Oil prices declined to their lowest levels in 11 days on Monday as investors assessed the possibility of diplomatic progress between the United States and Iran during this week’s United Nations General Assembly, alongside a partial recovery in Saudi Arabian crude exports.
Brent crude and US West Texas Intermediate (WTI) futures both touched their lowest levels since 10 September earlier in the session.
At 08:59 GMT, November Brent futures were down $2.12, or 2%, at $101.75 a barrel. The October WTI contract, due to expire on Tuesday, fell $1.96, or 2%, to $98.34 a barrel, while the November contract traded at $94.16.
Diplomatic Prospects Weighed Against Continued Threats
The United States and Iran exchanged further threats on Sunday, although US President Donald Trump indicated that he would be willing to meet Iranian President Masoud Pezeshkian, who is expected to attend the UN General Assembly in New York this week.
Tim Waterer, chief market analyst at KCM Trade, attributed part of the decline in oil prices to expectations of a possible diplomatic opening.
“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,” Waterer said.
Al Jazeera reported that Iran had communicated its conditions for resuming negotiations to mediators, citing comments made on Saturday by Iranian security official Mohsen Rezaei.
Nevertheless, regional tensions remained elevated.
Yemen’s Iran-backed Houthis said they had launched missile and drone attacks against “sensitive” locations in Riyadh on Saturday, as well as an Aramco facility in Yanbu, a major Saudi oil export centre on the Red Sea.
On Monday, a spokesperson for Iran’s Revolutionary Guards warned that the country would deploy new weapons and strike previously untargeted locations if the United States launched another offensive, according to the Fars news agency.
Three Iranian sources familiar with the matter also said China had asked Iran to help restrain the Houthis following an appeal from Saudi Arabia to Beijing after the attacks.
Saudi Oil Shipments Show Signs of Recovery
Disruptions to Saudi Aramco’s East-West pipeline have affected exports through Yanbu, prompting the state energy company to increase shipments through the Strait of Hormuz during September and October.
JPMorgan analysts highlighted the resilience of regional oil exports in a note dated 18 September.
“Middle East oil flows remain surprisingly strong despite the disruption to Saudi Arabia’s East-West pipeline,” the analysts said.
Satellite data cited by JPMorgan indicated that Saudi crude shipments through the Strait of Hormuz averaged 2.9 million barrels per day over the preceding six days, compared with approximately 700,000 barrels per day in August.
“The most notable pivot has come from Saudi Arabia,” the analysts added.
The recovery in shipments has provided some reassurance about near-term oil availability, although the continuing conflict, attacks on energy infrastructure and uncertainty surrounding diplomatic efforts remain significant factors for the market.
Brent Oil price
Crude Oil price
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