Oil Prices Plunge as Saudi Pipeline Restarts and Hormuz Traffic Resumes
Crude oil prices experienced a drop on Tuesday due to an increase in Saudi crude flows and the restart of the East-West pipeline. The Brent crude futures settled at $99.25 per barrel, a decrease of $1.09 or 1.09% from the previous day. US West Texas Intermediate (WTI) crude futures traded at $94.99 per barrel, down $1.19 or 1.24%. US President Donald Trump's statement that a peace deal with Iran would only come after the US midterm elections in early November dashed hopes for an immediate agreement.
However, Saudi Arabia has restarted its East-West oil pipeline, which had become the kingdom's main escape route around the Strait of Hormuz. Although it is currently operating at a low rate, Aramco plans to return flows to roughly 4 million barrels per day in the coming weeks. One cargo was scheduled to load at the Red Sea port of Yanbu for China.
The average flow of Saudi oil through the strait over the last six days has been about 2.9 million barrels a day, up from around 700,000 barrels a day in August. A senior Iranian official stated that Iran can reopen the Strait of Hormuz within seven days if the US eases military pressure and lifts its blockade on Iranian ports.