Oil prices rose on Wednesday after United States President Donald Trump denied reports that Washington was considering easing sanctions on Iran, adding to uncertainty as Qatar pursued diplomatic efforts to end the conflict between the two countries.
Brent crude futures for the November contract, which expires on Wednesday, gained 84 cents, or 0.82 per cent, to $103.43 a barrel by 0650 GMT.
The more actively traded December Brent contract rose 19 cents to $87.59 a barrel, while US West Texas Intermediate crude gained 25 cents, or 0.28 per cent, to $89.63.
Brent was on course for a monthly increase of about 14 per cent, its biggest monthly rise since July. WTI was also heading for a monthly gain of about four per cent after briefly rising above $106 a barrel for the first time since May.
The price gap between the two benchmarks widened to its highest level in four months as traders monitored possible US restrictions on diesel exports.
Such restrictions could increase diesel supplies in the US domestic market and encourage American refiners to reduce crude processing, potentially affecting demand for crude oil.
Reuters reported that Trump was considering allowing exports of red-dyed diesel instead of imposing a broader export ban, in an effort to ease fuel prices for consumers ahead of the November midterm elections.
“Continued uncertainty over sanctions relief and negotiations is keeping a geopolitical risk premium embedded in prices,” said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet.
“Improving supplies could cap further gains, but renewed disruption or an escalation in tensions could trigger another rally,” she added.
Qatar said on Tuesday that it hoped its shuttle diplomacy between Tehran and Washington could help produce a breakthrough in efforts to end the conflict.
However, Trump rejected an Axios report citing US officials as saying he was prepared to offer Iran sanctions relief and release frozen Iranian funds in exchange for “concrete” steps by Tehran on its nuclear programme.
The uncertainty surrounding possible sanctions relief has kept traders focused on the potential impact of any diplomatic breakthrough on Iranian oil exports and global supplies.
Meanwhile, Saudi Arabia resumed oil tanker loadings from its Red Sea port of Yanbu on Tuesday after restarting operations on its East-West Pipeline.
The developments come as oil markets continue to respond to shifting geopolitical risks, potential changes in Iranian exports and measures by major producers and consumers to manage fuel supplies.
