Oil prices rebounded sharply on Wednesday, with Brent crude rising nearly 4% as traders weighed continued tensions between the United States and Iran against signs that additional Middle East oil supplies are reaching the market. Brent crude futures settled at $103.08 a barrel, up $3.83, or 3.86%, while WTI gained $1.64, or 1.81%, to settle at $92.16.

The market had moved lower earlier in the week as Saudi Arabia increased crude shipments and hopes grew that Washington and Tehran could make progress toward ending the conflict. Those expectations were challenged after Iranian President Masoud Pezeshkian said at the United Nations that Iran would not surrender to the United States, while continuing to say Tehran supports diplomacy.

Iran is reviewing a U.S. response to a proposal aimed at ending hostilities, according to a senior Iranian official. Indirect discussions on Tuesday included the possibility of reopening the Strait of Hormuz and lifting the U.S. naval blockade of Iran. However, Iran’s security chief said Wednesday that the strait would remain closed until Iran’s conditions are met.

Meanwhile, the physical oil market is showing signs of improvement. Saudi Arabia restarted its East-West pipeline on Tuesday after drone attacks forced it to shut down earlier this month and halted crude loadings at Yanbu. Saudi Arabia has also offered additional crude to Asian refiners from locations outside the Strait of Hormuz.

Iraq is another source of additional supply. The country’s oil minister said Iraq is currently exporting more than 3 million barrels per day and expects exports through Turkey to eventually exceed 600,000 barrels per day.

U.S. crude inventories also moved higher. The Energy Information Administration reported that crude stocks increased by 3 million barrels to 426.4 million barrels for the week ended September 18, compared with expectations for a 641,000-barrel decline. Fuel inventories fell during the week.

The diesel market was particularly volatile. Ultra-low-sulfur diesel futures dropped about 5% after reports that the Trump administration was considering a 90-day diesel export ban. The White House subsequently denied the report, while Energy Secretary Chris Wright said earlier that such a ban would not work.

The oil market is therefore being pulled in opposite directions — rising Middle East supply and the possibility of renewed diplomacy are weighing on prices, while uncertainty surrounding the Strait of Hormuz and the continuing U.S.-Iran confrontation is keeping a significant risk premium in the market

• Where: Loews Arlington Hotel
• Attending: Brian Baker (239.297.4519), David Cohen (954-729-4774), and Curtis Chandler (239-405-3365)
• Conference Website

• Where: The Westin Galleria Dallas
• Attending: David Cohen (954-729-4774), and Curtis Chandler (239-405-3365)
• Conference Website

• Where: The Westin Galleria Dallas
• Attending: Brian Baker (239.297.4519)
• Conference Website