Oil prices edged lower on Wednesday as Saudi Arabia began restoring crude flows through a key pipeline to the Red Sea. Brent crude futures fell 7 cents, or 0.07%, to $99.18 a barrel by 0119 GMT. West Texas Intermediate futures dropped 35 cents, or 0.39%, to $90.17 a barrel.
Investors also watched diplomatic efforts between the United States and Iran. US President Donald Trump warned Iran on Tuesday but also said his envoys had held productive talks with mediators.
“I think there’s a lot of momentum for them to make a deal,” Trump said.
Saudi Pipeline Restart Eases Supply Concerns
Saudi Arabia restarted operations on its East-West Pipeline on Tuesday, according to sources briefed on the matter. The pipeline can help move crude to the Red Sea port of Yanbu while avoiding the Strait of Hormuz.
Drone attacks forced Saudi Arabia to shut the pipeline on September 11. The disruption halted crude loadings at Yanbu.
The pipeline has become especially important since the US-Israeli war on Iran disrupted regional oil flows through Hormuz.
Saudi Arabia has used the route to redirect around 4 million barrels per day to Yanbu, equal to about 4% of global supply. However, the pipeline has restarted at a reduced rate, with full restoration expected to take several weeks.
US-Iran Talks Support Market Optimism
Oil markets also responded to signs of possible diplomatic progress between Washington and Tehran.
Trump said US and Iranian officials continued discussions during the UN General Assembly in New York. He also said he believed the two countries could eventually reach a settlement.
Iran has separately indicated that it could reopen the Strait of Hormuz within seven days if the US reduces military pressure and lifts its blockade of Iranian ports.
These developments have encouraged traders to consider the possibility of increased oil supplies.
Iraq Also Plans Higher Oil Exports
Iraq is also increasing its crude exports, adding to expectations of improved regional supply.
Iraqi Oil Minister Basim Mohammed said the country is exporting more than 3 million barrels per day. He also expects exports through Turkey to rise above 600,000 barrels per day.
Earlier shipping data showed Iraqi exports remained below pre-war levels. However, higher exports could provide additional supply to international markets.
US Crude Inventories Add Pressure
US crude inventories also contributed to downward pressure on prices.
Industry data showed US crude stocks increased by 1.8 million barrels during the week ending September 18. Analysts surveyed by Reuters had expected inventories to decline.
Official weekly inventory figures from the US Energy Information Administration are due later Wednesday.
For now, oil markets remain focused on two major factors: the pace of recovering Middle Eastern supply and whether US-Iran diplomatic efforts can reduce the conflict.
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