KEY POINTS
- Oil rose more than 2% on Thursday, with Brent up 2.36% to $105.51 and WTI up 1.89% to $93.90, as US-Iran talks showed little progress.
- Iran is reviewing Washington’s response to peace proposals centered on lifting the US naval blockade and reopening the Strait of Hormuz, but the sides remain divided.
- European diesel futures held near record highs despite a White House denial of a planned 90-day export ban; US distillate stocks fell while crude inventories rose 3 million barrels.
Oil prices climbed more than 2% on Thursday as diplomatic talks between the United States and Iran showed little sign of progress, while traders weighed the risk of a US ban on diesel exports.
Brent crude futures rose $2.43, or 2.36%, to $105.51 a barrel by 0940 GMT, while West Texas Intermediate gained $1.74, or 1.89%, to $93.90. Notably, Brent touched $106.50 earlier after reports that Iran had given Washington one week to meet its demands, including lifting the US naval blockade.
Diplomacy stalls
The two sides remain far apart. According to a senior Iranian official, Tehran is reviewing Washington’s response to its peace proposals, which prioritise lifting the naval blockade and reopening the Strait of Hormuz. However, diplomacy must continue, the official told Reuters, even after Iran’s president told the UN General Assembly that Tehran would never surrender to US pressure.
The geopolitical risk kept a firm bid under crude. Specifically, Priyanka Sachdeva of Phillip Nova said the physical market is nowhere near normalised. Furthermore, she noted Brent carries a larger geopolitical and sea-route premium because international crude is more exposed to Middle East and Hormuz disruption, while WTI benefits from more insulated US supply.
Diesel ban in focus
The diesel question added another layer of uncertainty. European diesel futures held near record highs, even after a White House official on Wednesday denied a report that the US was preparing a 90-day export ban. Moreover, analysts warned such a move would do little to ease prices and could worsen global supply.
Inventory data sent mixed signals. Specifically, US distillate stockpiles fell 428,000 barrels to 107.4 million last week, according to the Energy Information Administration. Meanwhile, crude inventories rose 3 million barrels to 426.4 million, defying expectations for a draw. Ultimately, tight diesel and unresolved diplomacy left the market on edge.
