Oil braces for choppy week as Iran weighs US Hormuz reply

Oil traders expect another choppy week. Washington and Tehran are still trading proposals, while attacks on tankers and Gulf infrastructure keep a large supply-risk premium in crude prices. Brent futures for December delivery rose 2.41% over the past week to settle at \$104.72 a barrel, and West Texas Intermediate gained 1% to \$91.85 in New York.business-standard

Two things held back bigger gains: hopes for a deal to reopen the Strait of Hormuz and a US Treasury licence that lets Russian diesel back onto world markets.tradingkey+1

Diplomacy versus physical risk

President Donald Trump called talks with Tehran productive. He also said the United States would not attack Iran before the November 3 midterm elections. Iran is now reviewing the US response to its proposal on reopening the strait. However, the US naval blockade of Iran is still in place, and no ceasefire or peace agreement has been reached.cnbc+2

"Crude oil is caught between diplomatic optimism and persistent physical supply risks," said Navneet Damani, head of commodities research at Motilal Oswal Financial Services. A positive reply from Iran could push prices lower in the short term, he said, but "past experience shows that diplomatic progress alone rarely ensures a lasting recovery in supplies".business-standard

Risks remain high on the ground. Brent jumped 4% on October 8 after Iran stepped up attacks on tankers and Yemen's Houthi rebels fired ballistic missiles at Riyadh, CNBC reported. Trump has since said Washington is considering joining Saudi strikes on the Houthis, which has raised concern about shipping through the Bab el-Mandeb Strait.cnbc+1

Kpler data showed about 9.5 million barrels a day leaving Hormuz in the week to October 6. That is roughly 30% below prewar levels, CNBC reported. On October 7, supertanker rates from the Persian Gulf to East Asia neared \$1.4 million a day, about 540% above pre-conflict levels. Ryan McKay of TD Securities said the need for US Navy escorts and the "constant risk of being attacked" justify "a sticky risk premium".tradingkey+1

Russian diesel licence

On October 9, the Treasury's Office of Foreign Assets Control issued General License 135. It authorizes sales and imports of Russian-origin diesel until April 7, 2027. Trump said Russia would deliver the fuel in batches. Analysts warned that the volumes are small, and that Moscow's own diesel export ban, which runs through the end of October, may limit how much fuel actually flows.euromaidanpress+2

Week ahead

Investors will be watching the monthly oil market reports from OPEC and the International Energy Agency, along with weekly US inventory data. Hurricane-related shutdowns in the US Gulf of Mexico helped support WTI, but Damani said that support could fade as production resumes. He added that a meaningful recovery in Gulf supplies is uncertain before 2027.business-standard