Oil gains as stalled US-Iran talks trump supply recovery

By Ahmad Ghaddar

LONDON, Sept 30 (Reuters) - Oil prices ‌rose on Wednesday ​and were ​on track for a big monthly gain as US-Iran talks aimed at ending their war stalled and tight fuel markets continued to underpin prices despite recovering Middle East crude supplies.

The Brent November futures ‌contract, which expires on Wednesday, was up 60 cents, or 0.6%, at $103.19 a barrel at ⁠1251 GMT. The more active December contract was up $1.62, or 1.7%, to $97.78. US West Texas Intermediate crude was up $1.19, or 1.3%, to $90.57.

Brent is ‌headed for a monthly gain of ‌around 14%, its biggest since July, while WTI is on track for about a 5.5% rise.

The spread between the two benchmarks also expanded to its widest in four months as traders monitored potential plans by the US ​to restrict diesel exports, which could create an oversupply in the US market and lead refiners there to process less crude.

Qatar said on Tuesday it hopes that shuttle diplomacy between Tehran and Washington can lead to ⁠a breakthrough.

However, US President Donald Trump denied reports by Axios and CNN that cited US officials as saying he was willing to give Iran sanctions ​relief and release frozen Iranian funds in return for "concrete" steps by Tehran on its nuclear programme.

On Tuesday, Saudi Arabia resumed oil tanker loadings from its Red Sea port of Yanbu ​after restarting operations on its East-West Pipeline.

Goldman Sachs estimates Gulf oil ‌exports have recovered to 23.3 million barrels per day over the last week, in line with their 2025 average, as exports doubled in September, it said in a note on ⁠Tuesday.

Over the past five days, the 10-day average for total oil exports has held at 20.5 million bpd, or 89% of 2025 levels, JPMorgan estimated.

OPEC+ oil-producing countries are likely to keep their oil production targets steady for November when they meet on Sunday, ⁠two sources with knowledge of the matter told Reuters.

"Recovering crude flows should temper supply-driven price pressures, although persistent product shortages and elevated ​freight costs are likely to keep the broader energy market tight," analysts at Japanese bank MUFG said.

The White House has urged the European Union to draw down emergency diesel inventories in an effort to lower global prices, according to two people familiar with the effort.

Trump ‌is considering allowing sales of red-dyed diesel, instead of an export ban, to offer some price relief to consumers ahead of the November midterm elections.

In the US, crude oil ‌and gasoline inventories rose while distillate stocks fell last week, market sources said on Tuesday, citing American Petroleum Institute data.

Official inventory data ⁠from the US Energy Information Administration is ‌due at 10:30 a.m. EDT (1430 GMT). Analysts ​polled by Reuters expect crude and product inventories to have fallen.

(Additional reporting by Enes Tunagur in London, Mohi Narayan in New Delhi and Helen Clark in Perth; Editing by Philippa Fletcher, ‌Kirsten Donovan)

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