Oil prices jumped more than $3 on Thursday after China suspended oil products exports, potentially tightening fuel markets already coping with global supply shortages, and as there were few signs that diplomatic efforts to end the US-Israeli war on Iran were having an effect.
The new front-month December Brent crude futures contract traded at $101.20 per barrel at 12:47 EDT (16:47 GMT), up 3.2 per cent, or $3.17, from Wednesday's close. The November contract expired on Wednesday, settling at $103.50 per barrel, marking a monthly gain of around 14 per cent in September for the front-month contract.
US West Texas Intermediate crude futures were up $1.58, or 1.8 per cent, at $92 a barrel, having traded close to $93 earlier in the session.
Prices were volatile on Thursday, having slipped more than one per cent in early trading before rebounding.
Chinese refiners have suspended exports of oil products to regions beyond Hong Kong and Macau until further notice, four people briefed on the matter said on Thursday, a move that will further crimp war-constrained fuel markets.
"The Chinese export ban suggests concerns about domestic product availability," UBS analyst Giovanni Staunovo said, adding that it remains to be seen whether the measures will support higher crude imports after recent drawdowns in Chinese crude and fuel stocks.
While crude supplies continue to reach the market, diesel and other refined products remain in short supply following damage to refinery infrastructure in the Persian Gulf and Russia.
Gasoline, jet, and diesel shipments from the region are still around half of pre-war levels, said Phil Flynn, senior market analyst at Price Futures Group.
Global diesel inventories were already tight after Russia, a top exporter of the fuel, banned exports through October, and industry participants say shortages are unlikely to end before next year.
"The impact of China’s fuel export restrictions will not be as large as the loss of Russian and Middle Eastern refined oil product exports. However, it is another source of stress on global fuel markets when supply is severely constrained," said Hamad Hussain, senior climate and commodities economist at Capital Economics.
Brent and WTI crude futures pared some gains after two EU diplomats told Reuters on Thursday that the European Union's energy taskforce would meet on Friday to discuss a potential release of diesel stockpiles.
Earlier in the day, sources told Reuters the Trump administration has told Germany and France to draw down emergency diesel inventories to help ease global fuel prices or face a potential US diesel export ban.
Diplomatic efforts to end the Iran war have been relatively subdued of late as attacks continue.
On Tuesday, three Liberian-flagged oil tankers were struck by unknown projectiles when transiting the Strait of Hormuz, shipping intelligence service Marisks said in a Wednesday report.
Iran is preparing a broader and more forceful response if the US resumes large-scale military attacks, sources said, while continuing a diplomatic push that Iranian officials privately see as unlikely to succeed.
In the meantime, the lingering disruptions to global oil and fuel markets have spurred analysts to raise their average Brent crude oil price forecasts for 2026 to $89.05 a barrel, although they note there are signs of a gradual improvement in export flows from the Middle East.
Saudi Arabia resumed oil tanker loadings from Yanbu on Tuesday, after restarting operations on its East-West Pipeline.
Meanwhile, Goldman Sachs estimated gulf oil exports, including "dark exports" involving ships operating with their location transponders turned off, have recovered to 23.3 million barrels per day over the last week, in line with their 2025 average, as exports doubled in September, it said in a note on Tuesday.
And OPEC+ oil-producing countries are likely to keep their oil production targets steady for November when they meet on Sunday, two sources with knowledge of the matter told Reuters.
(Reporting by Siddharh Cavale in New York, Robert Harvey, Shadia Nasralla in London, Sethuraman N R in New Delhi, Anushree Mukherjee in Bangalore and Yuka Obayashi in Tokyo. Editing by Christopher Cushing, Tom Hogue, Mark Potter, Nick Zieminski and David Gaffen)