Crude oil prices fell again in global markets on Wednesday, as the resumption of Saudi Arabia’s oil flows through a key pipeline eased concerns over supply disruptions. Hopes of diplomatic progress between the United States and Iran also contributed to a more relaxed market outlook.
At around 7:30am Bangladesh time on 23 September, Brent crude was trading 7 cents, or 0.07 per cent, lower at $99.18 a barrel. US West Texas Intermediate (WTI) crude fell by 35 cents, or 0.39 per cent, to $90.17 a barrel.
The latest decline followed the restart of Saudi Arabia’s East-West pipeline, which extends towards the Red Sea and provides an important alternative route for transporting crude oil from the country’s eastern production areas to the port of Yanbu.
Saudi Arabia suspended the pipeline on 11 September after a drone attack by an armed group in Iraq. The disruption halted the movement of crude towards Yanbu and raised concerns about the availability of alternative export routes from the Gulf region.
The pipeline’s reopening has now strengthened expectations that additional supplies could reach international markets. It has the capacity to transport around 4 million barrels of crude oil a day towards Yanbu, equivalent to roughly 4 per cent of global oil supply.
The development is particularly significant because oil traders have been closely monitoring supply risks linked to the wider conflict in the Middle East. Disruptions to production facilities, pipelines or major transport routes can quickly affect expectations about global availability and put upward pressure on crude prices.
Alongside the Saudi supply development, diplomatic contacts between Washington and Tehran have also influenced market sentiment. Talks involving US and Iranian representatives in New York, under the wider United Nations diplomatic setting, have raised hopes that the conflict could eventually move towards a negotiated settlement.
However, tensions remain high. On Tuesday, 22 September, US President Donald Trump threatened to “destroy” Iran, while also saying that his envoys Steve Witkoff and Jared Kushner had held productive discussions with Iranian intermediaries about bringing the war to an end.
Trump said he believed sufficient progress had been made towards reaching an agreement. The contrasting messages have left traders weighing the possibility of further escalation against the prospect of diplomatic progress.
According to Reuters, Brent crude fell below $100 a barrel on Tuesday amid growing optimism about improving supply conditions and efforts to end the conflict, which has lasted for nearly seven months. It was the first time since 8 September that Brent had traded below the $100 threshold.
Tim Waterer, chief market analyst at KCM Trade, said the global oil supply outlook was more optimistic than it had been several weeks earlier. He said the meeting between US and Iranian representatives in New York had given traders some reason for optimism, even though strong rhetoric and threats continued.
The reopening of Saudi Arabia’s pipeline is being watched closely because Yanbu offers an important route for exporting crude without relying entirely on routes affected by regional tensions. The restoration of pipeline operations therefore provides an additional option for moving Saudi oil to international markets.
Iraq is also signalling stronger export activity. Oil Minister Basim Mohammed said on Tuesday that the country was exporting more than 3 million barrels of crude a day. Iraq has also expressed hopes of exporting more than 600,000 barrels a day through Turkey.
The combination of Saudi Arabia restoring an important oil transport route and Iraq increasing exports has strengthened expectations of additional supply. At the same time, any progress in US-Iran negotiations could reduce some of the geopolitical risk currently built into oil prices.
The market nevertheless remains vulnerable to sudden changes. Continued military tensions, disruption to energy infrastructure or a breakdown in diplomatic efforts could quickly alter supply expectations. For now, traders are balancing those risks against signs that more crude could become available, helping keep global oil prices below recent highs.
