LONDON – Oil prices held near their lowest in more than two weeks on Sept 23, kept in check by improving Gulf crude supplies and growing hopes for a diplomatic resolution to the US-Israeli war on Iran.
Brent crude futures rose 16 US cents, or 0.16 per cent, to US$99.41 a barrel by 0809 GMT (4.09pm, Singapore time) while West Texas Intermediate futures fell 50 US cents, or 0.55 per cent, to US$90.02.
The Brent benchmark hit its lowest since Sept 8 in the previous session at US$97.36. WTI touched its lowest since Sept 1 earlier on Sept 23.
While US President Donald Trump warned on Sept 22 that he could “annihilate” Iran, he also said his envoys had held productive talks with mediators of Iran to end the war.
Oil price volatility remains
“Trump is trying to give off strong vibes of good talks… so that’s possibly something driving down oil prices,” said WisdomTree commodity strategist Nitesh Shah. “But I’d caution that things could change quite abruptly back into positive price moves.”
Saudi Arabia resumed operations on its East-West Pipeline to the Red Sea on Sept 22, said three sources briefed on the matter.
Drone attacks, which Saudi Arabia has blamed on Iraqi militia, forced the kingdom to shut the pipeline on Sept 11, halting crude loadings at Yanbu port.
Since the Middle East conflict disrupted oil flows from Saudi Arabia and its Gulf neighbours through the Strait of Hormuz, Riyadh has been using the pipeline to reroute about 4 million barrels per day (bpd) to Yanbu, representing roughly 4 per cent of global supply.
Saudi Arabia on Sept 22 offered more barrels to Asian refiners for lifting from locations outside of the Strait of Hormuz.
Iraq, too, is increasing oil exports, its oil minister said on Sept 22. The country is exporting more than 3 million bpd, he said, and expects to boost exports via Turkey to more than 600,000 bpd.
Support for improved supply outlook
Meanwhile, supporting the improved supply outlook, a senior Iranian official told Reuters that the Strait of Hormuz could reopen within seven days if the United States eases military pressure and lifts its blockade on Iranian ports.
Adding to downward pressure on oil prices, industry data showed that US crude inventories rose by 1.8 million barrels in the week to Sept 18. Analysts polled by Reuters had expected a decline.
Official weekly inventory figures from the US Energy Information Administration are due at 10.30am ET (10.30pm, Singapore time).
“A bit more crude is finding its way into the market and the East-West pipeline returning is giving everyone some breathing space. But the products problem hasn’t gone away. Diesel is tight. Jet fuel is tight. And increasingly it’s the end user who is going to start feeling this,” said Matt Stanley, head of market engagement at Kpler.
Trump said on Sept 22 that he backed the idea of a diesel export ban as a way to lower prices that have hit record highs owing to a global supply shortage. But analysts and market watchers warn that such a measure would do little to ease high energy prices and could worsen supply and economic disruptions around the globe. REUTERS
