Gulf Supply Bump and Diplomatic Hopes Send Oil Prices Plummeting
Oil prices continued their downward trend on Wednesday as investors grew optimistic about improved Gulf supply and potential diplomatic progress in US-Iran talks. Brent crude futures fell $1.09, or 1.1%, to $98.16 a barrel, while West Texas Intermediate (WTI) futures dropped $1.50, or 1.67%, to $89.01 per barrel.
The decline marked the sixth consecutive session of losses for both contracts, pushing them to around two-week lows. The market's shift in sentiment came as Saudi Arabia restarted operations at its East-West Pipeline to the Red Sea, increasing Middle Eastern oil flows. This move followed drone attacks that forced the kingdom to shut the pipeline on September 11.
Iran has been a major concern for global oil markets, with US President Donald Trump warning of potential military action against the country. However, Trump also stated that his envoys had held productive talks with Iranian mediators in New York, sparking hopes for a diplomatic resolution to the conflict.
Analysts point out that despite continued tough rhetoric from both sides, the market is pricing in the possibility of talks. Industry data showed US crude inventories rose by 1.8 million barrels in the week to September 18, further contributing to downward pressure on oil prices.