Brent crude rose nearly 3% on Wednesday to $93.90per barrel at 11:18 a.m. ET, more than doubling its 1.4% gain at 9:27 a.m., as Iran denied it is negotiating with Washington and analysts saw no near-term end to the war. WTI rose nearly 2% to $87.98, and heating oil, the U.S. diesel benchmark, jumped 4.1%. The gains came as Saudi Arabia reported October output near pre-war levels. Since the start of November, Brent had lost about 21% and WTI about 17% on bets that the war was winding down.
Iran’s top security official, Mohsen Rezaei, denied that talks with Washington are under way and called reports of a recent meeting in Qatar “pure lies” spread to push down oil prices. Iranian President Masoud Pezeshkian accused the U.S. of conducting diplomacy through threats, and Secretary of State Marco Rubio has rejected Iran’s demand for war reparations. UBS analyst Giovanni Staunovo pointed to “fading hopes of an imminent de-escalation.” Bloomberg columnist Javier Blas called Brent at around $90 “an oddity,” too low if the U.S. and Iran escalate and too high if they sign a deal.
A deal would not restore Gulf flows quickly. LSEG Oil Research said traffic through Hormuz would depend on mine clearing, insurance costs and shipowners’ willingness to take the risk. Attackers struck 37 ships in October, the most in any month since the war began, according to the Washington Institute for Near East Policy. Allianz Trade puts physical damage across Gulf countries at more than $200 billion and projects cumulative economic losses of up to $790 billion by 2030.
Traders also looked past a 9-million-barrel build in U.S. crude inventories for the week ending November 6, reported by the American Petroleum Institute.
Diesel outpaced crude after a Ukrainian drone strike set off a fire at Russia’s Ust-Luga export hub. Ukrainian attacks have disrupted about 30% of Russia’s refining capacity since late October. The U.S. average retail gasoline price fell about 3.6 cents on Wednesday to $3.94 a gallon, its largest one-day drop in 18 years, according to AAA data, as pump prices caught up with a slide in wholesale costs.
By Charles Kennedy for Oilprice.com
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