Oil holds gains as Middle East supply risks persist

Oil prices remained stable in Asian trading on Thursday, after gaining in the previous day as traders balanced indications of a resurgent Middle East crude supply with doubts over sustained progress. Brent Crude Futures for December rose 0.2% to $98.23 per barrel, while U.S. West Texas Intermediate (WTI) futures remained flat at $90.49 a barrel. Brent's front-month contract, which closed on Wednesday, finished at $103.50.

Recent data showed a slight rebound in Gulf exports. Middle East crude shipments reached 16.328 million barrels per day in September, the highest level since the conflict ignited in February, according to Kpler data. Moreover, Saudi Arabia restarted tanker loadings from its Red Sea port of Yanbu following the revival of its East-West pipeline.

However, exports from the region still lag behind pre-conflict levels. In September, Middle East exports were approximately 3.2 million barrels per day short of February figures, making the market susceptible to any fresh disturbances. Diplomatic efforts are also under scrutiny. Iran disclosed on Wednesday that it had received a response from the U.S. to its latest proposal for reestablishing a ceasefire, following President Donald Trump's rejection of an earlier plan that included reopening the Strait of Hormuz in exchange for lifting the U.S. embargo on Iranian ports.

Meanwhile, tight refined-product markets are buoying crude prices. U.S. crude inventories expanded by 922,000 barrels last week, deviating from the anticipated 700,000-barrel decrease according to analysts, as reported by the Energy Information Administration on Wednesday. However, fuel inventories suggested a tighter market scenario.

Gasoline stocks declined by 1.7 million barrels, while distillate stocks, encompassing diesel and heating oil, fell by 2.3 million barrels. The information arrives as President Donald Trump stated on Wednesday that he remained engaged in discussions about potentially banning U.S. diesel exports, despite the White House previously denying a report of an imminent blanket ban.

The matter has gained urgency as U.S. diesel prices hit a record $6.53 a gallon last week, while U.S. diesel inventories remain at historically low levels.