Key Highlights
- Crude oil markets rallied over 2% Thursday, building on previous session momentum.
- Brent crude futures surpassed $105 per barrel as WTI approached $94 per barrel.
- Iranian President addressed the UN, declaring Tehran will not bow to American demands.
- The critical Strait of Hormuz waterway remains blocked, with Iranian officials setting preconditions for reopening.
- Reports of a potential 90-day diesel export ban from the US triggered sharp declines in diesel futures Wednesday.
Oil prices continued their upward trajectory Thursday, building momentum after Wednesday’s substantial rally.
Brent crude futures advanced more than 2%, reaching approximately $105.40 per barrel. West Texas Intermediate crude pushed toward $93.94 per barrel.
The rally occurred as negotiations between Washington and Tehran appeared to reach an impasse. Market participants continue monitoring the geopolitical developments closely.
Tehran and Washington at Diplomatic Crossroads
Iranian President Masoud Pezeshkian delivered remarks at the United Nations General Assembly earlier this week, declaring that Iran will not capitulate to American demands.
Despite his firm stance, Pezeshkian emphasized Tehran’s willingness to engage in diplomatic solutions. A high-ranking Iranian diplomat confirmed to Reuters that negotiations remain ongoing.
According to the diplomat, Iranian leadership is currently analyzing the American response to Tehran’s peace framework. Iran insists Washington must dismantle its naval blockade and permit the reopening of the Strait of Hormuz.
Under normal circumstances, the Strait of Hormuz facilitates roughly 20% of worldwide petroleum and natural gas transportation. The waterway has remained closed following combined American-Israeli military operations launched against Iran in late February.
Mohsen Rezaei, Iran’s top security official, stated earlier this week that the strategic waterway will remain shut until Tehran’s demands are satisfied.
President Donald Trump issued warnings this week suggesting escalated military intervention against Iran should diplomatic efforts collapse. Secretary of State Marco Rubio acknowledged that achieving a negotiated settlement requires substantial effort and patience.
Potential Diesel Ban Creates Additional Market Volatility
Market participants are closely monitoring reports of a potential American diesel export prohibition. Politico published reports suggesting the Trump administration was developing a 90-day export restriction.
White House officials refuted these claims. Energy Secretary Chris Wright stated that implementing a diesel ban would prove ineffective, despite Trump’s expressed willingness to support such measures.
Ultra-low-sulfur diesel futures plummeted approximately 5% Wednesday following the initial reports. Energy analysts warned that export restrictions could disrupt international supply chains and elevate prices in foreign markets.
According to Energy Information Administration data, American distillate reservesāencompassing diesel fuel and heating oilādecreased by 428,000 barrels in the previous week. Total inventories now stand at 107.4 million barrels.
Meanwhile, crude oil stockpiles in the United States increased by 3 million barrels last week, reaching 426.4 million barrels. Market forecasters had anticipated a drawdown of approximately 641,000 barrels.
Persian Gulf petroleum supplies showed modest recovery signs earlier this week. Reports indicated Saudi Arabia reactivated its cross-country pipeline connecting to the Red Sea, while Iraqi authorities expanded their export operations.
However, these positive developments were counterbalanced by Rezaei’s confirmation that the Strait of Hormuz remains closed indefinitely. Market analysts note that Brent crude maintains a substantial premium over WTI due to greater vulnerability to Middle Eastern supply disruptions.
As of Thursday morning trading, Brent crude was quoted around $105.40 per barrel while WTI hovered near $93.94 per barrel. Both benchmark contracts have posted significant gains compared to earlier weekly levels.
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