Oil stays above $103 after Trump denies easing sanctions on Iran

Oil prices inch higher

Oil prices inched higher on Wednesday, trading beyond the $103 per barrel mark as uncertainty over the US stance towards Iran returned to the spotlight. US The momentum came after US President Donald Trump rejected a report that Washington was prepared to ease sanctions on Tehran.

Qatar, meanwhile, said it was continuing efforts to bring Iran and the US towards an agreement.Brent crude rose 0.56% to $103.20, while WTI crude gained 0.11% to $89.48. The gains came a day after oil prices declined as crude supplies from the Middle East showed signs of recovering.As the Strait of Hormuz remains choked for a seventh month, oil prices have continued to rise. Brent is set to gain around 14% in September, which would be its biggest monthly increase since July.

WTI is headed for a rise of about 4% after crossing $106 for the first time since May.The gap between Brent and WTI has also widened to its highest level in four months this month. Traders have been assessing possible US restrictions on diesel exports, which could result in an oversupply in the domestic market and reduce the amount of crude processed by US refiners.Trump is considering allowing sales of red-dyed diesel instead of imposing an export ban, according to Reuters.

The move would be aimed at offering some relief to consumers as the November mid-term elections approach.

Qatar seeks common ground

Qatar on Tuesday said that it hoped its shuttle diplomacy between Iran and the US could help the two sides reach a breakthrough."We are exchanging messages between the parties, and we're working towards establishing a common ground in order to get into a deal that would save all of us from the repercussions of the conflict," Qatar's foreign ministry spokesperson Majed al-Ansari said.The diplomatic efforts came amid a report by Axios that cited US officials as saying Trump was willing to offer Iran sanctions relief and release frozen Iranian funds in return for "concrete" steps by Tehran on its nuclear programme.Trump rejected the report, saying "This is untrue. I offered them NOTHING."

Middle East supply picks up

The recovery in regional oil flows has also emerged as a key factor for the market. Saudi Arabia resumed oil tanker loadings from its Red Sea port of Yanbu on Tuesday after restarting operations on the East-West Pipeline.Oil exports from Middle Eastern producers rose to 16.328 million barrels per day in September, their highest level since the US-Israeli war with Iran began in late February.US inventory figures also remained in focus. Crude oil and gasoline stocks increased last week, while distillate inventories declined, according to market sources citing data from the American Petroleum Institute.US crude inventories rose by 1.02 million barrels in the week ended September 25, the sources said.The official US Energy Information Administration inventory data is due at 10:30 a.m. EDT (1430 GMT). Analysts polled by Reuters expect crude and product inventories to have declined.