Oil falls as Gulf supply rises and hopes for US-Iran talks gained traction on Wednesday, pushing crude prices lower as Saudi Arabia restarted a critical pipeline and diplomacy at the United Nations offered a potential path to ending the nearly seven-month conflict.
Brent crude futures slipped 7 cents, or 0.07%, to $99.18 a barrel as of 0119 GMT, while West Texas Intermediate futures dropped 35 cents, or 0.39%, to $90.17 per barrel. The decline followed Brent’s close below $100 a barrel on Tuesday for the first time since September 8, as optimism over improved supply and a push to end the war drove benchmark prices down.
On Tuesday, Saudi Arabia restarted operations on its East-West Pipeline to the Red Sea, according to three sources briefed on the matter, with signs of an increase in Middle Eastern oil flows. Drone attacks, which Saudi Arabia has blamed on Iraqi militia, forced the kingdom to shut the pipeline on September 11, halting crude loadings at the Yanbu port. Since the US-Israeli war on Iran disrupted oil flows from Saudi Arabia and its Gulf neighbours through the Strait of Hormuz, Riyadh has been using the pipeline to reroute around 4 million barrels per day — around 4% of global supply — to Yanbu.
Iraq is also increasing oil exports, its oil minister, Basim Mohammed, said on Tuesday. The country is exporting more than 3 million bpd, he said, and expects to boost exports via Turkey to more than 600,000 bpd. Provisional data from shiptracking firms Vortexa and Kpler pegged Iraqi crude exports in August at 2.3 million and 2.17 million bpd, respectively, up from July’s level but below February’s pre-war level of 3.7 million and 3.362 million bpd.
US President Donald Trump warned on Tuesday that he could “annihilate” Iran, but also said his envoys Steve Witkoff and Jared Kushner had held productive talks with mediators of Iran to end the war. “I think there’s a lot of momentum for them to make a deal,” Trump said.
“The market is currently feeling more constructive about the global oil supply picture than it was a few weeks ago,” said Tim Waterer, chief analyst at KCM Trade. “The meeting of US and Iranian delegations in New York has given traders a glimmer of hope … Despite the continued tough rhetoric, including threats of ‘annihilation,’ the market is choosing to price in the possibility of talks.”
Adding to downward pressure on oil prices, industry data showed US crude inventories rose by 1.8 million barrels in the week to September 18, while analysts polled by Reuters had expected a decline. Official weekly inventory figures from the US Energy Information Administration are due at 10:30 a.m. ET (1430 GMT).
As oil falls as Gulf supply rises and diplomatic efforts advance, traders are weighing the dual impact of restored flows and the prospect of a negotiated end to the conflict. The market’s constructive mood reflects a shift from weeks ago, when supply disruptions and war rhetoric dominated sentiment.
Source: ARY News