Oil Prices Tumble as Improved Supply Prospects Ease Market Concerns

Oil prices plummeted to a two-week low on Tuesday as the outlook for Gulf oil supplies improved, easing market concerns. The Brent crude futures November contract fell US$2.01 or 2 per cent to US$98.33 a barrel at 1027 GMT.

The improvement in supply prospects was driven by Iran's signal that it could reopen the Strait of Hormuz within seven days if the US eases military pressure and lifts its blockade on Iranian ports, a senior Iranian official told Reuters.

Saudi Arabia has also restarted operations at its East-West Pipeline and is set to resume exports from the Red Sea port of Yanbu later on Tuesday. The pipeline was pumping at a low rate before the restart.

Ole Hansen, head of commodity strategy at Saxo Bank, said he does not see much further downside in oil prices until there is increased supply through the Strait of Hormuz, particularly refined products.