Oil prices decline on diplomacy expectations

Oil prices fell to their lowest level in more than a week, driven by hopes that diplomacy could be given a chance in the Iran conflict within the scope of United Nations meetings and a partial recovery in Saudi Arabia's oil shipments.

Brent and WTI Levels

Brent crude futures and U.S. crude tested their lowest levels since September 10 in early trading on Monday. Brent dropped 2.08 percent to $101.71 a barrel, while WTI fell 2.14 percent to $98.15 a barrel.

Diplomacy Hopes and Risk Premium

Market analysts stated that a certain risk premium was pulled from oil prices amid hopes that a diplomatic path to prevent a conflict between the U.S. and Iran could emerge this week. U.S. President Donald Trump stated that he is open to meeting with Iranian President Masoud Pezeshkian, who is expected to be in New York for the United Nations General Assembly.

Ongoing Tensions in the Middle East

While mutual threats continued to be voiced between Iran and the U.S., the Iran-backed Houthi movement in Yemen announced on Saturday that they had launched missile and drone attacks targeting sensitive locations in Saudi Arabia's capital, Riyadh. The Houthis also reported targeting an Aramco facility in the city of Yanbu.

Saudi Arabian Shipments

The Houthis' attacks on Saudi Aramco's East-West pipeline caused the state-run energy company to increase its oil exports via the Strait of Hormuz after halting some shipments through Yanbu. According to preliminary data from Kpler, Saudi Arabia's exports exceeded 4 million barrels per day in September.