Oil prices remained higher on Tuesday, although they pared earlier gains, as markets continued to assess US-Iran diplomacy alongside signs of recovering crude exports from the Middle East.
As of 04:48 ET (08:48 GMT), benchmark Brent crude futures were up 0.1% at $105.38 a barrel, while US West Texas Intermediate crude futures also gained 0.1% to $92.77.
Brent had approached $109 a barrel during the previous session before settling at around $105.
Higher oil prices have also contributed to concerns about inflation and interest rates, with bond markets recently experiencing higher yields as investors assess the potential monetary policy implications of elevated energy costs.
“Geopolitical headlines and upward pressure on energy prices provide rates with an excuse to push higher,” analysts at ING said in a note.
Qatari Mediators Expected to Continue US-Iran Discussions
Qatari mediators were expected to hold separate discussions with Iran’s foreign minister and US officials concerning an amended seven-day proposal presented by Iran last week, Reuters reported, citing sources.
According to the report, both sides remained pessimistic about reaching an agreement before the US midterm elections.
The lack of an agreement has maintained uncertainty over the outlook for Middle Eastern oil supplies, although physical crude exports from the region have shown signs of recovery.
Middle East Crude Exports Rise to 12.8 Million Barrels a Day
Crude exports from major Middle Eastern producers increased to 12.8 million barrels per day in September, their highest level since February, according to preliminary data from Kpler.
Saudi Arabia and the United Arab Emirates accounted for much of the increase.
Saudi crude shipments through the Strait of Hormuz were on course to increase during the month after the country diverted exports from the Red Sea port of Yanbu following damage to its east-west pipeline.
Saudi Arabia has since repaired the pipeline and resumed exports through Yanbu, restoring a route that allows crude shipments to bypass the Strait of Hormuz.
The pipeline has capacity of up to 7 million barrels per day. Approximately 3.5 million barrels per day were flowing through the system following its restart, according to the Wall Street Journal.
Refined Product Markets Remain Under Pressure
The increase in regional crude exports has not eliminated concerns surrounding transportation costs and logistical difficulties in the Gulf.
Disruptions have also affected refined petroleum products, including diesel.
Reuters reported that record diesel prices have led the White House to consider regulatory changes that could allow broader sales of red-dyed diesel.
Speculation about possible US restrictions on diesel exports has also contributed to a widening of the spread between Brent and WTI crude prices.
Oil markets continue to monitor diplomatic developments, regional export volumes and transportation conditions for indications of changes in the supply outlook.