Oil markets saw a second straight day of gains on Tuesday, with Brent crude futures up 63 cents, or 0.6%, to $105.91 a barrel and U.S. West Texas Intermediate (WTI) rising 72 cents, or 0.8%, to $93.32. The rally reflects lingering worries about supply disruptions stemming from the ongoing U.S.-Iran conflict, which continue to outweigh indications that Gulf export volumes are recovering.
Gulf export volumes improve, but rely on costly workarounds
Tim Waterer, chief analyst at KCM Trade, said a clearer picture is emerging of higher oil export volumes leaving the Gulf. However, much of that increase still depends on ship-to-ship transfers, a method that is less efficient and more expensive than normal pipeline or direct tanker operations. “Those methods are less efficient and more costly than normal operations, which is why crude prices remain elevated,” Waterer explained.
Preliminary data from Kpler show that crude exports from major Middle Eastern producers climbed to 12.8 million barrels per day in September, the highest level since February. The rise was driven primarily by increased shipments from Saudi Arabia and the United Arab Emirates.
Diplomatic talks aim to end seven‑month war
U.S. and Iranian officials have each spoken separately with mediators in a renewed effort to end the seven‑month conflict that began in late February with U.S. and Israeli strikes on Iran. Both sides said further talks are expected to focus on an amended version of a seven‑day proposal Iran presented last week at the United Nations General Assembly.
Waterer added that the persistent hope of a diplomatic deal is a key factor preventing Brent from moving sustainably above $110 in the near term. He noted that traders are trying to separate genuine market signals from the noise created by the conflict.
U.S. considers diesel tax‑relief measure
In the United States, policymakers are weighing regulatory relief that would allow broader sales of red‑dyed diesel, a fuel often used for off‑road equipment. The proposal, described by sources familiar with the discussions, could let some buyers avoid the federal fuel tax, potentially lowering costs for certain sectors. The measure emerged after days of deliberation as a leading alternative to a proposed diesel export ban.
Industry observers say that if enacted, the relief could help temper domestic diesel prices, though its impact on overall fuel costs remains uncertain.
Market outlook
Analysts caution that while Gulf export volumes are showing signs of recovery, the reliance on ship‑to‑ship transfers and the uncertainty surrounding diplomatic negotiations keep the market on edge. Any escalation in the Strait of Hormuz, a critical shipping lane for global oil supplies, could quickly reverse the modest gains seen this week.
For now, traders appear to be pricing in both the potential for higher Gulf shipments and the risk of further supply disruptions, leaving crude prices elevated but still sensitive to developments in the Middle East and U.S. policy moves.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
