Oil prices dip to 11-day low as investors eye US-Iran diplomatic talks and Saudi export recovery
Brent and WTI crude fell about 2% on Monday, reaching their lowest levels since September 10, as markets reacted to potential US-Iran diplomatic moves and signs of increased Saudi oil flows through the Strait of Hormuz.
Oil prices fell to their lowest in 11 days on Monday, with Brent crude for November trading at $101.75 a barrel and U.S. West Texas Intermediate for October at $98.34, each down roughly 2%. The decline came as traders anticipated possible diplomatic steps to de-escalate tensions between the United States and Iran following a United Nations meeting this week.
Tim Waterer, chief market analyst at KCM Trade, said the market appears to be shedding a risk premium as hopes rise for a diplomatic path to reduce the US-Iran conflict.
The backdrop includes recent exchanges of threats between Tehran and Washington, and a statement from Iran’s security chief that the country has presented conditions to mediators for renewed negotiations.
Separately, Yemen’s Iran-backed Houthi group claimed missile and drone attacks on Saudi facilities in Riyadh and the Aramco complex in Yanbu. In response, Saudi Aramco has increased oil exports through the Strait of Hormuz, with satellite data showing an average flow of 2.9 million barrels per day over the past six days, up from about 700,000 barrels per day in August. JPMorgan analysts noted that Middle East oil flows remain robust despite disruptions to Saudi’s East-West pipeline.
China has been asked by Saudi Arabia to encourage Iran to restrain the Houthis, according to Iranian sources.