Crude oil futures staged a strong rebound on Wednesday, closing at the session's highs, with Brent surging 4% as geopolitical uncertainties resurfaced. After a week of decline, the market had largely priced in expectations of de-escalation, yet doubts persist over whether US-Iran talks will materialize as promised. Late in the session, Iran's Supreme National Security Council secretary stated that the Strait of Hormuz would not reopen, nor would negotiations proceed, unless Tehran's conditions are met, emphasizing that Iran is in no rush to negotiate and has already submitted its terms to Qatar and Pakistan.

Iran's president reinforced this stance in a speech at the United Nations, vowing the nation would never bow or bend, which amplified the upward momentum in oil prices overnight. This has prompted more capital to adopt a wait-and-see approach until the situation becomes clearer. While de-escalation hopes and positive news about Strait of Hormuz flows had dominated the recent pullback, the persistently hot tanker market and stubbornly firm refined product prices remain key realities that cannot be ignored, especially as Libya's National Oil Corporation chairman noted that production from the Sharara field has fallen below 100,000 barrels per day amid ongoing disruptions. The market's direction remains fluid, with price swings highly sensitive to shifting sentiment driven by headline news.

Overnight, reports that the US was preparing a 90-day diesel export ban became the dominant driver of price strength in the latter half of the session. This news initially sent US ultra-low sulfur diesel futures down over 7%, while European diesel futures surged more than 7% on supply concerns. Although a White House official dismissed the reports as "fake news," the speculation still swayed market expectations, triggering sharp movements in inter-regional spreads, with Brent outperforming WTI as a result. For China, Brent's influence is clearly more significant. Ultimately, the core factor determining oil prices remains whether Washington and Tehran can sit down for negotiations. With domestic holidays approaching, investors are advised to control risk and participate cautiously.

Daily Market Snapshot

WTI crude futures rose $1.64, or 1.81%, to settle at $92.16 per barrel. Brent crude futures gained $2.71, or 2.84%, to close at $98.12 per barrel. INE crude futures climbed 5.02% to 730 yuan per barrel.

The US dollar index rose 0.58% to 101.13. The HKEX USD/CNH rate increased 0.16% to 6.6661. US 10-year Treasury notes fell 0.94% to 105.03. The Dow Jones Industrial Average dropped 0.68% to 51,511.59.

Key Developments

Saudi Arabia Accelerates Loading at Gulf Terminal, East-West Pipeline Shows Early Recovery

Saudi Arabia resumed loading millions of barrels of oil at its key Gulf terminal on Tuesday, having shifted transport routes back through the Strait of Hormuz while maintaining high loading speeds. EU Copernicus satellite imagery showed a 12-million-barrel-capacity supertanker docked at the country's Gulf export facility. Sunday had already been the busiest day since at least June, followed by new arrivals and departures. Since the vital East-West pipeline was forced offline by attacks earlier this month, Saudi exports from the Gulf have increased, with shipments requiring passage through the Strait of Hormuz.

Sources said Tuesday the pipeline is in the early stages of restoring flows, currently transporting crude at low volumes. Saudi Aramco is aiming to restore throughput to 4 million barrels per day, with insiders noting it could take days to reach 40% of original capacity and six to eight weeks for full recovery. Traders also indicated Aramco sold about 10 VLCCs or more of crude to Asian buyers for October to November delivery, equivalent to roughly 20 million barrels.

Russian Refining Throughput Steady in Mid-September

Russia's crude processing volumes were broadly unchanged in the period of September 10-16, averaging about 4 million barrels per day, according to informed sources. Partial outages caused by Ukrainian strikes were offset by restarts at other units. During this period, Novatek's Ust-Luga condensate processing plant on the Baltic coast and the Yaroslavl refinery, jointly owned by Gazprom Neft and Rosneft, increased processing, as did the Ufa refinery operated by Bashneft.

Trump Backs Diesel Export Ban, Raising Supply Concerns for Europe and Latin America

Diesel exports have become a US political issue, with President Trump supporting a ban on exports and Treasury Secretary Bessent saying officials are studying whether a full or partial prohibition is feasible. This comes as US diesel prices hit record highs ahead of November midterm elections, with diesel crucial for trucking, agriculture, and construction. US refiners have become key suppliers replacing Russian fuel in markets like Europe, so an export ban could increase domestic supply in the short term but reduce global availability.

Analysts warn this could intensify pressure on Europe, which already faces record diesel prices and declining supplies from Russia and the Middle East. S&P Global said Middle East diesel exports to Europe are expected to hit a six-year low in September, averaging around 110,000 barrels per day so far this month versus 191,000 in August. The IEA reported that Gulf net diesel and gasoil exports in August were just over a quarter of pre-conflict levels. The Russia-Ukraine conflict adds further strain, with Ukrainian drone strikes on Russian refineries reducing some capacity and Russia extending diesel export restrictions through October.

European diesel prices hit a record on September 15, with the Northwest European benchmark surging to $1,642.25 per tonne, the highest since price assessments began, before easing the next day to the second highest ever. Data shows Indian refineries supplied about 60% of diesel and gasoil shipped to Europe via the Bab el-Mandeb Strait in August, with around 200,000 barrels per day moving along that route. Indian refiners are also major buyers of Russian crude, with Russia remaining India's top supplier in August, though purchases have declined from record levels earlier this summer. A US diesel export ban is not expected to directly impact India, given different trade routes; India does not rely on US diesel and can process Russian crude for export. The largest impact would likely fall on Latin America and parts of Europe that depend heavily on US diesel.

However, US Energy Secretary Wright warned that stopping exports could create a glut of diesel on the Gulf Coast, force refinery run cuts, and consequently reduce gasoline supply. Interior Secretary Burgum also questioned whether a ban would genuinely lower prices and cautioned about potential retaliatory measures.