Market moves
Oil prices pared some of the previous session's strong gains in Asian trading on Thursday, following an about-face in investor sentiment after a 4% jump the session before. At 0630 GMT Brent crude stood 43 cents higher at $103.51 a barrel, while West Texas Intermediate (WTI) rose 35 cents to $92.51 a barrel. Benchmarks initially weakened in Asian morning trade but later recovered as market participants struggled to identify a clear directional signal amid unresolved geopolitical tensions.
Diplomacy and geopolitical backdrop
Diplomatic communications between Tehran and Washington offered mixed signals rather than a breakthrough. A senior Iranian official said Tehran and the United States remain far apart on how to end their war, yet stressed that diplomacy must proceed. That comment followed remarks by Iran's president to the United Nations General Assembly asserting that Tehran would not yield to U.S. pressure.
The Iranian official noted that Tehran was reviewing Washington's response to its peace proposals. Those proposals place priority on lifting a U.S. naval blockade of Iranian ports and on reopening the Strait of Hormuz.
At the same time, Iran's security chief Mohsen Rezaei stated that the Strait of Hormuz would not be reopened while Iran's conditions remained unmet, underscoring the lack of immediate resolution to the standoff.
Physical market and route premiums
Market analysts cautioned that physical oil markets are still far from normalised. Priyanka Sachdeva, head of market insights at Phillip Nova, said the physical market remains unsettled. She explained that Brent retains a larger geopolitical and sea-route premium because international crude is more exposed to Middle East and Hormuz disruptions, while WTI benefits from supply that is relatively insulated within the United States.
U.S. political signals and diesel export debate
Political comments in Washington added another layer of uncertainty. U.S. Secretary of State Marco Rubio told reporters that reaching a deal with Iran would require sustained, difficult negotiations over time, and he indicated that President Donald Trump also had military options. Traders were also assessing prospects for restrictions on diesel exports.
Ultra-low-sulfur diesel futures moved lower by roughly 5% in midday trading after a report on the website Politico said the Trump administration was preparing plans for a 90-day diesel ban. The White House denied that such a ban was in progress. U.S. Energy Secretary Chris Wright stated that a diesel export ban would not work, even though President Trump said he would support such a measure. Analysts and market watchers cautioned that imposing a diesel export restriction would likely do little to relieve already high energy prices and could further strain global supplies and disrupt economic activity.
Inventories and supply data
U.S. Department of Energy figures showed U.S. distillate stockpiles, which include diesel and heating oil, fell by 428,000 barrels to 107.4 million barrels last week, according to Energy Information Administration (EIA) data. Meanwhile, U.S. crude inventories rose by 3 million barrels to 426.4 million barrels over the same period. That build contrasted with expectations from analysts polled by Reuters, who had anticipated a 641,000-barrel draw.
Outlook
Traders continued to weigh the interaction of diplomatic signals, physical market strains and the possibility of policy moves on U.S. diesel exports. With Iran and the United States publicly at odds over conditions to end hostilities while still signalling a desire to continue talks, oil markets remain sensitive to developments tied to the Strait of Hormuz and to shifts in U.S. inventory and policy data.