Crude Prices Slide Again on Fragile Supply Rebound and Uncertain Diplomatic Outcomes

Crude oil prices continued their downward trend for the sixth consecutive session. According to PL Capital, the supply-side picture has improved significantly. Saudi Arabia's Aramco has restarted its East-West pipeline, albeit at reduced capacity. Additionally, Red Sea crude exports from Yanbu have resumed, and crude shipments through the Strait of Hormuz averaged 2.9 million barrels per day between September 13 and 18, a sharp increase from around 700,000 barrels per day in August.

Rajodiya noted that while there has been an improvement in crude flows, it remains fragile. Only two commercial vessels transited the Strait on Monday, compared to around 125 vessels a day before the conflict, highlighting the gap between improving headlines and actual shipping activity.

The outlook for crude prices will now depend on whether Iran's seven-day reopening proposal leads to a broader diplomatic agreement. A successful deal could extend the recent decline in oil prices, while a breakdown in talks or a fresh incident around a key shipping chokepoint could quickly bring the risk premium back into crude.