Oil prices fell to an 11-day low on Monday as a recovery in Saudi Arabian exports and the prospect of diplomatic engagement between the United States and Iran eased some concerns about Middle Eastern supplies.
Both Brent crude and US West Texas Intermediate (WTI) futures reached their lowest levels since 10 September earlier in the session.
At 08:59 GMT, November Brent futures traded at $101.75 a barrel, down $2.12, or 2%.
The October WTI contract, which expires on Tuesday, declined $1.96, or 2%, to $98.34 a barrel. The November WTI contract stood at $94.16.
UN Meeting Raises Possibility of Diplomatic Engagement
Investors were monitoring developments ahead of this week’s United Nations General Assembly in New York, where Iranian President Masoud Pezeshkian is expected to attend.
US President Donald Trump indicated that he would be open to meeting Pezeshkian, despite a fresh exchange of threats between Washington and Tehran on Sunday.
Tim Waterer, chief market analyst at KCM Trade, said expectations of diplomatic progress were influencing oil prices.
“It seems that a degree of risk premium is being removed from oil prices on hopes that a diplomatic path to de-escalate the US-Iran war may arrive this week,” Waterer said.
Separately, Al Jazeera reported that Iran had communicated its conditions for returning to negotiations through mediators, citing an interview with Iranian security official Mohsen Rezaei on Saturday.
The possibility of talks has not eliminated the risk of further military escalation.
On Monday, a spokesperson for Iran’s Revolutionary Guards warned that the country would use new weapons and strike previously untargeted locations in response to another US offensive, according to the Fars news agency.
Houthi Attacks Add to Regional Supply Risks
Tensions also remained elevated following reported attacks by Yemen’s Iran-backed Houthis against Saudi Arabia.
The Houthis said they had launched missiles and drones at “sensitive” sites in Riyadh on Saturday and targeted an Aramco facility in Yanbu, an important oil export centre on the Red Sea.
Three Iranian sources familiar with the situation said China had asked Tehran to help restrain the Houthis after Saudi Arabia appealed to Beijing following the attacks.
The disruption to Saudi Aramco’s East-West pipeline has affected shipments through Yanbu, leading the company to redirect more crude exports through the Strait of Hormuz during September and October.
The shift has helped maintain Saudi export volumes despite damage to the pipeline.
Satellite Data Points to Higher Saudi Export Volumes
JPMorgan analysts said in a note dated 18 September that Middle Eastern oil shipments had remained relatively strong despite the disruption to Saudi infrastructure.
“Middle East oil flows remain surprisingly strong despite the disruption to Saudi Arabia’s East-West pipeline,” the analysts said.
Satellite data cited by the bank showed that Saudi crude shipments through the Strait of Hormuz averaged 2.9 million barrels per day over the previous six days.
That compared with approximately 700,000 barrels per day in August, indicating a substantial increase in volumes using the route.
“The most notable pivot has come from Saudi Arabia,” JPMorgan’s analysts said.
The rise in Saudi exports and the prospect of diplomatic discussions have contributed to Monday’s decline in crude prices.
Nevertheless, uncertainty remains over the outcome of any potential US-Iran engagement, while continued attacks on energy infrastructure could affect the availability and transportation of Middle Eastern oil.
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