Oil dips as recovering Gulf exports ease supply fears, US-Iran diplomacy in focus

Oil prices slipped 1% on Thursday, as improving crude shipments from the Gulf and an unexpected uptick in US inventories quelled supply worries. Simultaneously, traders factored in the prospects of renewed US-Iran diplomatic talks aimed at resolving their ongoing Middle East conflict. Brent crude futures dipped 1.1% to $96.92 a barrel, while US West Texas Intermediate (WTI) crude slipped 1.4% to $89.18 a barrel. Both benchmarks rebounded by roughly $1 a barrel on Wednesday.

Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm, noted that "Oil's near-term outlook remains bearish, as increasing Gulf shipments, resumed Saudi exports via Yanbu, and a build-up in US inventories mitigate supply concerns." Saudi Arabia had reinitiated oil tanker loadings from Yanbu, according to a Reuters report on Tuesday, following the restart of its East-West Pipeline operations.

In contrast, US crude inventories expanded by 922,000 barrels to 427.3 million barrels in the week concluding September 25, according to the Energy Information Administration, surpassing expectations in a Reuters poll for a 264,000-barrel decline.

"Renewed US-Iran diplomatic engagement might further diminish the geopolitical risk premium, though a resolution remains doubtful," Sachdeva commented. Iran indicated on Wednesday that it had received a response from the US concerning its recent proposal to revive the faltering ceasefire in the Gulf. However, US President Donald Trump dismissed reports from Axios and CNN, which cited US officials as stating he was inclined to provide Iran sanctions relief and release frozen Iranian funds in exchange for "concrete" actions from Tehran on its nuclear program.

Goldman Sachs estimates that Gulf oil exports, including "dark exports" involving vessels with their location transponders disabled, have rebounded to 23.3 million barrels per day over the past week, matching their 2025 average, as September exports doubled.