Oil Prices Drop Amid Hopes of US-Iran Diplomatic Breakthrough
Oil prices slid to their lowest in over a week on Monday amid hopes of improved diplomacy in the US-Iran conflict. Brent crude futures and US West Texas Intermediate (WTI) crude touched their lowest since September 10, with Brent at $101.71 a barrel, down $2.16 or 2.08 percent from Friday's close.
Tim Waterer, chief market analyst at KCM Trade, attributed the decline to a 'degree of risk premium' being removed from oil prices due to hopes that diplomacy may de-escalate the conflict. However, he cautioned that whether these hopes prove warranted remains uncertain.
The WTI broke a key psychological support level at $100 a barrel, while some investors may have rolled over their positions in the October contract ahead of its expiry on Tuesday. Iran and the US exchanged new threats on Sunday, but President Donald Trump expressed openness to meeting Iranian President Masoud Pezeshkian at the UN General Assembly.
Despite ongoing attacks by Yemen's Houthis, Middle East oil flows remained surprisingly strong, with Saudi Arabia's exports recovering to over 4 million barrels per day in September after slumping to 2.4 million bpd in August. China has asked Iran to help rein in the Houthis following an appeal from Saudi Arabia.