Oil prices are climbing again on Tuesday after another volatile start to the week.
West Texas Intermediate (WTI) crude is currently up around 0.5% to US$93.05 per barrel.
Meanwhile, Brent crude has climbed 0.5% to US$105.83 per barrel.
Both have been on a strong run lately, with WTI up almost 50% over the past year and Brent gaining around 60%.
So, with tensions in the Middle East still pretty high, oil prices could have another big week ahead.
Let's take a closer look.
Image source: Getty Images
US-Iran negotiations continue
There has been some movement in talks between the US and Iran.
Officials from both countries held separate discussions with mediators on Monday as efforts continue to bring the 7-month war to an end.
Iranian Foreign Minister Abbas Araqchi said Tehran is now waiting for a formal response from the US to its latest proposal.
The plan includes a halt to fighting, sanctions relief, and the unfreezing of Iranian assets.
In return, Iran would reopen the Strait of Hormuz and begin talks with the US over its nuclear program and uranium stockpile.
There has also been some improvement in oil flows from the Middle East.
Exports from major producers reached 12.8 million barrels per day in September, the highest level since February.
US oil reserves are getting low
Another thing to watch is how much oil the US has left in its Strategic Petroleum Reserve.
The US has been releasing millions of barrels from the reserve since the war began in an effort to keep more oil in the market.
That has pushed stockpiles down to around 285 million barrels, their lowest level in more than 40 years.
The reserve held almost 300 million barrels at the beginning of August, meaning around 15 million barrels have been released in less than two months.
The US has also been working with other countries to release emergency reserves during the conflict.
What happens next for oil prices?
I think oil prices could keep moving higher from here.
Brent crude has already moved above US$105 per barrel again, putting the US$110 level back within reach.
WTI is also holding above US$90 after briefly trading above US$96 on Monday.
Yes, a lot will depend on what happens with the latest US-Iran negotiations.
And while Middle East oil exports have improved this month, they remain below levels seen before the war.
For me, that leaves the oil market looking pretty tight.
I wouldn't be surprised to see Brent test US$110 per barrel again this week if tensions remain high.
