Front-month Brent rose to around $103 a barrel, while the more actively traded December contract gained about 1.7% to roughly $97.80. WTI traded above $90. Brent is now heading for an approximately 14% September gain, according to Reuters, while WTI is up roughly 5.5%.
The move is notable because physical supply is actually improving. Gulf crude exports have recovered to around 23.3 million barrels per day, and Saudi Arabia has resumed loadings from Yanbu as more barrels move through its East-West Pipeline.
Yet traders are still paying a substantial geopolitical premium.
Iran Talks Fail to Remove the Risk Premium
Oil had already become one of September’s biggest macro risks after renewed U.S.-Iran tensions pushed Brent above $100 and revived concerns over shipping through the Strait of Hormuz.
Qatar is now mediating between Washington and Tehran, but negotiations have yet to produce an agreement capable of restoring normal maritime flows. President Donald Trump also denied reports that Washington had offered sanctions relief in exchange for Iranian nuclear concessions.
That has left crude reacting more to the possibility of another disruption than to the barrels already returning to market.
The rally is considerably larger than the move in WTI, creating another interesting split in the oil market.
Diesel Tightness Keeps Oil Supported
Crude supply is only part of the problem. Refined-product markets remain tight, particularly diesel, while high freight costs continue to constrain energy flows.
Washington is considering measures involving U.S. diesel exports, a development that has helped widen the Brent-WTI spread. A restriction could leave more diesel inside the United States but potentially reduce incentives for refiners to process additional crude.
That helps explain why returning Gulf exports have not produced the price decline investors might normally expect.
The pressure is also spreading beyond commodities. Earlier this week, rising oil and Treasury yields pushed the Dow, S&P 500 and Nasdaq lower as investors worried that expensive energy could keep inflation elevated and force the Federal Reserve to maintain tighter policy.
