Oil Extends Gains as Middle East Supply Fears Offset Export Recovery
Crude prices climbed again as Middle East supply concerns outweighed recovering exports and peace talks.
Oil prices advanced for a second consecutive session on Tuesday, as persistent worries over Middle East supply disruptions linked to the US-Iran conflict overshadowed signs of improving crude exports from the region.
Brent crude futures gained 63 cents, or 0.6%, to trade at $105.91 a barrel by 0002 GMT, while US West Texas Intermediate crude stood at $93.32, up 72 cents, or 0.8%.
Crude exports from major Middle Eastern producers rose to 12.8 million barrels a day in September, the highest level since February, according to preliminary figures from data provider Kpler released on Monday. The increase was supported by higher shipments from Saudi Arabia and the United Arab Emirates.
However, much of the additional volume depends on alternative methods such as ship-to-ship transfers, which are less efficient and more expensive than normal operations, keeping prices elevated, said KCM Trade chief analyst Tim Waterer.
"A clearer picture is emerging of higher oil export volumes leaving the Gulf, but much of that increase still relies on workarounds such as ship-to-ship transfers," Waterer said.
Diplomatic efforts to end the seven-month war are also in focus. US and Iranian officials have spoken separately with mediators, both countries said, with further talks expected to centre on a revised version of a seven-day proposal Iran presented last week on the sidelines of the United Nations General Assembly.
Waterer noted that hopes for a deal are likely preventing Brent from sustainably exceeding $110 in the near term, adding that traders are navigating competing forces.
The conflict, which began in late February with US and Israeli attacks on Iran, has drawn attention to the Strait of Hormuz, a vital shipping lane for oil and gas supplies whose disruption has roiled energy markets.
Separately, the US is considering regulatory relief to permit broader sales of red-dyed diesel in an effort to lower prices, a move that could allow some buyers to avoid federal fuel tax, according to people familiar with the discussions. The proposal emerged as a leading alternative to a diesel export ban after days of deliberation.