International oil prices pared their gains after Pakistan signaled that the United States and Iran are close to reaching some form of arrangement, which could help ease the tensions disrupting energy markets.
Brent crude was trading near $88 a barrel, after briefly climbing to $90 earlier in the session. Any news regarding the potential progress of an agreement to restart shipping through the Strait of Hormuz triggers a sharp reaction in crude oil futures prices.
Earlier, U.S. President Donald Trump presented Iran with a series of new, tough demands, casting a shadow over the prospects for a deal and driving oil prices significantly higher.
Pakistan's Defense Minister Khawaja Asif told reporters in Islamabad that signals over the past "two or three days indicate we are very close to reaching some kind of arrangement."
Restoring the passage of vessels through this most critical global energy transit chokepoint is essential for rebalancing the world's oil market. Before the conflict began, about one-fifth of the global oil and gas flow was transported via the Strait of Hormuz.
Crude oil prices have been in a state of intense volatility since the conflict erupted in late February. As the situation has deteriorated again in recent days, the rally in refined product prices has been even more pronounced.
Diesel has been particularly hard hit, as the Russia-Ukraine conflict also squeezes supply. The European diesel benchmark has more than doubled in price since the start of the year.
On Tuesday, there were reports of a fire at the Komsomolsk refinery, operated by Russia's Rosneft in the Khabarovsk region, though the company stated that production operations were not interrupted.
In a separate incident, according to a local statement, debris from a drone also caused a fire at an industrial facility in Russia's Orenburg region, where the Orsk refinery, owned by ForteInvest, is located.
Additionally, a refinery in Libya was also attacked.
Trump has presented new demands to Iran, including compensation for casualties caused by its actions, as well as reparation for deaths and related losses in Lebanon, Syria, Yemen, and Gaza.
Prices: As of 12:27 PM London time, the Brent crude futures contract for October delivery was nearly flat at $87.68 per barrel. The WTI crude futures contract for September delivery was trading at $82.20 per barrel. On the ICE Futures Europe exchange, diesel futures rose 2.7% to $1,340.00 per metric ton.
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