Oil Holds Steady With WTI Near $90 as Middle East Supply Recovers

Oil prices paused around $90 a barrel as Middle East crude supply recovered to near prewar levels, with uncertainty over whether the rebound can be sustained keeping the market in a holding pattern.

Bloomberg reported on October 30 that West Texas Intermediate traded near $90 a barrel after rising 1.2% in the previous session. The most-active Brent futures contract settled around $98 a barrel.

Wall Street analysts and oil traders see Middle East crude supply as having returned to near prewar levels. Goldman Sachs estimated that about 23 million barrels a day of crude were supplied from the region over the past week through alternative export routes including the Strait of Hormuz and the Red Sea. That was roughly in line with last year's average.

Still, it remains unclear whether the recovery in Middle Eastern crude supply will last. Rebecca Babin, senior energy trader at CIBC Private Wealth Group, said improved supply is giving the market some relief, but the effect may be temporary without a credible path to a durable agreement. An increase in supply this week does not guarantee the same level next week.

International oil prices rose for a third straight month through September. Supply uncertainty persisted as the U.S. and Iran failed to make progress on a long-term peace agreement aimed at fully reopening the Strait of Hormuz. President Donald Trump said the U.S. has full control over the waterway and would provide a response to Iran soon.

Unlike crude, shortages in refined products such as gasoline and diesel continue. The U.S. Energy Information Administration said U.S. distillate inventories fell to the lowest seasonal level on record, while gasoline stockpiles in the Midwest dropped to an all-time low. As refiners increase output of petroleum products, demand for crude is also being supported.

The possibility of U.S. restrictions on diesel exports has also emerged as a market factor. Energy Secretary Chris Wright said an announcement related to new diesel supply in Europe would be made soon. Trump said he is reviewing the potential negative effects of a diesel export ban.

BloombergNEF said Gulf crude exports have recovered through escorted shipping and alternative routes, but crude inventories have fallen by more than 500 million barrels since February. As a result, the region has less capacity than before to absorb any additional supply disruption in the Middle East.