International crude oil markets were ignited once again on Thursday by supply-side and geopolitical news. Oil prices closed sharply higher across the board, with Brent crude settling more than $4 higher, as the market worried that China's suspension of refined fuel exports and the US sending additional troops to the Middle East could further worsen already tight global fuel supplies. At the close, the ICE December Brent crude futures contract settled at $102.31 per barrel, up $4.28, or 4.37%; US West Texas Intermediate (WTI) crude futures settled at $92.87 per barrel, up $2.45, or 2.71%.
According to reports, the United States is deploying a third aircraft carrier and up to 10,000 additional troops to the Middle East, as US President Trump weighs resuming strikes on Iran after the midterm elections. Trump told reporters before leaving the White House for a campaign event that he is weighing options on Iran. "Now I have to make a decision. They either sign a very fair agreement, or they will cease to exist." This statement further intensified market fears of escalating conflict.
Meanwhile, four people familiar with the matter said Chinese refiners have suspended exports of oil products to regions outside Hong Kong and Macau until further notice. That news became the key catalyst for oil prices reversing their early decline. Oil prices had previously fallen 1% before rebounding strongly after the news of the refined fuel export suspension emerged. UBS analyst Giovanni Staunovo said China's export ban signals market concerns about domestic refined fuel supply; after recent declines in China's crude and fuel inventories, it remains to be seen whether the measures will support higher crude imports.
On the supply side, crude continues to flow into the market, but diesel and other refined products remain in short supply after damage to refinery infrastructure in the Gulf of Mexico and Russia. Global diesel inventories were already tight, and Russia, as a major exporter, has extended its export ban through October. Industry participants said the shortage is unlikely to end before next year. Russian President Putin previously said Russia will not supply diesel to global energy markets unless sanctions on Moscow are lifted. Capital Economics senior climate and commodities economist Hamad Hussain noted that the impact of China's fuel export restrictions will not be as large as the loss of refined product exports from Russia and the Middle East, but it is another source of pressure on the global fuel market at a time when supply is severely constrained.
To ease the pressure, two EU diplomats said the EU energy working group will meet on Friday to discuss whether to release diesel inventories. Sources also said the Trump administration has asked Germany and France to tap emergency diesel stockpiles or potentially face a US diesel export ban. US Treasury Secretary Scott Bessent also urged European partners to help ease the global shortage.
On the geopolitical front, diplomatic efforts to end the Iran conflict have been relatively sluggish recently, and attacks continue. Shipping intelligence service Marisks said three Liberian-flagged tankers were hit by unidentified projectiles while passing through the Strait of Hormuz on Tuesday. The UK Maritime Trade Operations (UKMTO) also reported that a tanker was hit by an unidentified projectile in the Strait of Hormuz, with the extent of damage and environmental impact still unclear. Sources said that if the United States resumes large-scale military strikes, Iran is preparing a broader and more forceful response while continuing to pursue diplomacy, though Iranian officials privately believe the chances of diplomatic success are slim. Iran appeared not to load crude onto tankers in September, suggesting a US naval blockade is cutting off its access to energy markets.
Oil prices have been highly volatile this week as traders weigh improved Middle East supply against the risk of escalating conflict. Brent crude is still up nearly 70% this year, and the US-Iran conflict has entered its eighth month with little progress toward a diplomatic solution. ANZ analysts Brian Martin and Daniel Hynes said in a report that the oil market is highly vulnerable to another price spike, with inventories at low levels after six months of declines, and investors increasingly worried that Iran will respond to the military buildup by attacking US assets and regional energy infrastructure. Wall Street analysts said earlier this week that Middle East supply flows have approached pre-war levels, but fuel supply has not recovered to the same extent.
Despite rising risks, some signs of supply improvement are still emerging. Saudi Arabia resumed loading tankers from Yanbu on Tuesday after restarting the East-West pipeline. Meanwhile, Goldman Sachs estimated that Gulf oil exports, including "shadow exports" with transponders turned off, have recovered to 23.3 million barrels per day over the past week, in line with the 2025 average, as September exports doubled. Analysts also raised their average Brent crude price forecast for 2026 to $89.05 per barrel, but noted that Middle East exports are gradually improving.