Oil extends gains as U.S.-Iran stalemate overshadows Saudi flows

Oil prices climbed on Tuesday, building on the upward trend from the prior day. This surge was driven by the ongoing lack of progress in U.S.-Iran negotiations, which heightened concerns about potential supply constraints in the Middle East, even as regional crude exports rebounded.

As of 21:23 ET (01:23 GMT), Brent Oil Futures for November delivery were up 1.3% to $106.60 per barrel, while West Texas Intermediate (WTI) crude futures climbed 1.1% to $93.60 per barrel. Brent futures had approached $109 per barrel the previous session but retreated to around $105 a barrel.

Qatari mediators were set to meet with Iranian Foreign Minister Abbas Araqchi and U.S. officials to discuss a revised seven-day proposal Iran submitted last week, according to Reuters, citing unnamed sources. However, both sides expressed doubts about reaching an agreement before the upcoming U.S. midterm elections.

Despite growing evidence of recovering physical oil flows, the diplomatic uncertainty has undermined these developments. September crude exports from key Middle Eastern producers reached 12.8 million barrels per day, the highest level since February, based on preliminary Kpler data. Saudi Arabia and the United Arab Emirates contributed significantly to this increase.

Saudi Arabia's crude exports via the Strait of Hormuz were poised to surge this month after Riyadh rerouted shipments through the Red Sea port of Yanbu, following damage to its East-West pipeline. The pipeline has since been repaired and is now exporting up to 7 million barrels per day, with approximately 3.5 million bpd already flowing through it, as reported by the Wall Street Journal.

However, higher exports have not fully alleviated market concerns, as transporting crude through the Gulf remains expensive and challenging. This situation has also exacerbated refined-product markets, leading to record diesel prices. The White House is reportedly considering regulatory changes that could expand the sales of red-dyed diesel, while speculation over potential U.S. diesel export restrictions has widened the Brent-WTI price gap.