Oil prices top $105 as hopes fade for US-Iran breakthrough

Oil prices surged past $105 a barrel on Thursday as expectations for a US-Iran diplomatic breakthrough appeared to wane following inconclusive talks in New York. Brent crude, which accounts for two-thirds of global oil, leapt 2.18% to $105.33 a barrel, after leaping over $106 earlier in the day. West Texas Intermediate, the gauge tracking US crude, rose 1.77% to $93.79 per barrel.

The upward trend began to reverse on Wednesday as conflicting messages from Iran cast doubt on the chances of resolving the nearly seven-month conflict. Brent has climbed 5.5% this week, while WTI is up about 2%.

Iranian diplomats delivered mixed signals during the UN General Assembly (UNGA) sessions. Esmaeil Baghaei, the Iranian Foreign Ministry spokesman, said Tehran had communicated its conditions for re-launching diplomacy with Washington via Qatar during indirect exchanges. However, Mohsen Rezaei, Iran's top security official, insisted the country had not altered its preconditions for talks with the US, and would maintain the embargo until those conditions were met, following contact between Foreign Minister Abbas Araghchi and American officials in New York.

Meanwhile, sources revealed to The National on Wednesday that Iran had proposed a roadmap to end their dispute, which includes a regional ceasefire, gradual reopening of the Strait of Hormuz, and an end to the US blockade. This proposal eased supply chain concerns after the reopening of Saudi Arabia's East-West pipeline, a crucial corridor for OPEC's largest oil exporter.

The pipeline, closed due to a drone attack earlier this month, resumed operations and Saudi Arabia has shipped nearly 100 million barrels to Asian buyers since the beginning of last week. Norbert Rucker, head of economics and next generation research at Swiss bank Julius Baer, noted that the pipeline's reactivation provides greater clarity about its impact on the oil market.

He stated that the persistent risk of supply disruptions remains a major factor driving prices, as the market is still pricing in a potential disruption that has not yet materialized.