Oil Prices Tumble on Diplomatic Hopes Amid Escalating Conflict

Crude oil prices declined to their lowest level in a week as traders pinned their hopes on a diplomatic resolution of the war in the Middle East.

The decline comes despite the absence of any evidence that there is willingness for negotiations on either side. Brent crude was trading at $102.05 per barrel, while West Texas Intermediate was changing hands for $98.50 per barrel.

U.S. President threatened Iran with economic collapse and regime failure unless it agreed to make a deal, prompting Iran to respond with its own threat of a harsh response to any U.S. attack.

The Yemeni Houthis have escalated their offensive against Saudi Arabia, hitting several targets in the country over the weekend, including Riyadh. However, hope for a diplomatic resolution has taken hold, despite little basis for it.

Saudi Arabia managed to redirect its oil flows, achieving a daily export rate of 2.9 million barrels via the Strait of Hormuz over the past week, compared to 700,000 barrels daily in August, according to JP Morgan.