Crude Eases to $102 as Saudi Export Rerouting Eases Fear

Key Moments:

Prices Hit 11-Day Lows

Oil benchmarks declined to their weakest levels in 11 days on Monday as investors weighed diplomatic signals surrounding the US-Iran war and monitored Saudi Arabia’s export patterns.

Brent crude futures and US West Texas Intermediate (WTI) crude both touched their lowest intraday levels since September 10 earlier in the session. At 0859 GMT, the November Brent contract traded at $101.75 per barrel, down $2.12, or 2%.

The October WTI contract, which is set to expire on Tuesday, fell $1.96, or 2%, to $98.34 per barrel. The November WTI contract was quoted at $94.16.

Diplomacy Prospects Temper Risk Premium

The move lower in crude prices coincided with investor expectations that this week’s United Nations General Assembly in New York could provide an opening for diplomatic efforts related to the US-Iran war.

On Sunday, Iran and the United States exchanged new threats. At the same time, President Donald Trump signaled he would consider a meeting with Iranian President Masoud Pezeshkian, who is expected to attend the UN gathering.

“It seems that a degree of risk premium is being removed from oil prices on hopes that a diplomatic path to de-escalate the US-Iran war may arrive this week,” said Tim Waterer, chief market analyst at KCM Trade.

Al Jazeera cited Iran’s security chief, Mohsen Rezaei, as saying in an interview on Saturday that Iran had presented its conditions to mediators for returning to negotiations.

Regional Tensions Remain Elevated

Despite the shift in risk sentiment in oil markets, tensions in the Middle East stayed high. Yemen’s Iran-backed Houthi group said it had carried out attacks on Saturday using missiles and drones against “sensitive” sites in the Saudi capital Riyadh, as well as against an Aramco facility in the Red Sea city of Yanbu, an important hub for oil exports.

On Monday, a spokesman for Iran’s Revolutionary Guards warned that Iran would deploy new weapons and strike targets it has not previously hit if the United States launched a new offensive, according to the Fars news agency.

China has asked Iran to assist in curbing the actions of the Houthis after Saudi Arabia appealed to Beijing following the attacks, according to three Iranian sources familiar with the situation.

Saudi Export Flows Adjust After Pipeline Disruption

The Houthi strikes on Saudi Aramco’s East-West pipeline have led the state energy company to redirect and increase crude exports through the Strait of Hormuz this month and next, following a halt of some shipments via Yanbu.

JPMorgan analysts noted in a September 18 report that “Middle East oil flows remain surprisingly strong despite the disruption to Saudi Arabia’s East-West pipeline.”

The analysts highlighted a shift in Saudi crude logistics, stating that “The most notable pivot has come from Saudi Arabia,” as satellite data showed Saudi oil shipments through the Strait of Hormuz averaging 2.9 million barrels per day over the past six days, compared with 700,000 barrels per day in August.

Key Price and Flow Metrics