Oil prices dropped for a fourth straight session on Monday as rising Saudi exports through the Strait of Hormuz and hopes for U.S.-Iran diplomacy at the United Nations eased supply fears. Brent briefly slipped under $100 a barrel even as fighting between Saudi Arabia and Iran-backed Houthis reportedly intensified in Yemen.
Brent crude futures expiring in November fell 3.7% to $100.07 a barrel, briefly dipping below the $100 mark before recovering slightly. WTI futures for the same month dropped 4.3% to $91.98 a barrel.
Hormuz traffic eases supply fears
U.S. Central Command reported that more than 1 billion barrels of crude oil moved through the Strait of Hormuz over the past couple of months, with volumes in the past two weeks higher than at any point in the past six months. Admiral Brad Cooper, the CENTCOM commander, said "Clearly, momentum is building."
Saudi Arabia has also been rerouting output after the shutdown of its East-West Pipeline, ramping up east coast exports and allowing ship-to-ship transfers off Oman. Data from Kpler showed Saudi oil exports bounced back to a little over 4 million barrels per day so far in September, up from 2.4 million bpd in August. Satellite imagery separately showed the highest number of ships at the kingdom's main Persian Gulf port since June, according to Bloomberg.
Saudi-Houthi conflict widens even as diplomacy builds
Even so, traders remained on edge about the widening conflict between Saudi Arabia and Iran-backed Houthis in Yemen, where fighting reportedly intensified over the weekend as the Houthis pushed to gain leverage over the Bab el-Mandeb Strait. The Houthis said they launched missiles and drones at Riyadh on Saturday and targeted oil facilities, according to the New York Times.
Saudi Crown Prince Mohammed bin Salman called Trump on Thursday to ask for help stopping the Houthi advance; Trump told the Pentagon to prepare airstrikes against the Houthis before reversing that position on Sunday, the New York Times reported.
Diesel pressure fuels export-ban calls
Oil also fell on hopes for diplomatic progress between Washington and Tehran at this week's UN General Assembly, where Iran's delegation, including its foreign minister and president, is expected to attend. At home, U.S. gasoline prices rose 18.5 cents over the past week to $4.44 a gallon, while diesel jumped 30.7 cents to $6.49 a gallon, according to GasBuddy data; diesel first topped $6 a gallon earlier this month. Republican lawmakers from Iowa, including Senator Chuck Grassley, called for a ban on diesel exports to ease costs for farmers and truckers.
Sources: Investing.com, Rigzone
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