Brent drops below $100 as traders weigh return of Gulf supplies

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Brent drops below $100

Highlights

Brent and WTI fell to their lowest levels in two weeks.
Iran signaled that Hormuz could reopen within seven days.
Saudi Arabia is working to restore crude exports through Yanbu.

November Brent futures traded at $97.63 a barrel, down 2.70%, while November WTI futures stood at $89.37 a barrel, down 3.25%, according to the latest market data provided. The decline came as Iran signaled that the Strait of Hormuz could reopen within seven days and Saudi Arabia moved toward restoring exports from Yanbu, Reuters reported.

Gulf supply routes move back into focus

Iran has indicated that Hormuz could reopen if the United States eases military pressure and lifts its blockade on Iranian ports. An Iranian delegation attending the United Nations General Assembly in New York has authority to pursue renewed diplomacy with Washington, according to an Iranian official cited in the report.

The strait is critical to global energy markets. Before the current disruption, roughly one-fifth of worldwide oil and liquefied natural gas supplies passed through the waterway. Any return toward normal traffic would therefore increase the amount of Gulf energy available to international buyers.

Saudi Arabia is simultaneously working to restore another important export route. Operations have restarted on the East-West Pipeline, although flows were initially running at a low rate. The system connects production areas in eastern Saudi Arabia with the Red Sea coast and could allow crude exports from Yanbu to resume.

Saudi Aramco had increased shipments through Hormuz after attacks on the pipeline forced it to halt some Yanbu exports. Tanker-tracking data showed about 14 million barrels of Saudi crude loaded onto seven supertankers inside the Gulf on Sunday.

Supply recovery could reshape the oil market

The latest decline reflects improving expectations for physical supply, but significant constraints remain. Refined fuels are particularly tight, with diesel prices reaching record levels in Europe and the United States following disruptions to exports from several major producers.

For crude markets, the next test is whether diplomatic signals translate into actual barrels reaching buyers. A reopening of Hormuz combined with renewed exports from Yanbu would improve the flexibility of Gulf supply routes and reduce pressure created by recent disruptions.

Until those flows recover materially, however, oil prices remain exposed to developments affecting shipping and production across the region. Tuesday’s decline shows how quickly the market can respond when the outlook for physical supply begins to improve.

We have previously highlighted that Saudi Aramco has told European refiners they will receive no crude under long-term contracts next month after an attack forced Saudi Arabia to shut its East-West pipeline.

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