Oil prices climbed roughly 2 percent on Thursday as diplomatic negotiations between the United States and Iran showed minimal progress, while investors also weighed uncertainty surrounding a possible US ban on diesel exports.
Brent crude futures rose $2.03, or 2 percent, to reach $105.11 a barrel at 1320 GMT. Meanwhile, West Texas Intermediate futures gained $1.48, or 1.6 percent, settling at $93.64 a barrel.
Earlier in the session, Brent had climbed as high as $106.50, spurred by reports indicating Iran had given the US a one-week deadline to meet its publicly stated demands, including the lifting of the US naval blockade.
Despite ongoing divisions over how to resolve the conflict, a senior Iranian official told Reuters on Wednesday that diplomatic efforts must continue. This came after Iran’s president addressed the UN General Assembly, declaring that Tehran would not bow to US pressure.
According to the official, Tehran was currently reviewing Washington’s response to its peace proposals — proposals centered on lifting the US naval blockade of Iranian ports and reopening the Strait of Hormuz.
Separately, European diesel futures pulled back from record highs on Thursday amid uncertainty over a potential US diesel export ban. A White House official denied reports on Wednesday suggesting the US was preparing a 90-day suspension of diesel exports.
A spokesperson for the European Commission said Thursday that the EU had voiced concern over the reported US plans, warning that such a move could negatively affect both sides.
Analysts and market observers cautioned that a US diesel export ban would likely do little to bring down elevated energy prices, and could instead strain global supplies further and disrupt economies more broadly.
“The physical market for oil is nowhere near a fully normalised situation,” said Priyanka Sachdeva, head of market insights at Phillip Nova. She added: “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.”
Meanwhile, data from the US Energy Information Administration showed that distillate stockpiles — which include diesel and heating oil — fell by 428,000 barrels last week, bringing the total to 107.4 million barrels.
In contrast, US crude inventories rose by 3 million barrels to 426.4 million barrels last week, defying analyst expectations. A Reuters poll had forecast a draw of 641,000 barrels instead.