Oil prices rise for second session on continued Middle East supply concern

Brent crude futures rise $1.49, or 1.4%, to $106.77 a barrel

Oil prices rose for a second successive session on Tuesday as lingering concern over Middle East supply ​disruption brought about by US-Iran conflict outweighed signs of recovering crude exports ‌from the region.

Brent crude futures had risen $1.49, or 1.4%, to $106.77 a barrel, while US West Texas Intermediate crude was at $93.94, up $1.34, or 1.5%. Both benchmarks closed the previous session at nearly $1 ​a barrel higher.

"A clearer picture is emerging of higher oil export volumes leaving ​the Gulf, but much of that increase still relies on workarounds such ⁠as ship-to-ship transfers. Those methods are less efficient and more costly than normal operations, which ​is why crude prices remain elevated," said KCM Trade chief analyst Tim Waterer.

Crude exports from major ​Middle Eastern producers climbed to 12.8 million barrels a day in September, the highest since February, preliminary figures from data provider Kpler showed on Monday, helped by increased shipments from Saudi Arabia and the ​United Arab Emirates.

US and Iranian officials spoke separately with mediators in a renewed effort to end ​seven months of war, officials of both countries said. Further talks are widely expected to focus on ‌an ⁠amended version of a seven-day proposal that Iran presented last week on the sidelines of the United Nations General Assembly.

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"The dominant risk remains the US-Iran standoff and its implications for energy prices and inflation expectations," said UOB analysts in a client note.

"Iranian officials have reportedly ​expressed pessimism about reaching ​a deal before the ⁠Strait of Hormuz situation escalates further, keeping oil supply uncertainty elevated."

The war, which began in late February with US and Israeli attacks on ​Iran, has focused attention on the Strait of Hormuz, a crucial ​shipping lane ⁠for oil and gas supplies, the disruption of which has upended energy markets.

Meanwhile, the US is considering regulatory relief to allow broader sales of red-dyed diesel to help lower prices, an action ⁠that could ​allow some buyers to avoid the federal fuel tax, people ​familiar with discussions told Reuters. The proposal emerged from days of deliberation as a leading alternative to a diesel export ​ban.