporary shipping arrangements with Iran.