Oil prices slide to over one-week low on hopes for Iran diplomacy
Oil fell to its lowest in over a week on hopes for diplomacy in the Iran war and a partial recovery in Saudi shipments despite Houthi attacks.
Oil prices dropped to their lowest level in more than a week on Monday, as expectations of a diplomatic opening in the US-Iran conflict and signs of recovering Saudi exports eased supply concerns.
Brent crude was at $101.71 a barrel by 0213 GMT, down $2.16, or 2.08%, after settling 0.91% lower on Friday. US West Texas Intermediate fell $2.15, or 2.14%, to $98.15 a barrel, following a 1.58% decline in the previous session. Both benchmarks touched their lowest since September 10 earlier in the day.
"It seems that 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," said Tim Waterer, chief market analyst at KCM Trade. "Whether that hope proves to be warranted or not is another question. Time will tell."
The WTI contract broke below the psychological $100 mark, while some investors may have rolled positions from the October contract to November a day ahead of expiry, according to a Singapore-based broker.
Iran and the US exchanged fresh threats on Sunday amid the standoff, but President Donald Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected in New York this week for the United Nations General Assembly. Iran has conveyed conditions to mediators for re-engaging in negotiations to end the war, Al Jazeera cited Iran's security chief, Mohsen Rezaei, as saying in an interview on Saturday.
Tensions remained high as Yemen's Iran-backed Houthis said they attacked "sensitive" sites in Riyadh with missiles and drones on Saturday, 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 from Saudi Arabia following the attacks, according to three Iranian sources familiar with the matter.
The strikes on Saudi Aramco's East-West pipeline have prompted the state energy firm to increase exports through the Strait of Hormuz this month and next after halting some shipments via Yanbu. That helped exports from the OPEC kingpin recover to over 4 million barrels per day (bpd) 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.
"Middle East oil flows remain surprisingly strong despite the disruption to Saudi Arabia's East-West pipeline," JPMorgan analysts said in a September 18 note, 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 most notable pivot has come from Saudi Arabia," the analysts said, as 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.