Brent crude slips below $99 as Saudi Arabia restores pipeline flows and hopes of US-Iran talks ease concerns over global oil supplies
Oil prices fell further on Wednesday as Saudi Arabia resumed crude flows through a key pipeline to the Red Sea and hopes of a diplomatic breakthrough between the US and Iran reduced fears of a prolonged supply disruption.
The Brent futures contract was trading at $98.77 a barrel, down 48 cents or 0.48 per cent, as of 8:25 am. Brent had already fallen below the $100 mark on Tuesday for the first time since September 8.
US West Texas Intermediate crude was last quoted around $90 a barrel after falling on Tuesday as expectations of higher Middle Eastern supplies increased.
The latest decline comes as traders assess whether more crude can reach global markets despite the continuing conflict involving Iran and disruptions around the Strait of Hormuz.
Saudi Arabia restarts key oil pipeline
Saudi Arabia restarted its East-West Pipeline on Tuesday after the route was shut following drone attacks earlier this month.
The pipeline connects oil-producing areas in eastern Saudi Arabia with the Red Sea port of Yanbu. It provides the kingdom with an alternative route to export crude without relying entirely on the Strait of Hormuz.
More from BusinessSaudi Arabia has been using the pipeline to reroute around 4 million barrels per day of crude, equivalent to roughly 4 per cent of global oil supply, according to Reuters.
The pipeline resumed at a reduced rate, however. Three pumping stations were damaged in the drone attacks, and sources told Reuters that restoring the system to full capacity could take several weeks.
The pipeline has a maximum capacity of about 7 million barrels per day. Saudi Aramco is also preparing to restart crude shipments from Yanbu, with at least one cargo expected to load for China.
US-Iran talks put pressure on crude
Oil prices are also reacting to signs that Washington and Tehran could explore a diplomatic solution.
US President Donald Trump said on Tuesday that his envoys Steve Witkoff and Jared Kushner had held productive talks with Iranian mediators aimed at ending the conflict.
Trump said there was “a lot of momentum” towards a possible deal, even as he continued to warn Iran of further military action.
The comments have given oil traders some hope that the disruption to energy supplies could eventually ease. Reuters reported that the prospect of talks at the United Nations in New York has become an important factor for markets.
The Strait of Hormuz remains central to the oil market outlook. The waterway is a major route for crude exports from the Gulf, and any sustained improvement in shipping conditions could allow more barrels to reach international buyers.
Iran has also indicated that it could reopen the Strait within days under certain conditions, adding to expectations that supply constraints could ease if diplomatic efforts make progress.
Iraq increases oil exports
Iraq is also adding to the supply outlook.
Iraqi Oil Minister Basim Mohammed said the country was exporting more than 3 million barrels per day and expected exports through Turkey to rise above 600,000 barrels per day.
Ship-tracking data from Vortexa and Kpler showed Iraqi crude exports at about 2.3 million bpd and 2.17 million bpd respectively in August. Both estimates were higher than July levels, although they remained below the country’s pre-war export levels.
More Iraqi crude reaching international markets could provide additional relief to buyers at a time when supplies from the Gulf remain vulnerable to disruptions.
US crude inventories rise
US oil inventories are another factor weighing on prices.
Industry data showed that US crude stocks increased by 1.8 million barrels in the week ended September 18. Analysts surveyed by Reuters had expected inventories to fall.
The official weekly inventory figures from the US Energy Information Administration were due later on Wednesday and could provide a clearer picture of demand and supply conditions in the world’s biggest oil consumer.
