Oil Hits One-Week Low on Iran Diplomacy Hopes
Brent falls below $102 and WTI slips under $100 as markets weigh possible US-Iran diplomacy and recovering Saudi oil exports.
Global oil prices fell to their lowest levels in more than a week on Monday, as investors assessed the possibility of diplomatic efforts to de-escalate the Iran war alongside a partial recovery in Saudi Arabian crude shipments.
Brent crude futures touched their lowest level since September 10 and were trading at $101.71 a barrel, down $2.16 or 2.08%, in early trading. US West Texas Intermediate crude also declined sharply, falling 2.14% to $98.15 a barrel.
OIL MARKET SNAPSHOT
Brent: $101.71/barrel, down 2.08%
WTI: $98.15/barrel, down 2.14%
Both benchmarks touched their lowest levels since September 10.
The decline came as markets considered whether diplomatic efforts could provide a route towards easing the US-Iran conflict. US President Donald Trump has said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to attend the United Nations General Assembly in New York this week.
Iran has also conveyed conditions to mediators for potentially re-engaging in negotiations aimed at ending the conflict, according to the Reuters report citing an Al Jazeera interview with Iran's security chief Mohsen Rezaei.
However, Middle East tensions remain elevated. Yemen's Iran-backed Houthis said they had attacked sensitive sites in Riyadh using missiles and drones, as well as an Aramco facility in Yanbu, an important Saudi oil export hub.
Saudi Arabia has meanwhile adjusted its crude export routes following attacks on Saudi Aramco's East-West pipeline, increasing shipments through the Strait of Hormuz after disruptions affected some exports through Yanbu.
KEY SUPPLY SHIFT
Saudi oil exports have recovered to more than 4 million barrels per day in September, after falling to about 2.4 million bpd in August, according to provisional Kpler data cited by Reuters.
Satellite data cited by JPMorgan also indicated that Saudi crude moving through the Strait of Hormuz averaged about 2.9 million barrels per day over the previous six days, compared with around 700,000 bpd in August.
The combination of recovering Saudi supply and hopes for diplomatic progress has reduced some of the geopolitical risk premium embedded in crude prices. However, continued attacks and uncertainty surrounding the Iran conflict mean volatility in global energy markets remains elevated.