PERTH, Australia — Oil prices edged lower on Wednesday as Saudi Arabia began restoring crude supplies through a key pipeline and diplomatic efforts to end the U.S.-Iran war raised hopes of improved energy flows.
Brent crude futures fell seven cents, or 0.07%, to $99.18 a barrel as of 0119 GMT. West Texas Intermediate futures dropped 35 cents, or 0.39%, to $90.17 a barrel.
Brent settled below $100 a barrel on Tuesday for the first time since September 8, supported by expectations of increased oil supplies and possible progress in negotiations at the United Nations in New York.
U.S. President Donald Trump warned Iran that he could “annihilate” the country if no agreement is reached. However, he also said his envoys, Steve Witkoff and Jared Kushner, held productive talks with Iranian mediators.
“I think there's a lot of momentum for them to make a deal,” Trump said.
Tim Waterer, chief analyst at KCM Trade, said the market was becoming more confident about global supply conditions.
“The market is currently feeling more constructive about the global oil supply picture than it was a few weeks ago,” Waterer said.
He added that the meeting between U.S. and Iranian representatives in New York had given traders some hope despite the continued threats.
“Despite the continued tough rhetoric, including threats of ‘annihilation,’ the market is choosing to price in the possibility of talks,” Waterer said.
SAUDI PIPELINE RESTARTS
Saudi Arabia restarted operations on its East-West Pipeline on Tuesday, according to three sources familiar with the matter.
The pipeline carries crude to the Red Sea and offers Saudi Arabia an alternative export route after the U.S.-Israeli war on Iran disrupted shipments through the Strait of Hormuz.
Saudi Arabia shut the pipeline on September 11 following drone attacks that Riyadh blamed on an Iraqi militia. The shutdown halted crude loadings at the Red Sea port of Yanbu.
The pipeline has allowed Saudi Arabia to reroute around 4 million barrels of oil per day to Yanbu—roughly 4% of global supply.
Iraq is also increasing oil exports. Oil Minister Basim Mohammed said the country is shipping more than 3 million barrels per day and expects exports through Turkey to rise above 600,000 barrels per day.
However, provisional data from ship-tracking firms Vortexa and Kpler showed Iraqi crude exports in August remained below pre-war levels.
U.S. STOCKPILES RISE
Adding to downward pressure on oil prices, industry data showed U.S. crude inventories increased by 1.8 million barrels during the week ending September 18.
Analysts surveyed by Reuters had expected U.S. crude stocks to decline.
The official weekly inventory report from the U.S. Energy Information Administration was due later Wednesday.
