Global oil prices fell to their lowest in over a week on Monday. The drop is driven by renewed hopes for diplomatic talks between the US and Iran at the United Nations General Assembly alongside steadying oil shipments from Saudi Arabia.
Brent crude dropped by over 2% to $101.71 a barrel while US West Texas Intermediate (WTI) fell below the $100 mark to $98.15 a barrel.
Market analysts note that the "risk premium" on oil is easing. Investors are optimistic about potential de-escalation in the Middle East as US and Iranian leaders might explore negotiations during the UN summit in New York. Iran has reportedly outlined its conditions for re-engaging in talks to end the conflict.
Despite this optimism the regional tensions persist. Yemen's Iran-backed Houthi rebels recently claimed drone and missile attacks on Saudi Arabia's capital and an Aramco oil hub. In response the Saudi Arabia appealed to China urging Beijing to help restrain the Houthis.
Crucially, these attacks have not severely disrupted global energy supplies. Saudi Aramco swiftly rerouted its exports through the Strait of Hormuz to bypass affected pipelines. As a result Saudi oil shipments recovered to over 4 million barrels per day (bpd) in September, bouncing back from a decade-low of 2.4 million bpd in August.
With Middle East oil flows remaining surprisingly robust, supply fears have eased also driving the recent dip in international crude prices.
