Oil Prices Decline as Saudi Arabia Reopens Major Pipeline; Traders Optimistic About US-Iran Negotiations
Oil prices fell below $100 per barrel on Wednesday as Saudi Arabia resumed crude supplies through a key pipeline to the Red Sea. This decline was also influenced by growing optimism for a diplomatic resolution to the ongoing US-Iran conflict. As of 7:30 am IST, WTI crude was priced at $90.10 per barrel, down 42 cents, while Brent crude was at $99.09, down 16 cents.
The drop in prices followed Brent’s closing below the $100 mark on Tuesday, the first time since September 8. Expectations of improved oil supplies and efforts to negotiate an end to the nearly seven-month conflict have contributed to the downward pressure on benchmark crude prices.
Saudi Arabia Restarts Pipeline Operations
Saudi Arabia has restarted operations on its East-West Pipeline to the Red Sea, according to sources familiar with the situation. This pipeline had been shut down since September 11 due to drone attacks that halted crude loadings at the Yanbu port. The resumption of operations is expected to increase Middle Eastern oil flows.
The East-West Pipeline allows Saudi Arabia to reroute approximately 4 million barrels of crude per day to Yanbu, which represents around 4% of global oil supply. This move comes as the US-Israeli conflict with Iran has disrupted oil flows from Saudi Arabia and other Gulf producers through the Strait of Hormuz.
Iraq’s Oil Exports on the Rise
Iraq is also ramping up its oil exports. Oil Minister Basim Mohammed announced that the country is currently exporting over 3 million barrels per day, with expectations to increase exports through Turkey to more than 600,000 barrels per day.
Provisional data from ship-tracking firms Vortexa and Kpler indicated that Iraq’s crude exports in August were 2.3 million barrels per day and 2.17 million barrels per day, respectively. While these figures show an increase from July, they remain below pre-war levels of approximately 3.7 million barrels per day in February.
US Crude Inventories Increase
Adding further pressure on oil prices, recent industry data revealed that US crude inventories rose by 1.8 million barrels in the week ending September 18. Analysts had anticipated a decline in inventories, highlighting ongoing volatility in oil markets as global supply chains continue to face disruptions amid the prolonged conflict.
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