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Developments over the past week:

* The White House is reportedly considering a 90-day ban on US diesel exports as domestic fuel prices reach record levels. President Trump could advance the proposal by the end of the week, although the legal framework remains uncertain. US retail diesel prices have exceeded USD 6.5/gallon. The US is the largest exporter of diesel followed by Russia

* US and Iranian officials held further diplomatic discussions this week, with early signs of progress briefly pushing Brent below USD 100/b on 23rd September. Renewed tensions later drove Brent 3.9% higher to USD 103.08/b by the close. With the Strait of Hormuz disruption unresolved and no agreement reached, ongoing negotiations remain an important source of geopolitical risk and price volatility for global oil markets

* China’s seaborne crude imports remain below pre-war levels, averaging just under 7 mbd in September versus high of 12 mbd before the conflict. However, the sourcing mix has shifted significantly, with Iranian imports falling to ~80kbd from 1.0–1.5 mbd previously. China is replacing these barrels with higher imports from Iraq, the UAE, Brazil and Canada, increasing its purchases from conventional global markets

In our opinion:

* Any restriction on US diesel exports could lower domestic prices in the near term but would remove supply from an already constrained global market. Given the US’s role as a major diesel exporter, reduced shipments could widen the regional price differential, particularly for import-dependent markets – such as Europe. Overall, it will make the global distillate market tighter, as inventory levels continue to remain record low across geographies, refineries would undergo maintenance and Russian has extended its ban to Oct 30

* China continues to import materially less crude than pre-war levels, limiting incremental demand pressure. However, the collapse in Iranian supplies is shifting Chinese purchases toward conventional suppliers such as Iraq, the UAE, Brazil and Canada. This changes where Chinese demand is expressed, increasing competition for openly traded barrels even without a return to pre-war import volumes

* Key factors that could cap further oil-price upside include a reversal in the tariff stance, an additional release of strategic barrels and, most importantly, a consistent reduction in China’s crude imports. In a bear case scenario , we see Brent price spiking to USD130/b towards expiry of Novemeber contract on 30th Sept 2026, as the Dated Brent continues to trade at USD120/b. Meanwhile, in In a bull case scenario , Brent price could dip to USD90/b over the coming weeks. Overall, we see Brent price revert to the range of USD95-100/b over the coming month

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