Oil rose for a second straight session on Thursday as hopes for a U.S.-Iran diplomatic breakthrough faded at the United Nations General Assembly. Brent and WTI crude both extended their rebound from a five-day losing streak, while the Strait of Hormuz standoff and rising diesel prices kept traders on edge.
Oil prices climbed for a second straight session on Thursday, extending a rebound from a five-day losing streak. At 16:31 ET (20:31 GMT), Brent crude futures for November delivery gained 4.1% to $107.33 a barrel, while West Texas Intermediate crude for the same month added 3.1% to $95.04 a barrel.
Strait of Hormuz remains the flashpoint
Traders had hoped for diplomatic progress between the U.S. and Iran at the UN General Assembly this week, but the tone hardened instead. Trump threatened Iran with military destruction unless Tehran reaches a deal in a Tuesday speech, and Secretary of State Marco Rubio said Wednesday that indirect U.S.-Iran talks on the sidelines of the UN were not a major breakthrough but a continuation of past conversations.
Reuters reported Thursday that negotiators discussed a phased path out of the war involving Tehran reopening the strait and Washington lifting its economic blockade, citing sources close to the talks. Oil pared some gains on that report, but the pullback was short-lived. The strait carried roughly one-fifth of global oil and liquefied natural gas shipments before the Middle East conflict began in late February. Iranian security chief Mohsen Rezaee said Wednesday the waterway would not reopen until Tehran's conditions are met.
The U.S. insists the strait remains navigable behind an ongoing naval blockade of Iran's ports, and Reuters said some 60 commercial vessels carrying the highest daily volume of crude since early July transited the chokepoint Wednesday. Saudi Arabia has reportedly restarted its East-West Pipeline to the Red Sea, and Iraq has increased exports.
Fed rate-hike bets firm on inflation risk
The oil surge, along with solid U.S. business activity data on Wednesday, lifted expectations for more Federal Reserve interest rate hikes by year-end. The Fed raised rates last week, partly citing the energy-price shock, and analysts at BCA Research said elevated crude prices are feeding a hawkish repricing of Fed policy amid concerns over sticky inflation.
Washington weighs diesel export curbs
Diesel prices at U.S. pumps also stayed in focus. The national average hit a record $6.5276 a gallon on Tuesday. It was hovering at $6.5141 a gallon on Thursday. Some Republican lawmakers, Trump and Treasury Secretary Scott Bessent have called for a possible ban on diesel exports, though analysts say the move would be unlikely to provide long-term relief.
Reuters reported Thursday that Energy Secretary Chris Wright contacted executives at several major refiners to gauge support for a voluntary restriction on diesel exports, citing three people familiar with the discussions. Politico reported Wednesday that Washington was considering a 90-day ban on diesel exports despite opposition from the oil industry, though a White House official later told Reuters the report was "fake news."
Source: Investing.com
Trading involves risk.
Risk Disclaimer
