Oil prices moved higher on Tuesday, driven by escalating worries over the ongoing standoff between Washington and Tehran. The move follows a statement from US Treasury Secretary Scott Bessent, who revealed plans to fully ground all Iranian airlines starting Wednesday.

At 1:37 AM Eastern Time, international benchmark Brent crude futures for November delivery gained 1.53% to trade at $101.88 per barrel. Meanwhile, US West Texas Intermediate crude futures for October delivery rose 1.5% to $97.22 per barrel.

Bessent stated that all Iranian airlines would be shut down from Wednesday onward. He outlined the enforcement mechanism, noting that once Iranian flights land, any party providing fuel, ground services, or selling tickets would face removal from the US dollar system.

Traders are also closely monitoring reports that Iranian President Masoud Pezeshkian plans to travel to New York for the United Nations General Assembly, with investors seeking any signs of a diplomatic resolution to the Middle East conflict. According to the semi-official Tasnim News Agency, Pezeshkian will address the assembly to outline Iran's stance on the "international situation," with particular focus on disputes involving the US and Israel. During the meeting, he is scheduled to hold talks with various world leaders on the sidelines from September 22-26 and again on September 28.

Central questions around diplomatic developments

Luqman Otunuga, Head of Market Research at online broker FXTM, noted that market focus will likely remain fixed on diplomatic movements. He suggested that if direct talks between Washington and Tehran are confirmed, expectations of improved regional oil supply could trigger further selling pressure on crude prices. Otunuga added that conversely, Tehran has already cautioned that renewed escalation would provoke a strong response, which could push oil prices higher.