Crude Oil Prices Surge Amid Ongoing Geopolitical Tensions
Crude oil futures continued their upward trend on September 30, with both Brent and West Texas Intermediate (WTI) posting gains. The geopolitical premium persists as US-Iran peace negotiations stall.
The November Brent contract settled at $103.50 per barrel, a gain of $0.91 (0.9%) from the previous day. The December contract, now the most actively traded, gained $1.87 (1.9%) to $98.03 per barrel. WTI settled at $90.42 per barrel, a rise of $1.04 (1.2%) from the previous day.
The month of September saw Brent post a 14% gain, its largest monthly advance since July. In contrast, WTI rose approximately 5% for the month.
Despite physical supply improvements, the geopolitical premium remains in place due to concerns over supply disruption risk. Goldman Sachs estimates that crude exports from Gulf states have recovered to around 23.3 million barrels per day over the past week, but pipeline throughput is still limited and some estimates suggest full restoration could take another month.
Market participants continue to pay a premium for geopolitical risk surrounding the Strait of Hormuz shipping lane. The tightness in refined product markets, particularly diesel, also provides support to crude prices. Elevated transportation costs are constraining energy distribution, with distillate inventories falling by 2.3 million barrels from the prior week.