Crude oil started the new month with strong momentum

On the first trading day of October and the fourth quarter, crude oil prices rebounded, reversing earlier losses amid reports of Chinese fuel export restrictions that renewed concerns over global energy supplies. Brent crude increased by 4.37%, reaching $102.31 on Thursday, while WTI rose 2.71% to $92.87. US–Iran diplomacy remained an important source of uncertainty, but the immediate rebound was associated with developments in refined fuel markets.

US-Iran Diplomacy Remains Unresolved

Geopolitical tensions continue to influence oil prices, with ongoing negotiations between Washington and Tehran regarding the Strait of Hormuz remaining inconclusive. These tensions intensified following the deployment of a third US aircraft carrier strike group to the Middle East, coupled with President Donald Trump’s warning of potential new strikes against Iran. The strategic importance of the shipping route sustained the market’s elevated risk premium.

Iran stated that it had received a US response related to efforts to revive the stalled Gulf ceasefire. However, mixed signals from both parties left the prospects for an agreement uncertain. This development came after President Trump rejected a previous proposal that would have reopened the Strait of Hormuz in exchange for lifting the US blockade on Iranian ports.

For oil traders, the key analytical question is whether negotiations produce practical changes in shipping access and export reliability. A durable agreement could reduce the compensation buyers demand for disruption risk. Renewed escalation could have the opposite effect. Neither scenario is assured simply because messages are being exchanged.

China’s Reported Export Restrictions Add Support

China’s reported ban on some October fuel exports gave oil prices an additional boost later in the morning. Restrictions on fuel exports could tighten product availability outside China, adding to supply concerns already heightened by developments in the Gulf.

The extent of that support will depend on the scope and duration of the reported restrictions.

US Inventory Build Provides a Counterweight

US crude inventories increased by 922,000 barrels last week, according to figures released by the Energy Information Administration on Wednesday.

The inventory build offered a bearish counterpoint to the geopolitical backdrop. Nevertheless, the session’s rally suggested that traders were placing greater weight on potential supply disruptions and diplomatic uncertainty.

Factors That Could Influence the Next Market Move

The key test for sustaining the recent rally will be whether the reported fuel export restrictions persist and result in tighter physical markets. Traders will also seek concrete evidence that diplomatic initiatives lead to actual improvements in shipping conditions, rather than relying solely on political rhetoric.

Additional inventory data releases will be crucial to differentiate between temporary refinery-related fluctuations and a sustained shift in supply and demand dynamics. Continued declines in fuel stocks will warrant close monitoring, even if crude oil inventories increase. Conversely, a recovery in product inventories could undermine the case that fuel shortages will continue to support oil prices.

October’s opening trading session underscores how rapidly market dynamics can shift amid inventory concerns, policy announcements, and geopolitical uncertainties. While the price rebound is evident at the time of reporting, its longevity will depend on developments in physical supply chains and diplomatic negotiations.

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