Oil Prices Fall as Markets Watch Iran Diplomacy and Saudi Export Recovery

Oil prices fell to their lowest level in more than a week on Monday as investors looked for signs of diplomatic progress in the US-Iran war and monitored a partial recovery in Saudi crude shipments despite continued attacks by Yemen’s Houthis.

Brent crude futures fell $2.16, or 2.08%, to $101.71 a barrel by 5:13am Saudi time, after declining 0.91% on Friday. The benchmark earlier touched its lowest level since September 10.

US West Texas Intermediate crude was down $2.15, or 2.14%, at $98.15 a barrel after falling 1.58% in the previous session. WTI also moved below the $100 mark, a level closely watched by traders.

Tim Waterer, chief market analyst at KCM Trade, said some of the risk premium built into oil prices was being removed as investors hoped diplomatic efforts could reduce tensions between Washington and Tehran.

“It seems that a degree of risk premium is being removed from oil prices on hopes that a diplomatic path to de-escalate the US-Iran war may arrive this week,” Waterer said.

“Whether that hope proves to be warranted or not is another question. Time will tell.”

The decline also came as some traders adjusted their positions ahead of the expiration of the October WTI contract, with some shifting into the November contract.

Markets are closely watching developments at the United Nations General Assembly in New York, where US President Donald Trump is expected to attend and Iranian President Masoud Pezeshkian is also due to be present. Trump said on Sunday that he would be open to meeting Pezeshkian.

Iran and the US exchanged fresh threats over the weekend, while Iranian officials have indicated that Tehran has communicated conditions to mediators for a possible return to negotiations.

Despite hopes for diplomacy, tensions across the region remain high. Yemen’s Iran-backed Houthis said they attacked what they described as sensitive targets in Riyadh with missiles and drones, as well as an Aramco facility in Yanbu.

The attacks have disrupted Saudi oil flows, prompting Saudi Aramco to increase shipments through the Strait of Hormuz this month and next. Provisional data from analytics firm Kpler showed Saudi exports had recovered to more than 4 million barrels per day in September, compared with 2.4 million bpd in August.

JPMorgan analysts said Middle East oil flows remained relatively strong despite disruption to Saudi Arabia’s East-West pipeline. Total regional oil flows averaged 17.1 million bpd over the previous 10 days, about 6.1 million bpd below the 2025 average.

Saudi shipments through the Strait of Hormuz averaged 2.9 million bpd over the previous six days, up sharply from about 700,000 bpd in August, according to satellite data cited by the analysts.