Oil prices remained relatively stable Thursday as traders weighed improving physical supply conditions against renewed diplomatic efforts involving the United States and Iran. Brent crude futures rose 0.6% to $98.67 a barrel, while West Texas Intermediate gained 0.5% to $90.09.

Trading remained volatile, with both benchmarks briefly falling more than 1% before recovering. The moves followed a strong September for crude, with Brent gaining approximately 14% during the month and WTI rising about 5%.

The market is now balancing two competing forces: recovering crude shipments that are easing immediate supply concerns and geopolitical uncertainty that continues to influence expectations for Middle East production and exports.

Are Recovering Gulf Exports Reducing Supply Concerns?

Gulf crude flows have improved significantly. Goldman Sachs estimated that Gulf oil exports, including so-called dark exports involving vessels with location transponders switched off, recovered to approximately 23.3 million barrels per day during the latest week. That level is broadly in line with the region’s 2025 average, following a doubling in exports during September.

Saudi Arabia has also resumed tanker loadings from Yanbu after restarting operations on its East-West Pipeline. The recovery in shipments provides additional evidence that physical oil flows are gradually normalizing after disruptions.

OPEC+ is also expected to keep its November production targets unchanged when the group meets Sunday, according to people familiar with the matter. Stable production targets could reinforce the market’s focus on actual export flows and geopolitical developments.

Why Did U.S. Inventories Weigh on Crude?

U.S. crude inventories provided another bearish influence. Stockpiles increased by 922,000 barrels during the week ended September 25 to 427.3 million barrels, according to the Energy Information Administration. Analysts had expected a 264,000-barrel decline.

The unexpected build suggests that domestic supply conditions may be more comfortable than previously anticipated. Combined with recovering Gulf exports and renewed Saudi shipments, the inventory increase has reduced some of the immediate pressure on global crude availability.

Could U.S.-Iran Diplomacy Change the Oil Market?

Diplomatic developments remain another major variable. Iran said Wednesday that it had received a U.S. response to its latest proposal aimed at reviving a collapsed Gulf ceasefire. Any progress toward an agreement could reduce the geopolitical premium that has supported oil prices.

However, the diplomatic outlook remains uncertain. President Donald Trump denied reports that the United States was prepared to provide Iran with sanctions relief and release frozen Iranian funds in exchange for concrete steps concerning Tehran’s nuclear program.

For oil traders, the distinction is important. A durable diplomatic breakthrough could improve expectations for supply stability, while continued uncertainty could preserve some of the risk premium embedded in crude prices.

What Could Happen to Oil Prices Next?

The near-term outlook is increasingly dependent on whether improving physical supply conditions continue faster than geopolitical risks recede. Recovering Gulf exports, resumed Saudi shipments and rising U.S. inventories could limit upward pressure on crude if those trends persist.

At the same time, U.S.-Iran negotiations remain capable of quickly changing expectations for regional supply. Traders will therefore be watching diplomatic developments alongside OPEC+ decisions, Gulf export volumes and U.S. inventory data as they assess whether September’s strong oil rally can continue.