Oil falls on increased Gulf supply and hopes for US-Iran talks

Oil prices fell on Wednesday (Sep 23) as Saudi Arabia began restoring crude supply through a critical pipeline and traders held hopes for a diplomatic solution to the US-Iran conflict through talks at the UN in New York. Brent crude futures dropped 7 cents, or 0.07%, to US$99.18 a barrel, while West Texas Intermediate futures declined 35 cents, or 0.39%, to US$90.17 per barrel.

President Donald Trump warned of potentially annihilating Iran but also mentioned productive talks with Iranian mediators. The optimism around improved supply and the push to end the nearly seven-month conflict drove Brent below US$100 a barrel for the first time since Sep 8. Tim Waterer, chief analyst at KCM Trade, noted that the market is currently feeling more constructive about the global oil supply picture.

Saudi Arabia started operating its East-West Pipeline to the Red Sea, as reported by three sources. The pipeline, which Saudi Arabia had shut down on Sep 11 due to drone attacks, was restarted, allowing Saudi Arabia to reroute around 4 million barrels per day — about 4% of global supply — to Yanbu port. Iraq is also increasing oil exports, with its oil minister Basim Mohammed stating that the country is exporting more than 3 million barrels per day and expects to boost exports via Turkey to over 600,000 bpd. Lower-than-expected US crude inventories added to the downward pressure on oil prices.