Oil prices jumped by more than 2 per cent on Thursday 24 September, driven by limited progress in diplomatic efforts between the US and Iran and ongoing questions around a potential US ban on diesel exports.
As of 08:03 GMT, Brent crude futures had increased by US$2.32, or 2.25 per cent, to reach US$105.40 per barrel (bbl), reported Reuters.
Meanwhile, US West Texas Intermediate (WTI) futures had risen by US$1.78, or 1.93 per cent, to US$93.94/bbl.
Diplomatic discussions aimed at resolving tensions between the US and Iran have made little headway, according to officials from both countries.
A senior Iranian official told the news agency on Wednesday that Iran and the US “remain far apart on how to end their war but diplomacy must continue”, following duelling speeches at the UN General Assembly in New York.
Iranian President Masoud Pezeshkian stated Tehran would “never surrender to US pressure” and criticised a “bullying mentality” from US President Donald Trump, who used the UN platform to threaten Iran.
The Iranian official said Tehran is reviewing Washington’s response to peace proposals, which include calls for lifting the US naval blockade on Iranian ports and reopening the Strait of Hormuz.
Iran Security Chief Mohsen Rezaei said the key shipping route would stay closed while Iranian conditions remain unmet.
The continued impasse has left traders wary of further escalation in a region that accounts for a substantial share of global crude supply, adding a geopolitical risk premium to prices that had otherwise been under pressure in recent sessions.
Market participants are also assessing the potential impact of reported US government discussions about banning diesel exports for 90 days, although the White House has denied such plans, according to Reuters.
The prospect of restricted exports has unsettled fuel markets already grappling with tight distillate supplies heading into the winter heating season.
US Energy Secretary Chris Wright reiterated on Wednesday that a diesel export ban “would not work and could push up gasoline and jet fuel prices”.
His comments were intended to temper speculation that had gripped fuel markets earlier in the week, though uncertainty over the administration’s ultimate position appears to be lingering.
Ultra-low-sulphur diesel futures dropped by around 5 per cent on Wednesday after media reports about the possible restriction, a sharp swing that underscored how sensitive the market remains to any signal of policy intervention in fuel exports.
Adding to the supply picture, US distillate inventories, including diesel and heating oil, fell by 428,000bbl to 107.4 million barrels (mbbl) last week, according to Energy Information Administration data.
The drawdown points to continued tightness in the distillate market even as refiners work to build stocks ahead of colder months.
Crude stocks, by contrast, increased by 3mbbl to 426.4mbbl over the same period, suggesting that while overall crude supply remains ample, refined product markets, particularly diesel, are facing more acute pressure.
Taken together, the combination of stalled US-Iran negotiations, uncertainty over potential export restrictions and mixed inventory data has injected fresh volatility into oil markets this week.
Analysts say prices are likely to remain sensitive to developments on both fronts in the near term, with any sign of renewed diplomatic progress or clarity from Washington on export policy expected to trigger significant market moves.
For now, traders appear to be pricing in continued uncertainty rather than resolution, keeping both benchmark crude grades on an upward trajectory as the week draws to a close.
