US West Texas Intermediate crude fell more than 2% to around $98 per barrel, while Brent crude also declined as investors assessed diplomatic developments and oil supply flows.
Global crude oil prices fell sharply on Monday, Sept. 21, with US West Texas Intermediate (WTI) crude dropping more than 2% to around $98 per barrel as investors assessed prospects for diplomatic progress in the US-Iran conflict and improving Saudi oil shipments.
WTI crude fell $2.15, or 2.14%, to $98.15 a barrel, according to Reuters. Brent crude also declined, falling $2.16, or 2.08%, to $101.71 per barrel. Both benchmarks touched their lowest levels since Sept. 10.
The decline came as markets responded to hopes that diplomatic efforts could help reduce tensions surrounding the conflict involving the United States and Iran. Investors are closely watching this week’s United Nations General Assembly, where diplomatic contacts could provide an opportunity for discussions aimed at de-escalation.
Tim Waterer, chief market analyst at KCM Trade, said some of the risk premium in oil prices appeared to be declining on expectations of a possible diplomatic path toward easing tensions. He cautioned, however, that it remained uncertain whether those expectations would materialize.
The WTI October contract, which is due to expire Tuesday, also came under pressure as some traders shifted positions into the November contract. Reuters reported that the November WTI contract was trading at a lower level, highlighting the impact of the contract rollover on the market.
Oil prices have remained sensitive to developments in the Middle East because of potential risks to regional production and transportation. Despite recent attacks claimed by Yemen’s Houthi movement against targets in Saudi Arabia, oil flows from the region have remained stronger than some market participants had expected.
Saudi Arabia has increased exports through the Strait of Hormuz after disruptions affected some shipments through the country’s East-West pipeline and the Yanbu export route. Reuters reported that Saudi oil moving through the Strait averaged about 2.9 million barrels per day over six days, compared with around 700,000 barrels per day in August.
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