Oil Prices Fall 2.5 Percent as Middle East Exports Show Signs of Recovery

Oil prices settled 2.5 percent lower on Tuesday as investors focused on signs of recovering crude exports from the Middle East. Despite the daily drop, prices headed for monthly gains due to lingering concern about supply disruptions during the US-Israeli war on Iran. Brent crude futures closed down $2.69, or 2.6 percent, at $102.59 a barrel, while US West Texas Intermediate crude settled down $3.22, or 3.5 percent, at $89.38. Brent was headed for a monthly gain of around 13 percent and WTI about 4 percent. Crude futures came under pressure on news that Saudi Arabia's East-West pipeline flows have moved up. Saudi Arabia resumed oil tanker loadings from its Red Sea port of Yanbu after restarting operations on the pipeline. Crude oil exports from Middle East producers rebounded in September to 16.328 million barrels per day, the highest since the US-Israeli war on Iran started in late February, according to data from Kpler. US President Donald Trump said he has offered Iran nothing to end the war, rejecting media reports that cited US officials saying he was willing to ease sanctions and release frozen funds. US and Iran negotiations are continuing, and Dennis Kissler, senior vice president of trading at BOK Financial, noted that as more oil flows through the Middle East, the less bargaining power Iran will have.

Context

Global oil markets react quickly to political tensions and supply changes in major producing regions like the Middle East. When key pipelines and ports resume normal operations, increased supply often helps bring down prices that were previously driven up by fears of shortages.