Oil hits over 1-week low on Monday as traders bet that diplomacy in the Iran war could gain traction this week, with a United Nations gathering in New York offering a possible opening for de-escalation between Washington and Tehran.
Brent crude futures and US West Texas Intermediate crude both touched their lowest levels since September 10 earlier in the session, according to Reuters. Brent stood at $101.71 a barrel by 0213 GMT, down $2.16, or 2.08 percent, after settling 0.91 percent lower on Friday. US West Texas Intermediate crude shed $2.15, or 2.14 percent, to $98.15 a barrel, following a 1.58 percent drop in the previous session.
Market analysts attributed the slide to a thinning of the geopolitical risk premium that had been priced into crude. Tim Waterer, chief market analyst at KCM Trade, said it appears a degree of risk premium is being removed from oil prices on hopes that a diplomatic path to de-escalate the US-Iran war may arrive this week. He added that whether those hopes prove warranted is another question, and that time will tell.
The downward move carried technical significance as well. WTI broke a key psychological support at $100 a barrel, while some investors may have rolled over positions in the October contract a day ahead of expiry into November, a Singapore-based broker said.
The diplomatic signals emerged against a backdrop of continued hostility. Iran and the United States exchanged new threats on Sunday amid the stalemate, although President Donald Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to be in New York this week for the United Nations General Assembly. Iran has conveyed its conditions to mediators for re-engaging in negotiations aimed at ending the war with the US, Al Jazeera cited Iran’s security chief, Mohsen Rezaei, as saying in an interview on Saturday.
At the same time, tensions in the Middle East remained elevated. Yemen’s Houthis said they attacked sensitive sites in the Saudi capital of Riyadh on Saturday with missiles and drones, as well as an Aramco facility in the Red Sea city of Yanbu, a key oil export hub. China has asked Iran to help rein in the Houthis after an appeal to Beijing by Saudi Arabia following the attacks, according to three Iranian sources familiar with the matter.
The strikes on Saudi Aramco’s East-West pipeline have pushed the state energy firm to increase exports through the Strait of Hormuz this month and next after halting some shipments via Yanbu. That shift enabled exports from the OPEC kingpin to recover to over 4 million barrels per day so far in September, after slumping to 2.4 million bpd in August, the lowest since at least 2013, according to provisional data from analytics firm Kpler.
JPMorgan analysts said in a September 18 note that Middle East oil flows remain surprisingly strong despite the disruption to Saudi Arabia’s East-West pipeline, adding that total oil flows averaged 17.1 million bpd in the past 10 days, just 6.1 million bpd below the 2025 average. The analysts described the most notable pivot as coming from Saudi Arabia, noting satellite data indicated Saudi oil moving through the Strait of Hormuz averaged 2.9 million bpd over the past six days, up from just 700,000 bpd in August.
For now, the market’s attention is fixed on whether this week’s UN meetings can translate into a credible diplomatic track. If they do, further erosion of the risk premium is likely; if they do not, the supply disruptions and threats that have whipsawed crude could quickly return to the fore.
Source: ARY News