Oil falls below $100 after Trump reports talks with Iran

Oil prices plummeted below $100 per barrel on Wednesday after US President Donald Trump reported that American and Iranian representatives had held discussions at the United Nations. Brent crude, the global standard, traded at $98.41 per barrel in Europe, while the US benchmark West Texas Intermediate was $95.21 per barrel for subsequent deliveries. Brent prices had consistently surged above $100 since the conflict in the Middle East commenced in February.

The brief meeting was described by Trump as "very good" and "very productive" during a conversation with Ukrainian President Volodymyr Zelensky. He added that another gathering was scheduled soon. Trump disclosed the decision-making dilemma he faced during his remarks to the UN—whether to negotiate an agreement with Iran or "annihilate the Islamic Republic and do it quickly."

The United States and Iran remain entrenched in a stalemate. Iran has maintained the Strait of Hormuz closed, whereas the US has upheld a blockade of Iranian ports. Additionally, conflicts involving Saudi-backed government forces and Iran-backed Houthis in Yemen have further impeded energy exports through the Red Sea. The US and Iran's tense standoff has impacted market dynamics, with oil prices falling from pure escalation pricing toward a genuine diplomatic process, as per Stephen Innes of Quintex Intel.

Prices also dipped following a report that Saudi Arabia had resumed operations along its East-West Pipeline. The route enables Saudi crude to reach the Red Sea without traversing the Strait of Hormuz. Saudi Arabia reported earlier this month that drones from Iraq had compelled it to suspend the pipeline. The kingdom anticipates resuming exports later in the week, as per Bloomberg's report citing a source.

Saudi Aramco has reportedly informed Asian refiners that they may soon be able to retrieve crude from the Red Sea port of Yanbu. European refiners, however, have reportedly been informed they will not receive Saudi crude under their October supply arrangements. Global stocks gained ground ahead of Trump's meeting with Chinese President Xi Jinping.

European stock indices opened higher, with the Euro Stoxx 50 and Germany's DAX increasing by 0.3%, while the FTSE 100 futures climbed 0.2%. Asian shares broadly rose, with South Korea's Kospi up 1.2%, Samsung and SK Hynix both surging over 2%, and Taiwan's Taiex gaining 0.9%. The MSCI Asia-Pacific index outside Japan also experienced a 0.5% increase, marking its sixth consecutive day of growth. However, Japan's stock market was on a holiday, though Nikkei futures were trading higher.

On Wall Street, the Nasdaq gained 0.5% to set a record close on Tuesday, while the S&P 500 remained unchanged, and the Dow dropped 0.4%. In currency markets, the euro traded near its two-month low at $1.1429 as investors pondered the prospect of another US interest rate increase. The dollar also showed a slight rise against the yen to 157.60 yen. Gold was priced at $4,379 per ounce, and US Treasury futures edged up as oil prices softened, keeping the yield on the 10-year government bond below 5%.

Investors also awaited a meeting scheduled for Thursday between Trump and Chinese President Xi Jinping. Trade and competition over artificial intelligence were anticipated to be the primary topics of discussion. Analyst Kyle Rodda from Capital.com noted that the Middle East war could prove more consequential for markets, possibly influencing whether the US could persuade China to utilize its influence with Iran.