Crude oil prices opened the new trading week lower, falling to their lowest level in 11 days as investors focused on renewed hopes that diplomatic efforts could eventually ease the ongoing conflict involving the United States and Iran.
Brent crude futures touched their lowest level since September 10 before recovering slightly, with the November contract trading at about $101.75 a barrel at 0859 GMT on Monday, down $2.12, or two per cent. US West Texas Intermediate crude for October delivery fell $1.96, also about two per cent, to $98.34 a barrel.
The decline reflected expectations that the United Nations General Assembly in New York this week could create an opportunity for diplomatic contacts between Washington and Tehran. US President Donald Trump has indicated that he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to attend the gathering.
However, there has been no confirmed agreement for direct negotiations, while tensions between the two sides remain pronounced. Iran and the United States exchanged fresh threats over the weekend, underscoring the uncertainty surrounding any potential diplomatic breakthrough.
Market analysts said the decline in crude prices appeared to reflect the removal of part of the geopolitical premium that had pushed prices higher amid fears that the conflict could disrupt oil production and transportation across the Gulf.
“It seems that a degree of risk premium is being removed from oil prices on hopes that a diplomatic path to de-escalate the US-Iran war may arrive this week,” KCM Trade chief market analyst Tim Waterer said, according to Reuters.
Adding to the downward pressure was evidence that Saudi Arabia has adjusted its crude-export routes following disruptions to the country’s East-West pipeline. According to JPMorgan analysts cited by Reuters, Saudi crude flows through the Strait of Hormuz averaged about 2.9 million barrels per day over six days, compared with roughly 700,000 barrels per day in August.
The increased use of the strategic waterway has helped maintain oil flows despite attacks by Yemen’s Iran-backed Houthi movement.
The Houthis said they had targeted sensitive sites in Riyadh and an Aramco facility in Yanbu, adding another layer of uncertainty to regional energy supplies.
The market’s reaction highlights the sensitivity of crude prices to diplomatic signals. Even without concrete evidence of negotiations, the possibility of a meeting between senior US and Iranian officials has been enough to encourage some traders to reduce expectations of a prolonged supply shock.
Still, analysts caution that the outlook remains highly dependent on developments on the ground.
Any renewed military escalation, attacks on energy infrastructure or disruption to shipping through key Gulf routes could quickly reverse the recent decline.
For now, traders are watching the United Nations General Assembly closely, with crude markets balancing hopes of diplomacy against continuing military and geopolitical risks in one of the world’s most important oil-producing regions.
