Oil prices extended gains, with Brent crude futures rising $0.43 to $103.51 a barrel and West Texas Intermediate futures climbing $0.35 to $92.51 a barrel, following a 4% increase in the previous session. This surge is primarily attributed to the ongoing deadlock in diplomatic talks between the United States and Iran. Both benchmarks initially fell in Asian morning trade on September 24 but rebounded as investors reacted to the persistent geopolitical uncertainty.
The core of the conflict lies in Iran's insistence on lifting a US naval blockade on Iranian ports and reopening the Strait of Hormuz before any peace agreement. Iran's security chief, Mohsen Rezaei, explicitly stated that the Strait would not be reopened until Iran's conditions are met. Iranian President Masoud Pezeshkian, addressing the UN General Assembly, condemned US pressure and reiterated that Tehran would "never surrender," while a senior Iranian official confirmed that Tehran is reviewing Washington's response to its peace proposals.
Further escalating tensions, an adviser to Iran's supreme leader, Mojtaba Khamenei, warned that Iran might expand the conflict to the Indian Ocean if the US attacks again. This threat, coupled with continuous attacks on vessels in the Strait of Hormuz—including a recent incident where a cargo ship was hit by projectiles—highlights the volatile situation. Analysts, like Priyanka Sachdeva of Phillip Nova, note that Brent crude carries a larger geopolitical and sea-route premium due to its direct exposure to Middle East and Hormuz disruptions, while WTI benefits from more insulated US supply.
In related news, rumors of a 90-day US diesel export ban caused market fluctuations, with ultra-low-sulfur diesel futures dropping about 5%. However, White House officials denied such plans, and US Energy Secretary Chris Wright stated that a ban would not be effective and could worsen global supplies. US distillate stockpiles, including diesel and heating oil, fell by 428,000 barrels to 107.4 million barrels last week, while US crude inventories rose by 3 million barrels to 426.4 million barrels, contrary to analyst expectations for a draw.
