Oil Prices Surge on US-Iran Talk Hopes Amid Middle East Tensions
Oil prices surged on Tuesday as investors anticipated potential US-Iran talks at the UN General Assembly this week. The Brent crude futures November contract rose $1.72, or 1.7 percent, to $102.06 a barrel, while the WTI October contract climbed $1.62, or 1.7 percent, to $97.4 a barrel. Tim Waterer, chief market analyst at KCM Trade, said the move higher in oil prices had the appearance of a short-covering bounce rather than a fundamental shift.
Traders who were positioned for further downside took some risk off the table as diplomatic efforts between the US and Iran continued to unfold. Over the weekend, Tehran conveyed its conditions to mediators for re-engaging in negotiations, Al Jazeera reported, citing Iran's security chief, Mohsen Rezaei.
Middle East tensions remained elevated after Yemen's Iran-backed Houthis attacked Riyadh and a Saudi Aramco facility in Yanbu. China has privately urged Tehran to help curb attacks by the Houthis, three Iranian sources said. Saudi Aramco increased exports through the Strait of Hormuz after attacks on its East-West Pipeline forced it to halt some shipments through Yanbu.
Meanwhile, an armed group closed valve seven on Libya's Sharara crude pipeline to Zawiya port on Monday, resulting in a significant decline in production at the Sharara oilfield. Production at the field has fallen by around 200,000 barrels per day and is currently between 100,000 and 105,000 bpd.