Oil Bounces Back Above $90 Amid Ongoing Iran-US Diplomacy

Oil prices have regained their footing above $90 per barrel after a five-day losing streak, buoyed by ongoing indirect talks between the US and Iran on the sidelines of the UN General Assembly. The negotiations, however, show no concrete signs of progress, with both sides remaining divided over how to bring an end to the war. Iran's president emphasized that Tehran would never surrender to US pressure, while insisting that its conditions must be met before reopening the Strait of Hormuz.

The recovery in oil prices was also driven by nerves over reports that the Trump administration could impose a 90-day ban on US diesel exports to force domestic energy prices lower. The development has added to the uncertainty surrounding global crude supply, with many traders now focusing on any sense of progress towards a diplomatic solution that could bring oil prices lower.

Data released yesterday showed US crude inventories rose by 3 million barrels to 426.4 million barrels last week, defying expectations of a 641,000-barrel draw. The increase has sparked concerns about the country's fuel storage capacity, with many analysts warning of potential supply disruptions if the current trend continues.

In related news, USD/JPY has risen above 158, its highest level in three weeks and sharply higher from the 152 level seen earlier this month. The surge is attributed to strong gains in the US dollar and a widening Fed-BoJ rate differential, driven by expectations for another Fed interest rate hike.