Key Takeaways
- Brent crude futures fell $1.09 to $98.16 a barrel.
- Saudi Arabia restarted its East-West Pipeline to the Red Sea.
- US President Donald Trump expressed hope for a diplomatic solution with Iran.
Oil prices declined on Wednesday, with Brent crude futures falling $1.09 to $98.16 a barrel and West Texas Intermediate futures dropping $1.50 to $89.01 per barrel. This decline marked six consecutive sessions of falling prices, reaching two-week lows.
Saudi Arabia resumed operations on its East-West Pipeline to the Red Sea, three sources briefed on the matter confirmed. This move is expected to increase Middle Eastern oil flows, potentially easing supply concerns.
Drone attacks on Saudi Arabia's pipeline, which the kingdom has blamed on Iraqi militia, forced the shutdown on September 11. The pipeline was used to reroute around 4 million barrels per day to Yanbu port, accounting for about 4% of global supply.
Iraq is also increasing its oil exports, its oil minister Basim Mohammed announced. The country is exporting more than 3 million barrels per day and expects to boost exports via Turkey to more than 600,000 barrels per day.
US President Donald Trump expressed optimism for a diplomatic solution with Iran, stating that his envoys Steve Witkoff and Jared Kushner had held productive talks with mediators. Trump said, 'I think there’s a lot of momentum for them to make a deal.'
Despite the continued tough rhetoric, including threats of 'annihilation,' the market is choosing to price in the possibility of talks, according to Tim Waterer, chief analyst at KCM Trade.
Industry data showed US crude inventories rose by 1.8 million barrels in the week to September 18, contrary to expectations of a decline. Official weekly inventory figures from the US Energy Information Administration are due at 10:30 a.m. ET (1430 GMT).
Analysts are cautiously optimistic about the global oil supply picture, with the restart of the East-West Pipeline and increased exports from Iraq and Saudi Arabia contributing to the downward pressure on oil prices.
I think there’s a lot of momentum for them to make a deal.
Donald Trump, US President
The market is currently feeling more constructive about the global oil supply picture than it was a few weeks ago.
Tim Waterer, Chief Analyst at KCM Trade
