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

On Wednesday, oil prices experienced a slight decline as Saudi Arabia resumed crude supply through a vital pipeline and traders remained optimistic about potential US-Iran negotiations. Brent crude futures dropped 7 cents, or 0.07%, to $99.18 a barrel, while West Texas Intermediate futures declined 35 cents, or 0.39%, to $90.17 per barrel.

President Donald Trump had previously threatened to annihilate Iran, but also mentioned productive discussions between his envoys Steve Witkoff and Jared Kushner and Iranian mediators aimed at ending the nearly seven-month conflict. Trump expressed optimism about the possibility of a deal, stating, "I think there’s a lot of momentum for them to make a deal."

The market's shift towards a more constructive outlook on global oil supply was attributed to the improved supply and the ongoing talks between the US and Iran. Tim Waterer, chief analyst at KCM Trade, noted, "The meeting of US and Iranian delegations in New York has given traders a glimmer of hope despite the continued tough rhetoric."

Saudi Arabia restarted operations on its East-West Pipeline to the Red Sea on September 23, according to three sources briefed on the matter. The pipeline, which had been shut since September 11 due to drone attacks attributed to Iraqi militia, was carrying around 4 million barrels per day, or approximately 4% of global supply, rerouted from Saudi Arabia's Yanbu port.

Iraq, too, has been increasing its oil exports. Its oil minister, Basim Mohammed, stated that the country is now exporting more than 3 million barrels per day and expects to boost exports via Turkey to over 600,000 barrels per day. Industry data revealed that US crude inventories rose by 1.8 million barrels in the week to September 18, surpassing analysts' expectations of a decline. Official weekly inventory figures from the US Energy Information Administration are scheduled to be released at 10:30 a.m. ET (1430 GMT).