Oil prices extended their advance on Thursday as markets continued to assess negotiations between the United States and Iran and potential changes to energy shipments through the Strait of Hormuz.
Brent crude futures gained 1.1% to $104.19 a barrel by 04:01 ET, while U.S. West Texas Intermediate futures were 0.9% higher at $92.99.
The increases followed gains in the previous session, when Brent settled more than 3% higher and WTI rose almost 2%.
Iranian President Masoud Pezeshkian said during an address to the United Nations General Assembly that Iran would not surrender to U.S. pressure, while also indicating that Tehran remained open to diplomatic negotiations.
His comments followed a warning from U.S. President Donald Trump that he could “annihilate” Iran if hostilities escalated.
Oil Markets Monitor Strait of Hormuz Developments
A senior Iranian official told Reuters that Iran was considering Washington’s response to a proposal from Tehran aimed at ending the conflict, although differences between the two countries remained.
Issues discussed indirectly by the two sides have included reopening the Strait of Hormuz and lifting the U.S. blockade on Iranian ports.
The waterway remains significant for energy markets because of the volume of oil and liquefied natural gas that has historically passed through it. Shipping activity has declined during the conflict, making the outlook for transit through the strait one of the factors being monitored by oil traders.
Supply expectations had also been affected by reports that Saudi Arabia restarted its East-West Pipeline. The route provides an alternative means of transporting crude to the Red Sea without passing through the Strait of Hormuz.
Iraq had also increased oil exports, according to the supplied material.
Oil Rebound Adds to Inflation and Rate Considerations
The recovery in crude prices came alongside U.S. business activity data that exceeded expectations, prompting markets to reconsider the outlook for inflation and interest rates.
The Federal Reserve increased its benchmark rate by 25 basis points at its previous meeting, with energy prices among the economic factors under consideration.
“Higher oil prices play a role in the hawkish repricing of the Fed’s policy path, and last week’s rate hike, at a time when concerns over sticky inflation still linger,” BCA Research analysts said.
The assessment reflects BCA Research’s view of how oil prices are affecting market expectations for Federal Reserve policy. It does not establish the direction of future interest rate decisions.
U.S. Crude Stocks Increase to 426.4 Million Barrels
Domestic petroleum inventory figures provided another factor for oil markets.
U.S. crude inventories increased by 3 million barrels during the week ended September 18, reaching 426.4 million barrels, according to the Energy Information Administration.
Analysts cited in the supplied material had expected inventories to decline by 640,000 barrels.
Gasoline stocks decreased by 1.7 million barrels over the same period. Distillate inventories, including diesel and heating oil, fell by 400,000 barrels.
Separately, the supplied material cited a report that the White House was considering a 90-day restriction on U.S. diesel exports.
U.S. ultra-low-sulphur diesel futures moved lower on Wednesday following the report. The information provided did not indicate that a final decision on the proposed restriction had been made.
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