Oil Prices Plunge Amid Middle East Supply Recovery and US-Iran Diplomacy

International oil prices experienced a sharp intraday reversal on September 29. Initially, WTI crude (USOIL) and Brent crude (UKOIL) both rose over 1% in early trading before giving back all gains and turning lower.

The rapid drop in oil prices from high levels reflects renewed market expectations of Middle East supply recovery and progress in US-Iran negotiations. WTI crude was down about 2.8%, trading near $90.8, while Brent crude was down about 2.6%, trading near $96.1.

The initial support for oil prices came from the US-Iran situation, but the reversal was primarily linked to the resumption of diplomatic contact between the two countries. US and Iranian officials held separate talks with mediators on Monday, with subsequent discussions expected to center on a modified version of Iran's previously proposed 'seven-day plan'.