Oil prices fell on Wednesday as hopes of diplomatic progress between the United States and Iran combined with improving crude supply prospects from Saudi Arabia to ease concerns over prolonged disruption in the global oil market.
Brent crude, the international benchmark, fell to $98.41 per barrel, while West Texas Intermediate declined to $89.23 in Asian trading, taking both benchmarks below the $100 mark.
The decline followed US President Donald Trump’s statement that American and Iranian representatives had held “very good” and “very productive” talks at the United Nations.
Trump said the three-hour meeting was productive and that another meeting had been scheduled for the near future.
The comments came only hours after Trump addressed the UN General Assembly, where he said he faced a “big decision” over whether to reach a deal with Iran or “annihilate the Islamic Republic and do it quickly.”
Diplomacy weighs on oil markets
The prospect of renewed diplomacy has introduced a different dynamic into oil markets after months of heightened geopolitical risk.
“The three-hour US-Iran meeting matters because it shifts the market from pure escalation pricing toward a genuine diplomatic process, even if a final deal still looks distant,” said Stephen Innes of Quintex Intel.
The conflict has disrupted energy flows in the Middle East, with Iran keeping the Strait of Hormuz closed and the United States enforcing a counter-blockade of Iranian ports, according to the report.
The war has also affected shipping and energy infrastructure around the region, while fighting involving Iran-backed Houthis in Yemen has added pressure to routes through the Red Sea and the Bab al-Mandab Strait.
Trump has previously said oil prices would fall “as soon as” the United States wins the war.
Saudi supply outlook improves
Additional downward pressure on prices came from signs that Saudi Arabia is restoring crude flows through its East-West Pipeline.
Saudi Arabia resumed operations on the critical pipeline following a shutdown caused by drone attacks earlier in September. The route transports crude to the Red Sea port of Yanbu, providing an alternative export route that bypasses the Strait of Hormuz.
The pipeline’s restart has contributed to improved supply expectations and pushed Brent prices lower, although the system is operating below its full capacity while repairs continue.
Saudi Aramco has also been preparing to resume crude shipments from Yanbu, although reports indicate that supply allocations may differ between Asian and European buyers.
The combination of increased Gulf supply and hopes for progress in US-Iran negotiations has helped push oil prices to around two-week lows.
Global markets remain focused on geopolitics
Asian equity markets were mixed, with Hong Kong’s Hang Seng Index falling one per cent and Shanghai’s Composite declining 0.4 per cent.
South Korea’s Kospi rose 0.9 per cent, while Taiwan’s Taiex gained 0.8 per cent. European markets also opened higher.
Markets were also watching developments ahead of a planned meeting between Trump and Chinese President Xi Jinping, with trade relations between the world’s two largest economies remaining a key concern.
The US and China have maintained a tariff truce for nearly a year but have yet to reach a lasting trade agreement.
However, analysts said developments in the Middle East remained a more immediate market concern.
“But the higher impact issue will be the war in the Middle East and any support the US can extract from China to use its leverage to sway the Iranians,” said Kyle Rodda, senior financial market analyst at Capital.com.
AI stocks draw investor attention
Technology also remained in focus after Chinese technology giant Alibaba announced plans to expand its overseas data-centre operations across Europe and the Middle East.
The announcement came amid renewed activity in the artificial intelligence sector, with Anthropic and OpenAI releasing cheaper AI models within hours of each other.
Anthropic’s release comes weeks before its expected stock-market debut, while OpenAI has reportedly delayed its IPO plans until next year.
Key market figures
At around 0215 GMT:
- WTI crude: Down 1.4% at $89.23 per barrel
- Brent crude: Down 0.9% at $98.41 per barrel
- Hang Seng: Down 1% at 24,842.87
- Shanghai Composite: Down 0.4% at 3,936.52
- FTSE 100: Up 0.3% at 10,744.98
- Dollar/yen: 157.76
- Euro/dollar: $1.1425
- Pound/dollar: $1.3314
Oil markets remain sensitive to developments around the Iran conflict, the Strait of Hormuz and the restoration of alternative Gulf export routes, while traders continue to assess whether diplomatic contacts could lead to a broader reduction in regional supply risks.
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