Oil prices experienced an increase of over 2% on Thursday as diplomatic negotiations between the United States and Iran displayed limited progress. Investors are also concerned about a possible U.S. ban on diesel exports, contributing to market volatility.
As of 0940 GMT, Brent crude futures rose by $2.43, or 2.36%, reaching $105.51 per barrel. Similarly, West Texas Intermediate (WTI) futures increased by $1.74, or 1.89%, climbing to $93.90 per barrel.
Earlier in the day, Brent crude peaked at $106.50 following reports indicating that Iran has given the U.S. a deadline of one week to address its stated demands, which include lifting the U.S. naval blockade on Iranian ports.
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Despite ongoing divisions regarding the resolution of their conflict, a senior Iranian official emphasized to Reuters on Wednesday the importance of continuing diplomatic efforts. This statement followed Iran’s president’s remarks at the UN General Assembly, asserting that Tehran would not yield to U.S. pressure.
The Iranian official noted that Tehran is currently assessing Washington’s responses to its proposals for peace, which focus on ending the U.S. naval blockade and reopening the strategic Strait of Hormuz.
In Europe, diesel futures remained elevated at record levels amid speculation regarding a potential U.S. ban on diesel exports. A White House representative denied reports on Wednesday claiming that the U.S. is considering a 90-day ban on diesel exports.
Market analysts have cautioned that such a ban would likely have minimal impact on alleviating high energy prices and could exacerbate global supply issues, further straining economies.
According to Priyanka Sachdeva, head of market insights at Phillip Nova, the physical oil market is still far from being fully normalized. She explained, “Brent maintains a significant geopolitical and maritime premium due to its direct exposure to disruptions in the Middle East and the Strait of Hormuz, whereas WTI benefits from a more insulated U.S. supply.”
Data from the Energy Information Administration revealed that U.S. distillate inventories, which include diesel and heating oil, fell by 428,000 barrels to 107.4 million barrels in the previous week. In contrast, U.S. crude oil inventories increased by 3 million barrels to 426.4 million barrels, despite analysts’ expectations of a 641,000-barrel decrease.
Source: Financial Chronicle Biz English | Sri Lanka Business News.
