Synopsis

Brent crude futures for November rose 74 cents, or 0.75%, to $101 a barrel. US West Texas Intermediate (WTI) crude for October, which expires on Tuesday, gained 41 cents, or 0.43%, to $96 a barrel.

Oil prices edged higher on Tuesday after a four-day losing streak, as investors awaited developments on possible US-Iran talks at the United Nations General Assembly this week.

Iran and the US traded threats on Sunday, although US President Donald Trump said he was open to meeting Iranian President Masoud Pezeshkian, who is expected to be in New York this week for the UN General Assembly.

Brent crude futures for November rose 74 cents, or 0.75%, to $101 a barrel. US West Texas Intermediate (WTI) crude for October, which expires on Tuesday, gained 41 cents, or 0.43%, to $96 a barrel.

"The move higher in WTI and the stronger open in Brent have the appearance of a typical short-covering bounce after the recent decline, rather than a fundamental shift," Reuters reported citing Tim Waterer, chief market analyst at KCM Trade.

Also read: Trump to tout peace deals, defend Iran war in UN speech

Tensions in the Middle East remained elevated after Yemen's Iran-backed Houthis said they had attacked Riyadh and a Saudi Aramco facility in Yanbu, while also stepping up efforts to cut off Saudi-backed forces from the Red Sea coast.

China has privately urged Tehran to help rein in Houthi attacks, three Iranian sources said. The move came after Saudi Arabia appealed to Beijing following a recent increase in the group's military operations.

Saudi Aramco has increased exports through the Strait of Hormuz after attacks on its East-West Pipeline forced the company to halt some shipments through Yanbu. Tanker tracking data showed that Saudi Aramco loaded about 14 million barrels of crude onto seven supertankers inside the Gulf on Sunday.

Meanwhile, JPMorgan has lost clarity over the direction of oil prices. For the first time since the Iran war erupted in February, the Wall Street bank no longer has a clear baseline view for the oil market as rising tensions add to concerns over an already worsening supply shock.

"We simply don't know how to model the endgame," JPMorgan analysts said, pointing to the uncertainty over how the conflict could eventually unfold. At the beginning of the conflict, the bank had assumed there were certain economic thresholds that the US administration would not cross. Six months into the war, however, many of those lines have been crossed, while there is still no clear exit strategy, the bank said.

JPMorgan said on Thursday that it did not have a clear baseline view for oil markets for the first time since the US-Israeli war on Iran began, underscoring the uncertainty facing the market.

The risk of additional supply disruptions has increasingly tilted the outlook for oil prices to the upside. Daan Struyven, co-head of global commodities research at Goldman Sachs, said recent attacks had demonstrated that shipping disruptions could spread and become more severe.

Read more: 'All Iranian airlines will be shut down around the world': Bessent threatens secondary sanctions

Goldman Sachs has outlined a scenario in which oil prices could rise as high as $120 a barrel if attacks on vessels in the Middle East intensify. If exports return to normal, the bank expects oil prices to fall back toward $80 a barrel. Struyven told Bloomberg that risks to shipping had become an important factor driving oil prices.

Struyven said Goldman Sachs sees "meaningful upside to crude oil prices" and also expects natural gas and refined product prices to rise. He added that supply shocks in gas and fuels are larger than those in the crude market.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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