Oil settles up around 4% as Iran’s president vows to never surrender

[HOUSTON] Oil prices settled up just shy of 4 per cent a barrel on Wednesday (Sep 23) in choppy trade, as traders evaluated Iranian President Masoud Pezeshkian’s vow never to surrender, a day after US President Donald Trump warned he could “annihilate” Iran.

Brent crude futures settled up US$3.83, or 3.86 per cent, to US$103.08 a barrel, while West Texas Intermediate futures gained US$1.64, or 1.81 per cent, to US$92.16.

Ultra-low-sulfur diesel futures were down around 5 per cent after Politico reported the Trump administration was preparing plans for a 90-day diesel ban, a story the White House then denied.

US Energy Secretary Chris Wright had said earlier on Wednesday that a diesel export ban would not work. Analysts and market watchers have warned that such a move would do little to ease high energy prices and could worsen global supplies and further disrupt economies.

Driving oil prices higher was the speech at the UN General Assembly in New York by Pezeshkian, who said on Wednesday that Teheran would never surrender to the US but still believes in diplomacy. On Tuesday, Trump used a speech at the same forum to make his threat.

Teheran was reviewing the US response to its proposal to end hostilities, though many differences remain, a senior Iranian official told Reuters.

A reopening of the Strait of Hormuz and lifting of Washington’s naval blockade on Iran were discussed during indirect talks on Tuesday, the official said.

Earlier on Wednesday, Iran’s security chief Mohsen Rezaei said the Strait of Hormuz would not be reopened while Iran’s conditions are not met.

Meanwhile, US crude inventories rose by 3 million barrels to 426.4 million barrels in the week ended Sep 18, the Energy Information Administration said. Analysts polled by Reuters had expected a 641,000-barrel draw. Fuel stocks fell.

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On Tuesday, the Brent benchmark hit its lowest since Sep 8 at US$97.36. Early on Wednesday, WTI touched its lowest since Sep 1. Prices were pressured by more supplies flowing out of the Middle East and hopes for a peace deal soon between Washington and Teheran.

Saudi Arabia resumed operations on its East-West Pipeline to the Red Sea on Tuesday, according to three sources briefed on the matter.

Drone attacks, which Saudi Arabia has blamed on Iraqi militia, forced the kingdom to shut the pipeline on Sep 11, halting crude loadings at Yanbu port.

On Tuesday, Saudi Arabia offered more barrels to Asian refiners for lifting from locations outside of the Strait of Hormuz.

Iraq’s minister said on Tuesday the country is exporting more than 3 million bpd, and expects to boost exports via Turkey to more than 600,000 barrels per day.

A senior Iranian official told Reuters the Strait of Hormuz could reopen within seven days if the US eases military pressure and lifts its blockade on Iranian ports.

Ukraine and Russia have both voiced an interest in a limited ceasefire involving grain and energy-related targets, US Secretary of State Marco Rubio said on Wednesday after meeting Russian Foreign Minister Sergei Lavrov in New York. REUTERS