Oil Prices Fall 2% as Middle East Crude Exports Recover

By Adedapo Adesanya

Oil prices dropped over 2 per cent on Tuesday ​as investors focused on signs of recovering crude exports from the Middle East, although prices ‌headed for monthly gains on lingering concern about supply disruptions during the US-Israeli war on Iran.

Brent crude futures crashed by $2.69 or 2.6 per cent to $102.59 a barrel, and the US West Texas Intermediate (WTI) crude lost $3.22 or 3.5 per cent to $89.38 per barrel.

Crude prices came under pressure following an increase in Saudi Arabia’s East-West Pipeline flows, which improved the outlook for Middle Eastern oil exports.

Saudi Arabia also resumed tanker loadings from its Red Sea port of Yanbu after restarting the pipeline, according to trade sources and shipping data.

The development has eased concerns over supply disruptions, while ongoing US-Iran negotiations, despite differences between both sides, have raised the prospect of a diplomatic resolution.

Market analysts noted that despite this, the Houthi risk remains a genuine threat to recovering Saudi flows.

Crude oil exports from ​Middle East producers have rebounded in September to 16.328 million barrels per day, the highest since the ​US-Israeli war on Iran started in late February, data from Kpler showed on Monday.

Increased oil flows through the Middle East could also reduce Iran’s leverage in the negotiations.

US President Donald Trump said his administration had offered Iran nothing to end the conflict, dismissing media reports that cited US officials as saying the country was prepared to ease sanctions and release frozen Iranian funds in exchange for concrete steps on Iran’s nuclear programme.

The White House has urged the European Union to draw down ​diesel emergency inventories in a ​bid to lower ⁠global prices.

The Trump administration said that several European Union member countries have not released as much oil and refined products from reserves as they promised.

Member states of the International Energy Agency could discuss further strategic stock releases if supply conditions deteriorate, according to the organization’s chief, Fatih Birol, with the agency closely monitoring diesel and product markets.

The American Petroleum Institute (API) estimated that crude oil inventories in the US rose by 1.019 million barrels in the week ending September 25.