Oil prices moved lower on Tuesday as investors waited for signs of progress in U.S.-Iran diplomacy.
Despite an improvement in crude exports from the Middle East, concerns about possible supply disruptions remained a major factor for energy markets.
At 09:21 ET, Brent crude futures were down 2.0% at $103.14 per barrel. U.S. West Texas Intermediate crude fell 2.3% to $90.44 per barrel.
Traders Watch for Diplomatic Progress
David Morrison, Senior Market Analyst at Trade Nation, said oil prices were relatively stable early in the session before gradually moving lower.
He noted that traders remain focused on any indication that the United States and Iran are making progress through separate discussions with mediators.
Brent crude had climbed close to $109 per barrel during the previous session before settling near $105.
High Oil Prices Add to Inflation Concerns
Elevated oil prices have also contributed to recent pressure in global bond markets.
Investors are concerned that a prolonged energy shock could push inflation higher and encourage central banks to raise interest rates further.
That possibility has increased volatility across both commodity and fixed-income markets.
Qatar Mediates Between the U.S. and Iran
Qatari officials were expected to hold separate discussions with Iranian and U.S. representatives.
The talks are centered on an amended seven-day proposal presented by Iran last week.
However, reports suggest that both sides remain cautious about the possibility of reaching an agreement before the U.S. midterm elections.
The lack of a breakthrough has kept geopolitical risk elevated across crude oil markets.
Middle East Oil Exports Show Signs of Recovery
Despite the diplomatic uncertainty, physical crude flows from the Middle East have improved.
According to preliminary Kpler data, exports from major regional producers rose to around 12.8 million barrels per day in September.
That marked the highest level since February.
Saudi Arabia and the United Arab Emirates accounted for much of the increase.
Saudi Arabia Restores Key Export Route
Saudi Arabia has also resumed exports through the Red Sea port of Yanbu after repairing its east-west pipeline.
The route is important because it allows the country to bypass the Strait of Hormuz.
The pipeline can transport as much as 7 million barrels per day. Around 3.5 million barrels per day were reportedly flowing through it after the restart.
The restoration has improved supply flexibility, although traders remain cautious about broader regional risks.
Shipping Costs Keep Oil Market Under Pressure
Higher exports have not completely eased concerns about oil supply.
Transporting crude through and around the Gulf remains expensive and operationally difficult.
These challenges continue to support risk premiums in global oil prices.
Diesel Market Tightens Further
The disruption has also affected refined fuel markets.
Record diesel prices have reportedly encouraged the White House to consider regulatory changes that could expand sales of red-dyed diesel.
Speculation over possible U.S. diesel export restrictions has also contributed to wider price differences between Brent and WTI crude.
For now, oil markets remain highly sensitive to any new development in U.S.-Iran diplomacy, Middle East exports and global energy supply.
