Meanwhile, China plans to resume refined fuel exports: File Image/Pixabay.

For once, the threat of natural disaster instead of man-made ones caused crude prices on Friday to settle higher, as Hurricane Isaias approaching the Gulf of Mexico prompted oil companies to halt more than 70 percent of production – or about 1.3 million barrels per day (bpd) - in U.S. waters.

But capping the gains was China’s plan, announced on Friday, to resume refined fuel exports after halting them during its Golden Week holiday.

Brent settled up 44 cents at $104.72 per barrel, and West Texas Intermediate settled up 36 cents at $91.85 per barrel.

Although both on a practical as well as an ideological level the prospect of peace between U.S. and Iran seemed remote, media played up U.S. president Donald Trump’s remarks that talks with the Islamic republic have been “productive” – and that he had no attacks planned before the midterm congressional elections in November, despite reports to the contrary. 

Iran’s foreign minister Abbas Araghchi said Tehran was reviewing Washington's response to its seven-day plan to reopen the Strait of Hormuz, and that Iran will respond within the “next few days”.

If these reports are accurate, they represent a major attitudinal shift that presumably further disoriented oil traders, especially considering that Iran this week increased attacks on tankers in the Strait of Hormuz – to the tune of a dozen attacks between September 28 and October 2 alone, thus causing a sharp decline in transits.

Meanwhile, Amrita Sen, founder and director of market intelligence at Energy Aspects, told
media on Friday that oil futures prices did not reflect reality of Middle East hostilities and should be trading closer to $150 per barrel for some physical crude prices.

Sen said, “Futures prices are just struggling to price in what the true fundamentals are, in part because everything that is driving the market right now is about the mid-term elections and that somehow the U.S. government is going to get prices down.”

Sen added, “I find it fascinating that the market is happy to ignore events on the ground, actual infrastructure damage, and actual disruptions to shipping.”