Oil prices rose on Monday but pulled back from session highs on news that Qatari mediators would hold separate talks with Iran and the US in an effort to reach a peace deal. Prices had earlier jumped more than $4 a barrel after President Trump rejected an Iranian proposal to reopen the Strait of Hormuz, while Middle East crude exports and soaring diesel prices added further pressure on the market.
Trump rejection sparks a spike, then a pullback
Brent futures rose 91 cents, or 0.9%, to $105.23 a barrel at 1:33 p.m. EDT on Monday, while US West Texas Intermediate crude gained 20 cents, or 0.2%, to $92.61.
Earlier in the session, prices had surged more than $4 a barrel after Trump rejected an Iranian proposal to reopen the Strait of Hormuz. Gains eased, however, as traders looked ahead to new diplomacy.
Qatar brokers separate talks with Iran and the US
Qatari mediators are expected to hold separate talks with Iranian Foreign Minister Abbas Araqchi in New York and with the US side on Monday or Tuesday, according to an official briefed on the negotiations. The talks are expected to focus on an amended version of a seven-day proposal Iran presented last week on the sidelines of the United Nations General Assembly.
Iran has insisted that only diplomacy can resolve its conflict with the US and Israel, after Trump rejected Tehran's proposal to reopen the strait and end hostilities. Still, Trump told Axios in a phone interview Sunday that he expected US negotiators to hold more talks this week. Saudi Foreign Minister Prince Faisal bin Farhan also arrived in Washington Monday for talks with Secretary of State Marco Rubio, according to the Saudi state news agency, amid escalating hostilities between Riyadh and Yemen's Iran-backed Houthis.
Middle East exports rebound, but Hormuz flows lag
Crude oil exports from key Middle East producers rebounded in September to 12.8 million barrels per day, the highest since the war started in February, preliminary crude oil data from Kpler showed, as Saudi Arabia and the United Arab Emirates boosted shipments. The rebound followed a recovery in flows through the Strait of Hormuz, which were on track to reach about 7.4 million bpd this month.
According to UBS analyst Giovanni Staunovo: "flows remain below pre-conflict levels, keeping the market undersupplied". About a fifth of the world's oil supply — roughly 20 million bpd — passed through the strait before the US and Israel attacked Iran in February.
Soaring diesel prices widen the Brent-WTI gap
The White House is considering regulatory relief to allow broader sales of red-dyed diesel as it tries to bring down soaring gasoline and diesel prices, according to two people familiar with the discussions. Talk of a possible US diesel export ban, after diesel prices hit record highs in recent weeks, has widened the gap between US crude futures and the global Brent benchmark. The Brent premium over WTI was on track to close Monday at its highest since May, the third time in four sessions.
Diesel prices have soared amid supply disruptions tied to the wars in the Middle East and Ukraine, plus export bans in Russia and China. Moscow banned diesel exports to preserve domestic supply after Ukrainian attacks disrupted its refineries, and Ukrainian President Volodymyr Zelenskiy said Monday that Ukraine's military struck Russian oil facilities in the Krasnodar region.
Source: Commodities & Futures News
Trading involves risk.
Risk Disclaimer
