Oil swung as Saudi Arabia moved to restart a key pipeline and the U.S. flagged progress in talks with Iran to end a war that has disrupted energy markets for nearly seven months.

Brent traded around $99 a barrel, after falling nearly 9% in the past five sessions. Saudi Arabia is said to aim for a meaningful resumption of its East-West link to the Red Sea by Saturday, restoring a critical lifeline for global markets since the war snarled flows via the Strait of Hormuz. The kingdom also appears to be sustaining an elevated pace of exports from the Persian Gulf.

Traders have also been watching for potential progress toward an agreement that could help to stabilize shipping through Hormuz as diplomats gather in New York for the United Nations General Assembly. U.S. President Donald Trump said officials had a “very productive” meeting, even after he threatened to “annihilate” the Islamic Republic. More meetings are planned, he added.

Multiple efforts to end the conflict have so far proved fruitless, however, including an interim deal that was in place for a short period. Since then, the U.S. has maintained a blockade of Iran’s ports, limiting its export revenues. In retaliation, Iran has kept attacking ships in Hormuz.

Oil has rallied by more than 60% this year, with fuels like diesel surging even higher as the fighting between Russia and Ukraine also knocks out refining capacity. Rising prices at the pump have become a major concern for consumers ahead of the midterm elections in the U.S., and a headache for the Federal Reserve and other central banks seeking to tame inflation.

European diesel futures, already near the highest since April, jumped as much as 7% on Wednesday after Trump said he’s encouraged his advisers to support a ban on U.S. exports of the fuel. If implemented, the move threatens to squeeze markets elsewhere as America has emerged as a global supplier of last resort. The country’s diesel exports surged to a weekly record near 2 million barrels a day last month.

The diesel price jump is also underpinning crude prices, said Ole Sloth Hansen, head of commodity strategy at Saxo Bank. “It’s the refined products that set the tone on inflation, Fed rate intentions and not least economic growth,” he added.

In the U.S., an export ban could lower diesel prices initially, but given constraints on transporting oil around the country, inventories would eventually fill, forcing refiners to cut production, said Hamad Hussain, senior climate and commodities economist at Capital Economics.

On the diplomatic front, the U.S. and Iran remain at odds on a host of key issues, including Hormuz. Tehran has asserted its control over the waterway, while Washington insists its status remains unchanged.

Trump said special envoys Steve Witkoff and Jared Kushner participated in the outreach with Tehran. There were “lengthy talks with the Iranian delegation through the mediators,” Witkoff posted on X. “They successfully completed a round of discussions that we hope will prove constructive and promising.”

Still, market participants cautioned against reading too much into the claims of diplomatic progress by the Trump administration. “When you’re overly optimistic, you want to see good news to the point where you’re ignoring reality,” said John Driscoll, Director at JTD Energy Services Pte Ltd.

Iranian Foreign Ministry spokesman Esmail Baghaei said the purpose of the communication with the U.S., done via Qatar, was to relay demands, according to the Islamic Republic News Agency. Among aims, he listed an end to the fighting, lifting the U.S. blockade and unfreezing assets.

Traders are also parsing a mixed report on U.S. stockpile moves from the industry-funded American Petroleum Institute, which showed a 1.8-million-barrel build in nationwide crude holdings, but declines in inventories of gasoline and distillates. Official figures are due later Wednesday.

—With assistance from Alex Longley.

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