Oil prices rose for a second consecutive day, with Brent crude trading above $107 a barrel and West Texas Intermediate around $94. This increase was primarily attributed to a lack of progress in US-Iran negotiations and the ongoing uncertainty surrounding the reopening of the Strait of Hormuz. US President Donald Trump rejected a proposal to resume full traffic through the waterway, exacerbating market anxieties.
Adding to the supply concerns, Saudi Arabia's crucial East-West pipeline, which bypasses the Strait of Hormuz, had operations halted earlier in September due to drone strikes. While approximately half of its capacity has been restored, reaching at least 3.5 million barrels per day, the disruption contributed to the upward pressure on oil prices. Analysts noted that despite geopolitical risks, crude barrels continue to find their way to market, preventing a more significant repricing.
Crude is set for its third monthly gain in 2026, fueled by escalating US-Iran tensions, the Saudi pipeline disruptions, and potential diesel export curbs by Washington. Brent crude has already seen over a 70% increase this year due to more than seven months of conflict in the Middle East. President Trump denied an Axios report about offering Iran sanctions relief in exchange for nuclear program steps, a claim also refuted by Iran's Foreign Minister Abbas Araghchi.
Market indicators reflect significant tightness, with Brent's prompt spread widening to over $7 a barrel from less than $1 at the end of last month, signaling a strong demand for immediate supply. Dated Brent, a key physical-market benchmark in Europe, also traded at a substantial premium to futures. TotalEnergies SE CEO Patrick Pouyanné warned that a potential US ban on diesel exports, considered by Trump to lower prices, could backfire by increasing gasoline costs due to reduced refinery throughput.
