Oil extends rally as US-Iran deadlock keeps Hormuz shut
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Fuel prices are displayed across from a US flag at a Shell station in Carson, California.
PHOTO: AFP
- Oil prices rose as US-Iran diplomatic talks stalled, keeping the Strait of Hormuz closed and sustaining geopolitical tensions affecting Middle East oil supply.
- Iran insists on lifting the US naval blockade before reopening Hormuz, while the US maintains military options and no immediate deal is expected.
- US diesel export ban rumours caused market fluctuations, but officials denied plans, warning such bans could worsen global energy supply and economic conditions.
AI generated
SINGAPORE – Oil prices rose more than 2 per cent on Sept 24 after climbing 4 per cent in the previous session, as diplomatic talks between the United States and Iran showed no concrete sign of progress.
Brent crude futures were up US$2.43, or 2.36 per cent, to US$105.51 a barrel at 0940 GMT (5.40pm, Singapore time), while West Texas Intermediate futures were up US$1.74, or 1.89 per cent, to US$93.90 a barrel.
Brent rose as high as US$106.50 earlier in the day, following reports suggesting Iran gave the US one week to meet its publicly stated demands, such as lifting the US naval blockade.
Iran and the US remain divided over how to bring an end to their war, but diplomacy must continue, a senior Iranian official said after Iran’s president told the UN General Assembly that Tehran would never surrender to US pressure.
The official said Tehran was reviewing Washington’s response to its peace proposals, which prioritise lifting a US naval blockade on Iranian ports and reopening the Strait of Hormuz.
However, the physical market for oil is nowhere near a fully normalised situation, said Priyanka Sachdeva, head of market insights at Phillip Nova.
“Brent retains a larger geopolitical and sea-route premium because international crude is more directly exposed to Middle East and Hormuz disruption, while WTI benefits more from relatively insulated US supply,” Sachdeva added.
Earlier on Sept 23, Iran’s security chief Mohsen Rezaei said the Strait of Hormuz would not be reopened while Iran’s conditions were not met.
US Secretary of State Marco Rubio told reporters on Sept 23 that a deal with Iran would involve hard work over a period of time, adding that President Donald Trump also had military options.
Traders also evaluated possible curbs on diesel exports. Ultra-low-sulphur diesel futures were down about 5 per cent in midday trading after website Politico said the Trump administration was preparing plans for a 90-day diesel ban, but the White House denied this.
US Energy Secretary Chris Wright said earlier on Sept 23 that a diesel export ban would not work even though Trump said he would support it.
Analysts and market watchers have warned that such a move would do little to ease high energy prices and could worsen global supplies and further disrupt economies.
US distillate stockpiles, including diesel and heating oil, fell by 428,000 barrels to 107.4 million barrels last week, Energy Information Administration data showed.
Meanwhile, US crude inventories rose by 3 million barrels to 426.4 million barrels last week, though analysts polled by Reuters had expected a 641,000-barrel draw. REUTERS