Oil steadies as Gulf exports recover, US-Iran diplomacy in focus

Oil prices stabilized on Wednesday, offsetting gains from US-Iran negotiations and tighter US fuel markets. The Brent November futures contract rose to $103.50 per barrel, a 0.9% increase, while the December contract climbed 1.9% to $98.03. US West Texas Intermediate crude settled at $90.42, up 1.2%. Brent saw a 14% monthly gain, its highest since July, with WTI up about 5% on the month.

Qatar expressed optimism that diplomacy between Tehran and Washington could result in progress. However, President Trump rejected claims that he was prepared to ease sanctions on Iran and release frozen funds for tangible progress in their nuclear program. Saudi Arabia restarted oil tanker shipments from Yanbu in the Red Sea and resumed East-West Pipeline operations.

Oil exports from Gulf countries rebounded to 23.3 million barrels per day, matching their 2025 average, according to Goldman Sachs. Over the past five days, total oil exports averaged 20.5 million bpd, representing 89% of 2025 levels. OPEC+ is expected to maintain production targets for November during their upcoming meeting.

While recovering crude flows could ease supply pressures, persistent product shortages and high freight costs are expected to keep the energy market tight. The White House has asked the European Union to reduce diesel reserves to help lower global prices, according to anonymous sources.

US gasoline inventories dropped 1.7 million barrels to 204.4 million barrels, while distillate stocks fell 2.3 million barrels to 105.2 million barrels. John Kilduff, a partner at Again Capital, noted that distillate demand is high, and prices will reflect that. US crude stocks increased by 922,000 barrels to 427.3 million barrels, exceeding expectations for a 264,000-barrel decrease.

The gap between two crude oil benchmarks widened to four-month highs as traders watched potential US restrictions on diesel exports, which could lead to oversupply and less processing in the US. Trump is considering allowing sales of red-dyed diesel to provide price relief before the November midterm elections. Recent US economic data indicated lower-than-expected inflation in August, potentially reducing the need for the Federal Reserve to raise interest rates again in October.