Crude Oil Prices Hang in Balance as Diplomatic Tensions Remain High

Crude oil prices have experienced significant volatility in September due to ongoing geopolitical tensions and supply disruptions. Despite this, the physical picture has improved, with Saudi Arabia's East-West pipeline restored to approximately 3.5 million barrels per day and Middle East crude exports rebounding to 16.3 million barrels per day.

The Brent contract is on track for a gain of around 14% in September, while WTI has gained about 5%. However, the headline close masks a mechanical reset as the November contract expires, and the December contract becomes the primary market reference.

Diplomatic developments have been the primary driver of intraweek volatility, with optimism compressing the risk premium and reversals expanding it. The US-Iran diplomatic track is likely to play a crucial role in determining crude prices in October.