Oil prices fell to their lowest level in over a week amid hopes for diplomacy regarding US-Iran tensions
On Monday, oil prices dropped to their lowest level in more than a week, driven by hopes that diplomacy might be given a chance to address Iran tensions during the UN meeting, alongside expectations of a partial recovery in shipments from Saudi Arabia despite ongoing attacks by Yemen's Houthis.
Brent crude futures and WTI crude hit their lowest levels since September 10 in early Monday trading.
Brent crude, which closed Friday down 0.91%, fell $2.16 (or 2.08%) to $101.71 per barrel as of 02:13 GMT. Meanwhile, WTI crude dropped $2.15 (or 2.14%) to $98.15 per barrel, following a 1.58% decline in the previous session.
The risk premium embedded in oil prices narrowed slightly amid hopes that a diplomatic path to defuse US-Iran tensions could be found this week. Time will tell whether this optimism is justified.
While Iran and the US kept tensions high by exchanging new threats on Sunday, Trump expressed openness to meeting with Iranian President Masoud Pezeshkian, who is expected to be in New York this week for the United Nations General Assembly.
Tensions in the Middle East remained high as Iran conveyed its conditions to mediators for resuming negotiations aimed at ending the conflict with the US, while the Houthis announced on Saturday that they had attacked "sensitive" sites in Riyadh as well as an Aramco facility in the Red Sea city of Yanbu, a key oil export hub, using missiles and drones.
Following the attacks and a call from Saudi Arabia, China urged Iran to help rein in the Houthis.
Houthi attacks on Saudi Aramco's East-West pipeline prompted the state energy company to increase exports via the Strait of Hormuz this month and next, after halting some shipments through Yanbu.
According to data, this shift pushed exports from OPEC's leading producer above 4 million barrels per day (bpd) so far in September, following a drop to 2.4 million bpd in August, the lowest level seen since at least 2013.
However, despite the disruption to Saudi Arabia's East-West pipeline, Middle East oil flows remain surprisingly robust; total oil flows averaged 17.1 million bpd over the last 10 days, just 6.1 million bpd below the 2025 average.
Saudi oil shipments passing through the Strait of Hormuz averaged 2.9 million bpd over the past six days, up from 700,000 bpd in August.
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