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

Oil prices slipped on Wednesday as Saudi Arabia reopened a key pipeline to the Red Sea and traders remained hopeful for US-Iranian diplomatic talks. Brent crude futures tumbled 7 cents, or 0.07%, to $99.18 a barrel, while West Texas Intermediate futures fell 35 cents, or 0.39%, to $90.17 per barrel. US President Donald Trump warned on Tuesday that he could annihilate Iran, but his envoys Steve Witkoff and Jared Kushner reportedly held productive discussions with Iranian mediators to end the nearly seven-month conflict.

Optimism surrounding the pipeline's reopening and potential peace talks pushed Brent down to close below $100 a barrel for the first time since September 8. Despite ongoing harsh rhetoric, including threats of "annihilation," traders are pricing in the likelihood of talks. Saudi Arabia resumed operations on the East-West Pipeline to the Red Sea on September 12, following a three-day shutdown due to alleged drone attacks blamed on Iraqi militia.

The pipeline, which had halted crude loadings at Saudi Arabia's Yanbu port, is now transporting around 4 million barrels per day, or 4% of global supply, to Yanbu. Iraq is also boosting oil exports, with its oil minister Basim Mohammed stating that the country is exporting over 3 million barrels per day and aims to increase this to more than 600,000 bpd via Turkey.

Lower-than-expected US crude inventories and increased Iraqi exports contribute to the downward pressure on oil prices.