Oil Prices Rise for Second Day as Middle East Supply Concerns Persist

International oil prices rose for a second consecutive day on Tuesday, September 29, amid concerns that supplies from the Middle East could be disrupted. Worries over the conflict between the United States and Iran have outweighed signs of increased crude exports from the region, Reuters reported.

Brent crude rose 1.4%, or $1.49, to $106.77 a barrel. US West Texas Intermediate (WTI) crude gained $1.34, or 1.5%, to $93.94 a barrel. Both benchmarks had risen by around $1 in the previous session.

Tim Waterer, chief market analyst at KCM Trade, said there were clear signs of increased oil exports from the Gulf region. However, much of the increase still depended on alternative arrangements such as ship-to-ship transfers.

He said these methods were less efficient and more expensive than normal operations, helping keep crude prices elevated.

Preliminary estimates from data provider Kpler showed that crude exports from major Middle Eastern oil producers rose to 12.8 million barrels per day in September, the highest level since February. The increase was driven by higher exports from Saudi Arabia and the United Arab Emirates.

Meanwhile, US and Iranian officials have held separate talks with mediators in renewed efforts to end the seven-month war, officials from both countries said.

A revised version of Iran’s seven-day proposal, presented last week on the sidelines of the United Nations General Assembly, may be discussed in subsequent talks.

Analysts at UOB said in a client note that the US-Iran conflict and its impact on oil prices and inflation expectations remained key risks.

They added that reports of Iranian officials expressing frustration over reaching an agreement before the situation in the Strait of Hormuz becomes more complicated had kept uncertainty over oil supplies elevated.

The war, which began with US and Israeli strikes on Iran in late February, has placed the Strait of Hormuz under close scrutiny. Any disruption to the vital route for oil and gas shipments could significantly affect global energy markets.

Separately, the US government is considering easing some regulatory restrictions to allow broader sales of red-dyed diesel in an effort to lower fuel prices, people familiar with the matter told Reuters.

They said the move could allow some buyers to avoid federal fuel taxes. The proposal emerged after several days of discussions about alternatives to banning diesel exports.