Oil Extends Gain as Iran Uncertainty Outweighs Saudi Pipe Return

(Bloomberg) -- Oil rose a second day as uncertainty over progress in US-Iran talks weighed against signs of strong demand and a resumption of flows through a key pipeline from top exporter Saudi Arabia.

West Texas Intermediate advanced above $93 a barrel after ticking higher in the previous session, while Brent closed near $105. Iranian officials have privately expressed pessimism about reaching a deal to end hostilities with Washington and reopen the Strait of Hormuz before US midterm elections in November, following US President Donald Trump's rejection of a proposal to reopen the waterway in seven days.

Meanwhile, Saudi Arabia has restored about half the flows through its cross-country East-West pipeline, a crucial route bypassing the strait, after drone strikes halted operations earlier this month. Flows through the link to the Red Sea have reached at least 3.5 million barrels a day, according to people familiar with the matter.

The fundamental outlook for oil is turning increasingly bullish, and key gauges of supply tightness have spiked in recent days in a sign of a clamor for barrels that can be delivered quickly, while fuel prices are surging as global refinery capacity remains hobbled. Crude is headed for a third monthly gain on the escalating US-Iran tensions, disruptions to the Saudi bypass route and potential diesel export curbs by Washington.