Oil Prices Fall For Sixth Straight Session As Saudi Pipeline Restart, US-Iran Talks Ease Supply Concerns

Oil prices continued to drop on Wednesday, as markets responded to indications of increasing crude supply from the Gulf region and optimistic prospects for US-Iran diplomatic progress. Brent crude futures slipped $1.09, or 1.1%, to $98.16 a barrel, while West Texas Intermediate (WTI) futures declined $1.50, or 1.67%, to $89.01 per barrel. Both benchmarks have fallen for six straight sessions, nearing two-week lows.

The decline in crude prices brought relief to Indian equities, with the Sensex and Nifty opening higher as oil prices slipped below the $100 mark. US-Iran talks played a significant role in shaping oil market sentiment. After US President Donald Trump reported that his representatives, Steve Witkoff and Jared Kushner, had productive discussions with Iranian mediators, aiming to end the conflict, investor sentiment improved. Trump expressed confidence, stating, "I think there's a lot of momentum for them to make a deal."

Despite Trump's cautious approach towards Iran, traders mainly focused on the potential for negotiations to succeed. The recovery of Gulf supply posed pressure on oil prices. Saudi Arabia reactivated its East-West Pipeline following a temporary shutdown caused by drone attacks earlier in the month. The pipeline enables Saudi Arabia to transport about 4 million barrels per day to the Red Sea, circumventing the Strait of Hormuz.

Furthermore, Saudi Arabia offered additional crude supplies to Asian refiners from areas outside the Strait of Hormuz.

Iraq also reported an increase in oil exports, with shipments surpassing 3 million barrels per day. The country anticipates further growth in exports through Turkey. However, bearish sentiment persisted due to a rise in US crude inventories by 1.8 million barrels in the week ending September 18, contrary to market expectations of a decrease, according to industry data.