By Jeslyn Lerh
SINGAPORE, Sept 24 (Reuters) – Oil prices extended gains on Thursday after climbing 4% in the previous session as diplomatic talks between the United States and Iran showed no concrete sign of progress.
Brent crude futures rose 43 cents, or 0.4%, to $103.51 a barrel at 0630 GMT, while West Texas Intermediate futures climbed 35 cents, or 0.4%, to $92.51 a barrel.
The benchmarks fell in Asian morning trade on Thursday but later rebounded as investors struggled to find a clear direction amid the geopolitical deadlock.
Iran and the US remain divided over how to bring an end to their war, but diplomacy must continue, a senior Iranian official told Reuters on Wednesday, after Iran’s president told the UN General Assembly that Tehran would never surrender to US pressure.
The official said Tehran was reviewing Washington’s response to its peace proposals, which prioritise lifting a US naval blockade on Iranian ports and reopening the Strait of Hormuz.
However, the physical market for oil is nowhere near a fully normalised situation, said Priyanka Sachdeva, head of market insights at Phillip Nova.
“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,” Sachdeva added.
Earlier on Wednesday, Iran’s security chief Mohsen Rezaei said the Strait of Hormuz would not be reopened while Iran’s conditions are not met.
US Secretary of State Marco Rubio told reporters on Wednesday that a deal with Iran would involve hard work over a period of time, adding that President Donald Trump also had military options.
Traders also evaluated possible curbs on diesel exports. Ultra-low-sulfur diesel futures were down about 5% in midday trading after website Politico said the Trump administration was preparing plans for a 90-day diesel ban, but the White House denied this.
US Energy Secretary Chris Wright had said earlier on Wednesday that a diesel export ban would not work, even though Trump said he would support it.
Analysts and market watchers have warned that such a move would do little to ease high energy prices and could worsen global supplies and further disrupt economies.
US distillate stockpiles, including diesel and heating oil, fell by 428,000 barrels to 107.4 million barrels last week, Energy Information Administration data showed.
Meanwhile, US crude inventories rose by 3 million barrels to 426.4 million barrels last week, though analysts polled by Reuters had expected a 641,000-barrel draw. [EIA/S]
(Reporting by Jeslyn Lerh in Singapore; Additional reporting by Arathy Somasekhar in Houston; Editing by Sonali Paul, Shri Navaratnam and Jamie Freed)
