Oil Falls Toward 5-Week Low

Crude oil trimmed gains to below $93 a barrel after topping $96 on Monday amid reports that Saudi Arabia is ramping up flows through its critical East-West pipeline following repairs. Saudi Arabia is reported to have restored flows to around 3.5 million barrels per day. The pipeline was shut down earlier this month after sustaining damage in a drone strike launched from Iraq. Meanwhile, US President Donald Trump is reportedly open to sanctions relief for Iran and the release of frozen funds if concrete progress is made toward a nuclear deal. Earlier, Trump rejected Iran’s conditional offer to reopen the Strait of Hormuz and told aides he expects US strikes on the country to resume after November’s midterm elections. Fading hopes for an imminent diplomatic breakthrough between the US and Iran had driven crude to session highs. Separately, Yemen’s Saudi-led coalition said on Saturday that it had intercepted projectiles launched by Iran-backed Houthi rebels.

Crude oil rose more than 3% to above $95 a barrel on Monday, recovering from a 2.3% decline in the previous session, as fading hopes for an imminent diplomatic breakthrough between the US and Iran renewed concerns over Middle East supply disruptions. Tehran and Washington remain divided over a potential ceasefire and the reopening of the Strait of Hormuz, with Iran continuing to support a proposal rejected by US President Donald Trump. Nevertheless, Iranian Foreign Minister Abbas Araghchi was expected to meet mediators in New York, while separate discussions between US and Iranian representatives were reportedly planned for Monday or Tuesday. Meanwhile, Saudi Arabia has resumed crude exports through its East-West pipeline after repairs following drone strikes earlier this month. Around 3.5 million barrels a day was flowing through the route, providing an important alternative for Saudi shipments during the conflict.

Crude oil climbed more than 4% to above $96 a barrel on Monday, recovering from a 2.3% decline in the previous session as uncertainty surrounding US-Iran diplomacy kept supply risks elevated. Tehran continues to support a proposal that US President Donald Trump has rejected, calling for the lifting of a US naval blockade and oil sanctions as conditions for reopening the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi said these requirements were longstanding and that Washington would need to make concessions. However, Trump said talks could resume this week. Oil markets have remained volatile as hopes for progress repeatedly give way to renewed uncertainty during the conflict’s eighth month. Regional tensions also persisted, with Saudi-led coalition forces reporting the interception of Houthi drones heading toward Riyadh and a missile aimed at Khamis Mushait, while alerts were issued around Abha and Jazan, where Aramco facilities are located.