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The rebound shows how quickly the geopolitical premium returns once peace hopes fade, even with Saudi and Iraqi barrels flowing more freely outside Hormuz. Brent’s return above $100 leaves the front end sensitive to any headline on the blockade or the strait’s reopening terms, with two-way risk elevated. Diesel’s policy-driven swings add a separate layer of volatility to refining margins that crude traders cannot hedge easily. The move in Treasury yields to 5% tightens financial conditions across asset classes, a potential drag on demand expectations that could limit how far crude rallies without a genuine supply shock.
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Crude rebounded as diplomacy stalled, reminding traders that the Hormuz premium is only one failed headline away, while diesel was whipsawed by contradictory reports over a US export ban.
Summary:
- Brent settled up nearly 4% at around $103 and WTI rose circa 2% to around $92, rebounding from multi-week lows
- Tehran is still reviewing the US response to its peace proposal with many differences remaining; Hormuz and the US blockade were discussed in indirect talks
- An Iranian official suggested Hormuz could reopen within a week if the US eases pressure, while the security chief said it stays shut until Iran’s conditions are met
- Diesel swung on conflicting headlines over a possible US export ban before settling marginally lower
- US crude stocks rose around 3 million barrels versus an expected draw; gasoline and distillates drew
- Saudi Arabia restarted its East-West Pipeline, and Iraq reported exports above 3 million barrels per day
Oil prices climbed on Wednesday as a lack of concrete progress between Washington and Tehran outweighed fresh signs of recovering Gulf supply and a surprise build in US crude stocks. Brent settled up nearly 4% at around $103 a barrel, while West Texas Intermediate gained circa 2% to around $92, rebounding after both benchmarks had slipped to multi-week lows earlier in the week.
Diplomacy remained the central theme. Tehran is still reviewing Washington’s response to its proposal to end hostilities, a senior Iranian official told Reuters, adding that many differences remain even as talks continue. A reopening of the Strait of Hormuz and the lifting of the US naval blockade on Iran were discussed in indirect talks on Tuesday, and the same official suggested the strait could reopen within a week if the US eased military pressure and lifted its blockade of Iranian ports. Iran’s security chief Mohsen Rezaei took a harder line, saying Hormuz would stay shut until Iran’s conditions are met.
At the UN General Assembly, Iranian President Masoud Pezeshkian said Tehran would never surrender to the US while still backing diplomacy, a day after President Donald Trump used the same forum to warn he could annihilate Iran. Some reports linked the day’s gains to the speech, although price moves while Pezeshkian was speaking were modest, and his remarks contained little that pointed clearly towards either escalation or de-escalation.
Diesel was the most volatile corner of the complex. Energy Secretary Chris Wright said a blanket export ban would not work and favoured a voluntary approach instead, before Politico reported that the administration was preparing a 90-day ban. A White House official later rejected that report. Diesel futures swung sharply on the conflicting headlines, sliding at one stage before settling marginally lower.
Weekly government data drew a muted response. US commercial crude inventories rose by around 3 million barrels to about 426 million barrels in the week to September 18, against expectations for a small draw and above the build shown in private data the previous evening. Gasoline stocks fell by around 1.7 million barrels, a larger decline than forecast, while distillate inventories drew by around 0.4 million barrels. Crude output held steady near 13.9 million barrels per day, and the Strategic Petroleum Reserve fell by about 0.4 million barrels.
Supply-side signals had pressured prices earlier in the week. Saudi Arabia resumed operations on its East-West Pipeline to the Red Sea on Tuesday, according to sources briefed on the matter, after drone attacks it blamed on Iraqi militia forced a shutdown on September 11 and halted loadings at Yanbu. The kingdom also offered Asian refiners additional barrels from locations outside Hormuz, while Iraq said it is exporting more than 3 million barrels per day and expects to lift flows via Turkey above 600,000 barrels per day.
The broader backdrop added to the pressure across markets, with US Treasury yields reaching 5%, a level weighing on risk sentiment well beyond energy. Elsewhere, Secretary of State Marco Rubio said Ukraine and Russia had both shown interest in a limited ceasefire covering grain and energy targets. For now, oil remains anchored to Hormuz: any credible path to reopening the strait would likely weigh on prices, while continued deadlock keeps the risk premium in place.
This article was written by Eamonn Sheridan at investinglive.com.
