Oil held near $107 after yesterday's surge

World oil prices on September 29 remain near the high levels reached the day before after a deterioration in the prospects for a deal between the US and Iran. Formally, quotations are rising for a second consecutive session, but no new sharp jump occurred in the market.

According to Bloomberg, Brent was trading above $107 per barrel, and US WTI was around $94.

At the same time, prices changed insignificantly over the day. The day before, Brent had already risen above $107, and WTI approached $95 per barrel. After intraday fluctuations, quotations retreated somewhat, so the current move rather means oil consolidating near the achieved levels than a new wave of a sharp price increase.

The main factor supporting prices remains uncertainty around negotiations between Washington and Tehran. According to Bloomberg, Iranian officials privately express pessimism about the possibility of reaching an agreement to end hostilities and fully open the Strait of Hormuz before the US midterm elections in November.

Expectations for a quick settlement deteriorated after US President Donald Trump rejected an Iranian proposal that envisіaged a possibility of restoring full traffic through Hormuz within seven days if certain conditions were met.

At the same time, a factor appeared on the supply side that partially restrains oil quotations. Saudi Arabia restored about half of the flows through the East-West pipeline, which allows transporting oil from the fields in the east of the country to the Red Sea coast bypassing the Strait of Hormuz.

According to Bloomberg, pipeline pumping has already reached at least 3.5 million barrels per day. Its operation was halted after drone strikes in early September.

Thus, the oil market is currently balancing between two opposing factors. The risk of prolonged restrictions on navigation through Hormuz supports the geopolitical premium in prices, while the restoration of the Saudi route increases available supply volumes. So far, this is enough to keep Brent near $107, but not for a new sharp move upward.

Based on materials from: Bloomberg, Financial Times