Oil prices climb as Trump rules out sanctions relief for Iran
Crude benchmarks hit their highest levels since May after Trump denied a report he would ease Iran sanctions, with Brent set for a 14% September gain.
Oil prices advanced on Wednesday after US President Donald Trump rejected a report that he was prepared to soften sanctions on Iran, even as Qatar pressed ahead with efforts to broker talks between Washington and Tehran.
Brent crude futures gained $1.14, or 1.11%, to trade at $103.73 a barrel by 0131 GMT, while US West Texas Intermediate rose 34 cents, or 0.38%, to $89.72. Both benchmarks touched their highest levels since May.
Brent is on course for a monthly rise of about 14%, its steepest since July, and WTI is set for a 4% gain for September. The gap between the two contracts widened to its broadest in four months as traders weighed possible US moves to curb diesel exports, a step that could leave excess supply at home and prompt American refiners to process less crude.
Trump is considering permitting sales of red-dyed diesel as an alternative to an outright export ban, a measure aimed at easing prices for consumers ahead of November's mid-term elections.
"Further evidence of recovering flows through the Strait of Hormuz, hope for alternatives to a US diesel export restriction will emerge, and no material Iranian escalation in the last 24 hours has seen prices come off a little," said Saul Kavonic, head of energy research at MST Marquee, who described the situation as remaining volatile with costly and constrained oil logistics.
Qatar said on Tuesday it hopes its shuttle diplomacy can produce a breakthrough. "We are exchanging messages between the parties, and we're working towards establishing a common ground in order to get into a deal that would save all of us from the repercussions of the conflict," Qatari Foreign Ministry spokesperson Majed al-Ansari told reporters.
Trump, however, dismissed an Axios report citing US officials as saying he was willing to offer Iran sanctions relief and release frozen Iranian funds in exchange for "concrete" steps on its nuclear programme. "This is untrue. I offered them NOTHING," he wrote on Truth Social.
Supply-side developments also weighed on sentiment. Saudi Arabia resumed tanker loadings from its Red Sea port of Yanbu on Tuesday after restarting operations on the East-West Pipeline. Crude exports from Middle East producers rebounded in September to 16.328 million barrels per day, the highest since the US-Israeli war with Iran began in late February.
In the United States, crude and gasoline inventories rose last week while distillate stocks fell, market sources said on Tuesday, citing American Petroleum Institute data. Crude stocks increased by 1.02 million barrels in the week ended September 25. Official figures from the US Energy Information Administration are due at 1430 GMT, with analysts polled expecting crude and product inventories to have declined.