Oil prices rose on Wednesday, with Brent crude futures gaining $1.14, or 1.11%, to $103.73 a barrel by 01:31 GMT, while US West Texas Intermediate crude rose 34 cents, or 0.38%, to $89.72, after US President Donald Trump denied being willing to ease sanctions imposed on Iran. The gains came after prices fell in the previous session as supplies from the Middle East recovered.
Brent heads for biggest monthly gain since July
Brent crude is on course for a monthly gain of about 14%, its biggest increase since July, while US crude is heading for a 4% rise after surpassing $106 for the first time since May.
The spread between the two benchmark crude grades widened during the month to its largest level in four months, as traders monitored potential US plans to restrict diesel exports. The plans could create a surplus in the US market, prompting refiners to reduce crude processing.
Trump is considering allowing the sale of red-dyed diesel instead of imposing an export ban, in an attempt to ease some of the price pressure on consumers as the November midterm elections approach.
Qatari mediation and US denial of sanctions easing
Qatar said on Tuesday that it hoped diplomatic mediation efforts between Iran and the United States would lead to a breakthrough. Qatar's Foreign Ministry spokesman Majed Al Ansari told reporters: "Work is still under way to hold meetings and convey messages between the parties, and we are working to find common ground in order to reach an agreement that saves us all from the repercussions of the conflict."
Trump, however, denied reports citing unnamed US officials as saying he was prepared to ease sanctions on Iran and release its frozen funds in return for "concrete" steps by Tehran regarding its nuclear programme. He wrote on his Truth Social platform: "This is not true. I offered them nothing."
As more evidence emerges of recovering flows through the Strait of Hormuz, hopes will rise that alternatives can be found to restricting US diesel exports, while the absence of any tangible escalation by Iran over the past 24 hours led prices to ease slightly.
Kavonic added that the situation "remains volatile, and oil services logistics costs are high and constrained."
Middle East exports recover
Saudi Arabia resumed loading oil tankers at the Red Sea port of Yanbu on Tuesday after restarting the East-West pipeline.
Crude oil exports from Middle East producers recovered in September to 16.328 million barrels per day, their highest level since the US-Israeli war with Iran began in late February.
US crude and gasoline inventories rise
Data from the American Petroleum Institute, according to market sources on Tuesday, showed that US crude oil and gasoline inventories rose while distillate stocks fell last week. Crude inventories increased by 1.02 million barrels in the week ended September 25.
Official inventory data from the US Energy Information Administration are due at 10:30 a.m. Eastern Time, or 14:30 GMT. Analysts polled expect crude oil and petroleum product inventories to have fallen.
