Oil prices moved higher on Thursday, extending strong gains from the previous session as investors assessed renewed tensions between the United States and Iran.
Markets were also watching for signs that diplomatic efforts could still lead to a resolution of the conflict.
As of 02:32 ET, or 06:32 GMT, Brent crude futures for November delivery rose 0.3% to $103.35 per barrel.
West Texas Intermediate crude futures gained 0.2% to $92.34 per barrel.
Both benchmarks had initially fallen by nearly 1% earlier in the session before reversing course.
Brent and WTI Extend Wednesday’s Gains
Oil prices had already posted strong gains on Wednesday.
Brent crude settled almost 4% higher, while WTI advanced nearly 2%.
The rally followed remarks from Iranian President Masoud Pezeshkian during his address to the United Nations General Assembly.
Pezeshkian said Iran would not give in to U.S. pressure, while also maintaining that Tehran remained open to diplomatic negotiations.
U.S.-Iran Tensions Remain in Focus
The comments came one day after U.S. President Donald Trump warned that military action could intensify if an agreement to end the conflict could not be reached.
At the same time, there were signs that diplomatic discussions were continuing.
A senior Iranian official told Reuters that Tehran was reviewing Washington’s response to an Iranian proposal aimed at ending hostilities.
However, major differences between the two sides remain unresolved.
Strait of Hormuz Remains Key for Oil Markets
Indirect discussions have reportedly included the potential reopening of the Strait of Hormuz and the removal of a U.S. naval blockade on Iran.
The Strait remains one of the most important shipping routes in global energy markets.
Roughly one-fifth of global oil and gas shipments typically pass through the waterway, making any disruption highly significant for crude prices.
Iranian security official Mohsen Rezaei said on Wednesday that the Strait would not reopen until Tehran’s conditions were met.
Higher Gulf Supply Limits Oil’s Upside
Despite geopolitical concerns, improving crude supply from the Gulf region has limited further gains in oil prices.
Saudi Arabia has restarted operations on its East-West pipeline, which transports oil toward the Red Sea.
Iraq has also increased exports and expects to raise shipments further through Turkey.
These additional supply routes have helped reduce some concerns about possible disruptions in the Strait of Hormuz.
U.S. Diesel Market Draws Attention
The U.S. diesel market was another major focus for traders.
A report suggesting that the White House was considering a 90-day ban on diesel exports caused U.S. ultra-low-sulfur diesel futures to fall sharply on Wednesday.
The White House later rejected the report and described it as inaccurate.
Diesel supply conditions remain important because inventories are still relatively tight despite rising crude stockpiles.
U.S. Crude Inventories Rise
Fresh inventory data also influenced oil markets.
U.S. crude inventories increased by 3 million barrels to 426.4 million barrels in the week ending September 18, according to the Energy Information Administration.
Analysts had expected inventories to decline by approximately 640,000 barrels.
Gasoline inventories fell by 1.7 million barrels during the same period.
Distillate inventories, which include diesel and heating oil, declined by around 400,000 barrels.
The figures highlighted a mixed supply picture, with crude stocks rising while inventories of refined products remained under pressure.
Oil Outlook Remains Driven by Geopolitics
Oil prices remain highly sensitive to developments between Washington and Tehran.
Any progress toward a diplomatic agreement could reduce concerns over supply disruptions.
However, continued uncertainty surrounding the Strait of Hormuz, regional tensions and tight diesel supplies could keep volatility elevated in the near term.
