Key Points
- Brent falls more than 2 per cent to its lowest level since September 10
- WTI slips below $100 following recovery in Saudi crude shipments
- UN diplomacy and possible US-Iran talks reduce some geopolitical risk premium
ISLAMABAD: Oil prices fell signficantly on Monday, with Brent crude dropping below $102 a barrel and US West Texas Intermediate (WTI) slipping below $100, following improving Saudi crude flows and hopes for renewed US-Iran diplomacy.
Brent crude futures fell $2.16, or 2.08 per cent, to $101.71 a barrel by 0213 GMT, reaching their lowest level since September 10. WTI fell $2.15, or 2.14 per cent, to $98.15 a barrel. Both benchmarks had also declined on Friday.
The decline came despite fresh attacks by Yemen’s Houthis on Saudi Arabia over the weekend, including attempted attacks on Riyadh and an Aramco facility in Yanbu, a key Red Sea oil export hub.
Market attention shifted towards signs that Saudi Arabia is restoring crude exports following damage to its East-West pipeline, which disrupted shipments through Red Sea terminals.
Provisional data from analytics firm Kpler showed Saudi exports had recovered to more than 4 million barrels per day in September, compared with 2.4 million bpd in August.
Saudi Arabia has also increased crude shipments through the Strait of Hormuz to compensate for disruption to its alternative export route.
Saudi oil supply improves
J.P. Morgan analysts said satellite data indicated Saudi crude oil moving through Hormuz averaged 2.9 million bpd over the previous six days, compared with about 700,000 bpd in August.
Diplomatic activity surrounding the Iran war is also drawing greater attention, with world leaders gathering in New York for the United Nations General Assembly.
US President Donald Trump has indicated he is open to meeting Iranian President Masoud Pezeshkian this week, raising expectations that a diplomatic channel could reopen.
READ ALSO: Oil Prices End Week Lower after Saudi Supply Fears Ease
The developments have reduced part of the geopolitical premium built into oil prices during the conflict.
Oil supply risks remain significant, however, because crude and other energy shipments through the Strait of Hormuz are still well below normal levels.
US Central Command said oil and gas movements through Hormuz had increased. However, shipping data indicated only 12 commodity vessels crossed the waterway over the weekend, compared with 35 the previous weekend, highlighting uncertainty over the pace of the recovery in traffic.
The market remains focused on the pace of Saudi export recovery, developments around Hormuz and whether diplomatic contacts between Washington and Tehran produce tangible reductions in the conflict’s impact on regional energy supplies.
