Oil prices fell on Wednesday following President Donald Trump's announcement of "very good" and "very productive" talks between US and Iranian representatives at the United Nations. Brent crude dipped to $98.91 per barrel and West Texas Intermediate to $89.93 per barrel, falling below the $100 mark that had been frequently breached since the Middle East conflict began in February. This dip was attributed by analysts like Stephen Innes of Quintex Intel to a shift from "pure escalation pricing" toward a diplomatic process.
Trump's comments came just hours after he delivered a bellicose address to the UN, threatening to "annihilate the Islamic Republic" if a deal wasn't reached quickly. However, a three-hour meeting with Iranian envoys, described as "very good," has led to hopes for further diplomatic engagement. Iran, through its foreign ministry spokesman Esmaeil Baghaei, offered to reopen the Strait of Hormuz within a week if the US halts its "acts of aggression," ends its naval blockade, and releases Iranian assets. The Strait of Hormuz, crucial for global oil and gas shipments, has seen traffic significantly reduced, averaging 6.98 million barrels a day in the seven days to September 20, well below its pre-war baseline of 18.3 million barrels.
The decline in oil prices was also influenced by the reported restart of operations at Saudi Arabia's East-West Pipeline. This crucial oil export route, which bypasses the Strait of Hormuz, had been shut down on September 13 due to drone attacks. Saudi Arabia is aiming to resume exports later this week from the Red Sea port of Yanbu. The resumption of these supplies contributed to selling pressure on global oil markets. Euro zone bond yields also fell for a second straight day, hitting a two-week low, as lower energy prices eased expectations of further interest-rate hikes to combat inflation.
