Key Points
- Brent falls to $99.25 a barrel; WTI below $90
- Saudi Arabia restarts East-West pipeline at reduced rate
- Trump calls talks with Iran “very productive”
ISLAMABAD: Oil extended its decline on Wednesday, continuing a slide from about a week ago, following reports of improved Middle Eastern supplies, including Saudi pipeline restoration and fresh hopes for US-Iran diplomacy.
Brent crude fell 1.1 per cent to $99.25 a barrel, while US West Texas Intermediate crude dropped 1 per cent to $89.66. WTI has fallen about 10 per cent over the past five days, according to Bloomberg market data.
Oil pipeline resumes operations
The latest pressure on prices came after Saudi Arabia restarted its East-West pipeline, which carries crude from the kingdom’s eastern oil fields to the Red Sea port of Yanbu, allowing exports to bypass the Strait of Hormuz.
The pipeline was shut after a drone attack on September 11 disrupted crude loadings at Yanbu. Saudi Arabia has now resumed pumping, although at a reduced rate. According to media sources, the pipeline’s return to its full capacity could take six to eight weeks because three pumping stations were damaged in the attack.
The pipeline can carry up to 7 million barrels per day, while Saudi Arabia had been using it to reroute about 4 million barrels per day towards Yanbu. Its restart has raised expectations of additional crude reaching international markets, helping push Brent down by more than $2 on Tuesday towards its lowest level since September 8.
The improvement in Saudi flows has added to other signs of easing supply pressure. Iran has indicated that the Strait of Hormuz could potentially reopen, while Saudi Arabia has also increased crude loadings from its Ras Tanura port, according to market reports.
Trump’s comments on talks with Iran added another layer of pressure on prices on Wednesday.
READ ALSO: Oil Prices End Week Lower after Saudi Supply Fears Ease
The US president said American and Iranian representatives had held “very productive” talks at the United Nations and indicated that contacts would continue. The comments strengthened expectations in oil markets that diplomacy could eventually reduce the disruption to regional energy flows.
The combination of improving Saudi export routes and hopes for progress between Washington and Tehran has shifted market attention away from the immediate supply risks that pushed crude sharply higher earlier in the conflict.
For now, however, the physical supply picture remains uncertain. The Saudi pipeline is not yet back at full capacity, while the Strait of Hormuz remains a major risk for global oil flows. Any setback in diplomacy or renewed attacks on energy infrastructure could therefore put fresh pressure on prices.
Recent oil trajectory
Oil prices have shifted into a declining trend after rising sharply on concerns over disruptions to Middle Eastern supplies.
Brent crude climbed above $110 a barrel earlier in the conflict, while West Texas Intermediate also moved above $100 as attacks on energy infrastructure and disruption around the Strait of Hormuz heightened fears of a prolonged supply shortage.
Prices then began easing as markets assessed signs that some disrupted flows could be restored. Expectations that Saudi Arabia would restart its East-West pipeline became an important factor, allowing crude to move towards the Red Sea without relying on the Strait of Hormuz.
Reports that the pipeline has resumed operations have reinforced those expectations, although flows remain below full capacity.
Oil has also come under pressure from hopes that diplomatic contacts between the United States and Iran could eventually reduce tensions and improve regional energy flows.
The combination of recovering Saudi export capacity, prospects for progress in US-Iran diplomacy and fading fears of an immediate supply shortfall has kept crude prices under pressure in recent sessions, extending the market’s downward trajectory.
