Oil Prices Decline as Supply Outlook Improves, US-Iran Talks Lift Hopes
Oil prices moved lower on Wednesday as investors assessed signs of improving crude supplies from the Gulf region and renewed hopes for diplomatic discussions between the United States and Iran.
Brent crude futures dropped $1.09, or 1.1%, to $98.16 a barrel, while West Texas Intermediate (WTI) futures fell $1.50, or 1.67%, to $89.01 a barrel.
Both benchmarks have now declined for six consecutive sessions, reaching their lowest levels in about two weeks.
Market sentiment was influenced by Saudi Arabia’s restart of operations on its East-West Pipeline, which provides an alternative route for transporting crude to the Red Sea. The development has raised expectations of stronger oil flows from the region.
Saudi Arabia had suspended the pipeline’s operations on September 11 following drone attacks that the kingdom attributed to an Iraqi militia. The shutdown affected crude shipments through Yanbu.
The pipeline has become increasingly important since disruptions to oil transportation through the Strait of Hormuz. Saudi Arabia has been using the route to move around 4 million barrels per day, equivalent to roughly 4% of global oil supply, toward Yanbu.
Saudi Arabia has also offered additional crude volumes to Asian refiners from locations outside the Strait of Hormuz, according to market reports.
Iraq is also increasing its oil exports. Oil Minister Basim Mohammed said the country is currently exporting more than 3 million barrels per day and expects shipments through Turkey to rise above 600,000 barrels per day.
Data from ship-tracking companies Vortexa and Kpler showed Iraqi crude exports in August at approximately 2.3 million and 2.17 million barrels per day, respectively. While exports increased from July, they remained below levels recorded before the conflict.
Oil prices also faced pressure from higher US crude inventories. Industry data indicated that US crude stocks increased by 1.8 million barrels in the week ending September 18, while analysts surveyed by Reuters had expected inventories to decline.
Official inventory figures from the US Energy Information Administration are expected later Wednesday and could provide further direction for oil markets.
Meanwhile, comments from US President Donald Trump about potential discussions with Iranian representatives have added to expectations that diplomatic efforts could eventually ease pressure on oil supplies.
KCM Trade chief analyst Tim Waterer said the market appeared more positive about the global supply outlook than it had been several weeks earlier, while the reported US-Iran discussions had given traders some optimism about a possible agreement.
