Oil prices moved lower on Thursday as traders assessed signs of recovering crude exports from the Middle East. However, uncertainty remains over whether the improvement in regional supply can continue.
December Brent crude futures fell around 0.8% to $97.24 per barrel, while U.S. West Texas Intermediate (WTI) futures declined about 1% to $89.50 a barrel.
Despite the latest pullback, oil recorded strong gains in September. Brent climbed roughly 14% during the month, while WTI advanced about 5%.
Middle East Oil Exports Show Signs of Recovery
Recent shipping data pointed to an improvement in crude flows from the Middle East.
Regional exports increased during September as producers found ways to restore shipments that had been disrupted earlier in the year.
Saudi Arabia also resumed crude loadings through its Red Sea infrastructure, including the Yanbu export route and East-West Pipeline. The development helped ease some concerns about global oil supply.
However, supply conditions remain fragile.
Middle East oil flows have not fully returned to levels seen before the conflict, leaving crude markets vulnerable to renewed disruptions.
Strait of Hormuz Remains a Key Market Risk
The Strait of Hormuz continues to be one of the most important risks for global energy markets.
The waterway is a critical route for oil and liquefied natural gas shipments from Gulf producers. Recent shipping activity has improved, although traffic remains volatile compared with normal conditions.
Any renewed disruption could quickly tighten global crude supplies and put upward pressure on oil prices.
US-Iran Diplomacy Draws Investor Attention
Diplomatic developments between the United States and Iran are also being closely watched by energy traders.
Iran confirmed that it had received a U.S. response to its latest ceasefire proposal as diplomatic efforts continued. However, uncertainty remains over whether negotiations can produce a lasting agreement.
Progress toward easing regional tensions could reduce the geopolitical premium currently built into crude prices.
On the other hand, a breakdown in negotiations could renew concerns over Middle East supply.
US Crude Inventories Unexpectedly Rise
Oil prices also faced pressure from an unexpected increase in U.S. crude inventories.
American crude stocks rose by 922,000 barrels during the latest reporting week, according to the U.S. Energy Information Administration.
Markets had expected inventories to decline, making the increase another factor weighing on crude prices.
Gasoline and Diesel Supplies Tighten
While crude inventories increased, refined fuel supplies showed signs of tightening.
Gasoline stocks fell by around 1.7 million barrels, while distillate inventories declined by roughly 2.3 million barrels.
Distillates include products such as diesel and heating oil, making falling inventories particularly important as fuel markets remain tight.
Strong demand and limited supplies have helped support refining margins even as crude inventories rise.
US Diesel Prices Add to Energy Market Concerns
The U.S. diesel market has become another major focus for traders.
Diesel prices recently reached record levels, while domestic inventories remain unusually low.
U.S. President Donald Trump said his administration continues to consider restrictions on diesel exports as part of efforts to address high domestic fuel prices. Various potential measures remain under discussion, and no blanket ban has been finalized.
Any restrictions on U.S. diesel exports could have wider consequences because international markets currently rely heavily on American refined-product shipments.
Oil Market Remains Sensitive to Supply Risks
Oil prices enter October caught between two competing forces.
Recovering Middle East exports and rising U.S. crude inventories are helping reduce immediate supply concerns. However, tight fuel markets, geopolitical uncertainty and disruption risks around the Strait of Hormuz continue to support prices.
For now, crude traders are likely to remain focused on Middle East oil flows, U.S. inventories and diplomatic developments for the next major signal on oil prices.
