Oil prices rise for second session on continued Middle East supply concern
- Oil prices increased for a second straight session on Tuesday as ongoing fears of Middle East supply disruption due to US-Iran tensions overshadowed signals of recovering crude supplies from the region.
Brent crude futures were up $1.49, or 1.4%, at $106.77 a barrel by 0326 GMT while US West Texas Intermediate crude was at $93.94, up $1.34, or 1.5%. Both benchmarks finished the last session with gains of around $1 a barrel.Higher volumes of oil exports are increasingly visible exiting the Gulf, but much of the growth still depends on workarounds such as ship-to-ship transfers. “The methods are less efficient, more costly than normal operations, which is why crude prices remain elevated,” KCM Trade chief analyst Tim Waterer said.
Crude exports from major Middle Eastern producers jumped to 12.8 million barrels a day in September, the highest since February, aided by higher shipments from Saudi Arabia and the United Arab Emirates, preliminary statistics from data source Kpler showed on Monday.
U.S. and Iranian officials separately spoke to mediators in a renewed effort to end seven months of hostilities, officials from both nations said. Further talks are widely expected to focus on a revised version of a seven-day proposal Iran submitted last week on the margins of the United Nations General Assembly.“The dominant risk remains the US-Iran standoff and its implications for energy prices and inflation expectations,” UOB analysts said in a client note.Iranian officials have allegedly been pessimistic about striking a compromise before the Strait of Hormuz crisis worsens further, keeping oil supply uncertainties elevated.”
The conflict that started in late February with US and Israeli strikes on Iran has turned the spotlight onto the Strait of Hormuz, a vital shipping path for oil and gas supplies that has been thrown into chaos and shaken up energy markets.
Meanwhile, the US is weighing regulatory relief to enable wider sales of red-dyed diesel to help decrease prices, a move that might allow some consumers to escape federal fuel tax, people familiar with discussions told Reuters. The proposal came after days of negotiations as a key alternative to a ban on fuel exports.