Oil prices fell to their lowest level in more than a week as traders bet on diplomatic progress in the US-Iran war, even as fresh Houthi attacks on Saudi Arabia kept supply risks alive. WTI broke through the $100 support level while Saudi Arabia worked around disrupted pipeline shipments.
Brent crude for November delivery fell to $102.09 a barrel, down $1.78, or 1.71%, after settling 0.91% lower on Friday. West Texas Intermediate's October contract, which expires Tuesday, dropped $1.97, or 1.96%, to $98.33 a barrel, extending a 1.58% decline from the previous session. Both benchmarks touched their lowest levels since September 10 earlier Monday, and WTI broke through the $100 psychological support level.
Diplomacy hopes drive the risk premium lower
Traders are pricing in the chance of a breakthrough this week, as Iranian President Masoud Pezeshkian is expected to attend the United Nations General Assembly in New York, where President Donald Trump said he would be open to meeting him. Tim Waterer, chief market analyst at KCM Trade, said "it seems that a degree of risk premium is being removed from oil prices" on hopes of a diplomatic path to de-escalate the war. Iran conveyed its conditions to mediators for re-engaging in negotiations, Iran's security chief Mohsen Rezaei told Al Jazeera in an interview Saturday. Iran and the US also exchanged new threats on Sunday.
Houthi attacks keep supply risk alive
Even so, tensions in the Middle East stayed elevated after Yemen's Iran-backed Houthis said they attacked "sensitive" sites in Riyadh on Saturday with missiles and drones, along with an Aramco facility in the Red Sea city of Yanbu. The strikes prompted Saudi Arabia to issue air-raid alerts for the capital. A Revolutionary Guards spokesman, Hossein Mohebbi, said Monday that Iran would use new weapons and target previously unattacked locations if the US launches a new offensive, according to Iran's Fars news agency.
The attacks on Saudi Aramco's East-West pipeline have pushed the state energy firm to increase exports through the Strait of Hormuz this month and next after halting some shipments via Yanbu. Satellite data showed Saudi oil moving through the strait averaged 2.9 million bpd over the past six days, up from just 700,000 bpd in August, JPMorgan analysts said in a September 18 note.
Saudi supply finds workarounds
Saudi Arabia has also been offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman's Sohar port, easing fears of an immediate shortage. China has separately asked Iran to help rein in the Houthis after Saudi Arabia appealed to Beijing, according to three Iranian sources familiar with the matter.
Total Middle East oil flows averaged 17.1 million bpd over the past ten days, just 6.1 million bpd below the 2025 average, JPMorgan said — evidence that regional supply has held up despite the disruption to Saudi Arabia's pipeline.
Sources: Commodities & Futures News, Commodities & Futures News
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