Oil holds near two-week lows while diesel cracks hit record

On September 23, oil prices hovered near their two-week low as a surge in Gulf crude supplies put downward pressure on the market. Brent crude futures climbed $1.15, or 1.16%, to $100.40 per barrel by 11:43am GMT, while West Texas Intermediate (WTI) futures increased 35 US cents, or 0.42%, to $90.90 per barrel. Brent had its lowest price since September 8, while WTI reached its lowest since September 1.

European low-sulphur gasoil's premium to Brent futures hit a record of around $95 per barrel after US President Donald Trump indicated support for a potential diesel export ban to curb prices exacerbated by a global supply shortage. However, experts warn such a restriction might not alleviate high energy costs and could cause supply disruptions worldwide.

Oil prices have been pressured this week due to rising Gulf supplies and hopes for diplomatic talks to cease Middle East hostilities. Trump threatened to "annihilate" Iran on September 22, yet also mentioned productive talks with mediators to end the war. The reopening of the East-West Saudi pipeline, halted since September 11 due to drone attacks, could also boost oil supplies.

Saudi Arabia offered more barrels to Asian refiners for extraction from areas outside the Strait of Hormuz. Meanwhile, Iraq is boosting exports, now exceeding three million barrels per day, with the goal of surpassing 600,000 barrels per day via Turkey. Additionally, a senior Iranian official said the Strait of Hormuz may reopen within seven days if the US eases military pressure and lifts its blockade on Iranian ports.

Lower oil prices were also supported by US crude inventories rising by 1.8 million barrels in the week ending September 18, exceeding expectations.