Crude oil benchmarks climbed sharply on Thursday as diplomatic efforts between the United States and Iran showed little progress, keeping geopolitical supply risks firmly in focus. Brent crude futures rose 2.09% to $105.20 a barrel after touching an intraday high of $106.50, while West Texas Intermediate futures gained 2.05% to $94.13 a barrel. By Friday, WTI had retreated to about $93 and Brent to $105.65 amid reports of a possible phased agreement to reopen the Strait of Hormuz.
US and Iranian delegations were reportedly exploring a framework similar to a previous Memorandum of Understanding under which Iran would refrain from striking vessels transiting the Strait and Washington would lift its naval blockade of Iranian ports. However, the talks remain fragile. A senior Iranian official said Tehran was reviewing Washington’s response to its proposals, which include lifting the US naval blockade and reopening the Strait of Hormuz. Iranian President Masoud Pezeshkian told the United Nations General Assembly that Tehran would not surrender to US pressure, while an adviser to Iran’s Supreme Leader warned that Tehran could expand the Middle East conflict into the Indian Ocean if the US or Israel launched another attack.
Market commentary underscored the uncertainty. Peter Cardillo of Spartan Capital said crude oil remained in strong demand because there was still no evidence of a diplomatic breakthrough that would bring the parties back to negotiations. MUFG analyst Soojin Kim noted that continued flows through Hormuz and the restart of Saudi Arabia’s East-West pipeline could ease physical supply pressures, but persistent tanker attacks and limited diplomatic progress could keep volatility and the geopolitical risk premium elevated.
Adding to concerns, European diesel futures moved lower from all-time highs as markets assessed reports of a possible 90-day US diesel export ban. A White House official denied the report, while the European Commission expressed concern that such a measure could negatively impact both sides. US inventory data sent mixed signals: distillate stockpiles including diesel and heating oil fell by 428,000 barrels to 107.4 million barrels, while crude inventories rose by 3 million barrels to 426.4 million barrels, against expectations for a 641,000-barrel decline.
Technical analysis pointed to continued upside for WTI, with an ascending channel intact and the next key target at $106.70, its September 15 high, followed by a potential move to $110. A drop below the lower channel boundary would invalidate the bullish outlook. The restart of Saudi Arabia’s East-West Pipeline to the Red Sea export hub of Yanbu added some supply relief, though Houthi control of the Bab el-Mandeb Strait remains a risk to those flows.
