Oil prices rose on Wednesday after US President Donald Trump rejected reports that he was prepared to ease sanctions on Iran, while Qatar pushed for peace talks. Prices had fallen in the previous session as crude supply from the Middle East showed signs of recovery.
Trump, however, denied an Axios report citing US officials who said he was willing to provide Iran with sanctions relief and release frozen Iranian funds in exchange for "concrete" steps from Tehran on its nuclear programme. "This is untrue. I offered them nothing," Trump wrote on his Truth Social account.
Crude oil price on September 30
Brent crude futures rose $1.14, or 1.11%, to $103.73, while US West Texas Intermediate crude gained 15 cents, or 0.30%, to $89.50 a barrel. Brent is on track for a monthly gain of around 14%, which would be its biggest rise since July. WTI is set for a 4% monthly increase after earlier crossing $106 a barrel for the first time since May.
US President Donald Trump is considering allowing sales of red-dyed diesel rather than imposing an export ban, in a move aimed at providing some relief to consumers ahead of the November mid-term elections.
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Qatar said on Tuesday it hoped shuttle diplomacy between Iran and the US could produce a breakthrough. "We are exchanging messages between the parties, and we're working towards establishing a common ground in order to get into a deal that would save all of us from the repercussions of the conflict," Reuters reported citing Qatari Foreign Ministry spokesperson Majed al-Ansari.
Saudi Arabia resumed oil tanker loadings from its Red Sea port of Yanbu on Tuesday after restarting operations on the East-West Pipeline. Crude oil exports from Middle Eastern producers recovered to 16.328 million barrels per day in September, their highest level since the US-Israeli war with Iran began in late February.
Where are prices headed?
The uncertainty has also made it harder for major banks to gauge the direction of oil prices. JPMorgan said it had lost visibility on the market and, for the first time since the Iran war began in February, no longer had a clear baseline scenario. The bank said the escalation in tensions was adding to concerns over an already worsening supply shock.
"We simply don't know how to model the endgame," JPMorgan analysts said, pointing to the uncertainty over how the conflict could unfold. At the start of the conflict, the bank had assumed there were economic thresholds the US administration would not cross. Six months into the war, JPMorgan said many of those thresholds had been crossed, while there was still no clear exit strategy.
The prospect of further supply disruptions has also raised the potential for oil prices to climb higher. Daan Struyven, co-head of global commodities research at Goldman Sachs, said recent attacks showed that disruptions to shipping could spread and become more severe.
Goldman Sachs has outlined a scenario in which oil prices could reach as high as $120 a barrel if attacks on vessels in the Middle East intensify. If exports return to normal, the bank expects oil prices to move back towards $80 a barrel.
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Struyven told Bloomberg that shipping risks had become a key driver of oil prices. Goldman Sachs sees "meaningful upside to crude oil prices" and also expects natural gas and refined product prices to rise. Struyven said supply shocks in gas and fuels are larger than those in the crude market.
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