Oil Prices Climb for Second Day as Middle East Supply Jitters Persist

Oil prices advanced for a second successive session on Tuesday, as investor concerns over potential supply disruptions from the U.S.-Iran conflict continued to support the market, offsetting signs of recovering crude exports from the Middle East.

By 0002 GMT, the global benchmark Brent crude futures rose 63 cents, or 0.6%, to trade at $105.91 a barrel. U.S. West Texas Intermediate (WTI) crude futures gained 72 cents, or 0.8%, to $93.32 a barrel, according to Reuters data.

Geopolitical Risks vs. Rising Exports

The primary bullish factor for the market remains the seven-month war involving the U.S. and Iran, which has heightened risks for shipping through the Strait of Hormuz, a critical chokepoint for global energy supplies. While U.S. and Iranian officials are reportedly engaging with mediators, the lack of a resolution keeps a risk premium in prices.

"That perennial hope of a deal is arguably the main factor preventing Brent from moving sustainably above $110 in the near term," said Tim Waterer, chief analyst at KCM Trade.

Countering these supply fears, preliminary data from Kpler showed that crude exports from major Middle Eastern producers climbed to 12.8 million barrels per day in September, the highest level since February. The increase was reportedly driven by higher shipments from Saudi Arabia and the United Arab Emirates.

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Logistical Hurdles Support Prices

Despite the higher export volumes, analysts note that logistical challenges are keeping prices elevated. Much of the increased flow relies on less efficient and more costly workarounds, such as ship-to-ship transfers, to bypass conflict-related disruptions.

"A clearer picture is emerging of higher oil export volumes leaving the Gulf, but much of that increase still relies on workarounds," Waterer noted. "Those methods are less efficient and more costly than normal operations, which is why crude prices remain elevated."

In a separate development, U.S. officials are considering regulatory relief to allow wider sales of red-dyed diesel to help lower domestic fuel prices, according to people familiar with the discussions cited by Reuters. The proposal is being weighed as an alternative to a potential ban on diesel exports.