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

Oil prices declined on Wednesday as Saudi Arabia resumed crude supply on a vital pipeline to the Red Sea and traders remained hopeful of a diplomatic resolution to the US-Iran conflict, according to wire reports. Brent crude futures dropped 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.

Despite President Donald Trump's warning that he could annihilate Iran, his envoys Steve Witkoff and Jared Kushner reportedly held constructive talks with Iranian mediators in New York to end the war. Trump expressed optimism about the possibility of a deal.

The market appeared more constructive regarding global oil supply on Wednesday, with benchmark Brent closing below $100 a barrel for the first time since September 8. Analyst Tim Waterer from KCM Trade stated that the meeting of US and Iranian delegations in New York had given traders a glimmer of hope.

On Tuesday, Saudi Arabia restarted operations on its East-West Pipeline to the Red Sea, as reported by three sources. This halt, which began on September 11, had reduced Saudi crude loadings at Yanbu port to around 4 million barrels per day, equivalent to about 4% of global supply. Iraq has also increased its 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 this to over 600,000 barrels per day via Turkey.

Lower-than-expected US crude inventories, which rose by 1.8 million barrels in the week to September 18, added to downward pressure on oil prices. The US Energy Information Administration is set to release official weekly inventory figures at 10:30 a.m. ET (1430 GMT).