Oil prices fell on Tuesday as investors assessed signs of recovering crude exports from the Middle East while continuing to monitor supply risks linked to the ongoing US-Israeli conflict with Iran.
Brent crude futures were down 54 cents, or 0.51%, at $104.74 a barrel at 1144 GMT, while US West Texas Intermediate crude fell 77 cents, or 0.83%, to $91.83. Later in the session, Brent was trading at $103.32 and WTI at $90.65. Both benchmarks remained on course for monthly gains, with Brent up about 14% and WTI about 5.6% at that point.
A clearer picture is emerging of higher oil export volumes from the Gulf, although some shipments continue to rely on ship-to-ship transfers, according to KCM Trade chief analyst Tim Waterer. Such arrangements are less efficient and more expensive than normal shipping operations, keeping crude prices elevated.
Saudi Arabia has resumed oil loadings from its Red Sea port of Yanbu following the restart of the East-West Pipeline. The pipeline had been shut after drone attacks on September 11, disrupting crude exports from Yanbu. Saudi Aramco has since notified customers of its October loading schedule, while trade sources said loadings had resumed at about 2 million barrels per day.
Preliminary figures from data provider Kpler showed crude exports from major Middle Eastern producers rose to 12.8 million barrels per day in September, the highest level since February. Increased shipments from Saudi Arabia and the United Arab Emirates contributed to the recovery.
Despite the improvement, disruptions remain around key shipping routes. Kpler estimates that Middle East crude exports have recovered to almost 80% of their pre-conflict level, helped by increased flows through Yanbu and Fujairah. Ship-to-ship transfers through the Gulf of Oman have also supported exports as normal traffic through the Strait of Hormuz remains restricted.
European diesel futures also eased on Tuesday after reaching $1,535 per metric ton last week. Prices remained around $1,379 per ton, having more than doubled since the start of the year. Markets have been watching the possibility of a US diesel export ban as Washington seeks to reduce domestic fuel prices.
The White House is also considering regulatory changes that could allow wider sales of red-dyed diesel, which is normally reserved for off-road uses and is subject to different federal tax treatment. The proposal has emerged as an alternative to a full export ban.
Meanwhile, US and Iranian officials held separate discussions with mediators in an effort to end the seven-month conflict. President Donald Trump denied reports that he had offered Iran sanctions relief or access to frozen funds in exchange for progress on its nuclear programme.
The conflicting signals have left oil markets sensitive to developments in diplomacy, shipping and regional supply, with investors balancing improving export volumes against the continuing risk of disruption.
