Oil prices continued their steep slide on Tuesday, with cumulative losses of around $8 per barrel over the past two trading sessions, signaling a notable cooldown in the market. The trigger for the sharp downturn beginning Tuesday afternoon was media reports that Iran had signaled a willingness to negotiate, with officials suggesting Tehran would welcome a resumption of diplomatic contact if the United States took concrete actions. Iran's delegation has been granted full authority to push for the restoration of diplomatic engagement with Washington during their visit to New York. The delegation could discuss the specifics of an agreement to end hostilities with the US through intermediaries. Iran indicated it could reopen the Strait of Hormuz within seven days if the US eases military pressure and lifts the port blockade. The Iranian proposal was reportedly conveyed to the US through mediators on September 16. Although Iran's semi-official Fars News Agency later denied reports regarding the potential reopening of the Strait of Hormuz, calling such reports invalid and incorrect, this did not help oil prices recover lost ground, as the market appeared to place greater trust in the possibility of de-escalation.
Late Wednesday morning, the latest developments confirmed that Iranian official media acknowledged Iran's acceptance of a meeting request from Witkoff, with the core objective being to clarify Iran's conditions regarding navigation through the Strait of Hormuz. Trump responded by suggesting that the conflict with Iran could potentially conclude after the midterm elections, without ruling out the possibility of it ending before those elections. He expressed confidence that Witkoff and Kushner could handle the matter properly, expressing hope that Iran would make the appropriate decision sooner rather than later. Meanwhile, Gulf Arab states planned to urge Trump during their Tuesday meeting not to escalate confrontational actions against Iran.
On the supply-demand front for crude, despite domestic energy facilities being hit by Houthi attacks and the East-West pipeline suffering temporary damage and closure, Kpler data shows that Saudi Arabia's total crude loadings from both eastern and western coasts surged from 3.46 million barrels per day in August to 5.6 million barrels per day so far this month in September, representing a significant increase. Additionally, reports on Tuesday indicated that Saudi Arabia has resumed operations of its East-West pipeline and may restore oil exports from the Red Sea port of Yanbu later on Tuesday evening. Two sources noted that the pipeline's current throughput remains relatively low. Iraq's Oil Minister stated that August oil exports reached 70 million barrels, and tracking data indicates Iraqi export figures continue to grow in September, with supply-side anxiety beginning to subside. Early Wednesday, API data showed a crude inventory build of 1.786 million barrels for the week, versus expectations for a draw of 563,000 barrels, although gasoline and distillate inventories fell sharply, indicating that refined product supply tightness is more severe than in the crude market itself.
Since peaking early last week, oil prices have entered a continuous correction, with the decline pricing in supply resilience and expectations of geopolitical cooling. The key factor for the coming trading sessions will be the progress of US-Iran negotiations at the concrete implementation level, which will determine the downside space and pace of oil prices. Current expectations suggest that pricing has already been largely factored in, and oil prices could fluctuate at any time with news developments. With the approach of the Mid-Autumn Festival and National Day holidays, domestic investors should pay attention to risk control and participate cautiously.
Daily Market Update
[1] WTI benchmark crude futures settled down $1.85, or 2%, at $90.52 per barrel; Brent benchmark crude futures settled down $0.83, or 0.86%, at $95.41 per barrel; INE crude futures fell 3.11% to 694.8 yuan.
[2] The US dollar index rose 0.12% to 100.54; the HKEX USD/CNH rose 0.08% to 6.6552; the US 10-year Treasury fell 0.04% to 106.03; the Dow Jones Industrial Average declined 0.36% to 51,863.69.
Recent Headlines
[1] Iraq's Oil Minister stated that August oil exports reached 70 million barrels, with the northern export route continuing to expand. Iraqi Oil Minister Bassim Mohammed said in an interview with state television on Tuesday that Iraq exported 70 million barrels of oil in August and is currently exporting over 3 million barrels per day. Transporting crude by road from southern fields to Kirkuk storage facilities is expected to increase exports via Turkey's Ceyhan port to over 600,000 barrels per day. Iraq launched a pilot operation this month to truck crude from southern fields to Kirkuk to boost supplies to the northern export system, potentially increasing loadings via Ceyhan. This move aims to increase flows on the northern export route, following disruptions to Iraq's Strait of Hormuz exports caused by the US-Israel war with Iran. Mohammed added that Iraq's Kurdistan region oil fields are currently producing around 200,000 barrels per day.
Russia's Black Sea port of Novorossiysk saw daily exports rebound 50% in September. According to two trade sources and related data, compared to the full month of August, average daily exports from Russia's Black Sea port of Novorossiysk during the first 20 days of September increased by 50%. Following disruptions caused by drone attacks, crude exports and transit volumes via the port have recovered to near-normal loading levels. Based on data calculations, loadings of Urals, KEBCO, and Siberian Light crude averaged approximately 650,000 barrels per day in the first 20 days of September, up from around 420,000 barrels per day in August. The recovery was driven by increased volumes of Kazakhstan's KEBCO blend exported through the port after Russia redirected Kazakh crude transshipment from Baltic ports. Trade source data shows Novorossiysk handled approximately 350,000 tons of KEBCO blend crude in the first two weeks of September.
[2] Iranian officials stated that if the US initially eases military pressure, Iran could reopen the Strait of Hormuz within seven days. A senior Iranian government official said Iran has proposed reopening the Strait of Hormuz within seven days if the US takes initial steps to ease military pressure, as part of Tehran's intensified push to restart US-Iran negotiations. The official stated the proposal has been conveyed to the US through intermediaries, with the plan calling for renewed talks aimed at permanently ending hostilities between the two nations. Tehran plans to use this week's UN General Assembly in New York to consult with countries serving as mediators. The official ruled out the possibility of a meeting between Iranian President Pezeshkian and US President Trump on the sidelines of the assembly but said an agreement remains possible. "There is a possibility of moving toward an agreement," the official said, adding that the US must demonstrate "good faith and commitment" for diplomatic progress to be made. The official said Iran hopes to see signals from Washington indicating willingness to return to negotiations, take action to lift the US military blockade on Iranian ports, and cease military operations related to the Strait of Hormuz. If the US implements these measures, Iran is prepared to reopen the strategic waterway within seven days and return to the negotiating table, the official stated. The US and its allies continue to pressure Iran through various means, including recent disruptions to Iranian flights, but such measures are unlikely to substantially improve crude shipping capacity through the strait. However, market sensitivity to Iran unilaterally blockading the strait and disrupting crude supplies is also declining. Iran hopes to use its strait shipping leverage to attract global market attention and drive oil prices higher, but the influence of this tactic has also weakened.
[3] Saudi Arabia's crude loading activity on the eastern coast accelerated sharply in September, with satellite imagery from September 20 showing all six SPMs at the Juaymah terminal simultaneously occupied by VLCCs loading crude. The concentration of vessels indicates an abnormally large volume of crude being loaded in a short period, with the six VLCCs having potential export capacity of approximately 12 million barrels if fully laden. The latest activity comes against the broader backdrop of recovery in Saudi crude exports during September. Total loadings from eastern and western coasts rose from 3.46 million barrels per day in August to 5.6 million barrels per day so far this month, with most of the growth coming from the eastern coast. Average loadings at Juaymah alone reached 2.14 million barrels per day, more than five times the August level of 415,000 barrels per day, while combined loadings at Juaymah and Ras Tanura have reached 2.8 million barrels per day. The rebound also marks a significant shift in Saudi Arabia's export geographic mix. Juaymah and Ras Tanura accounted for about half of observed loadings in September, up from less than one-fifth in July and August, while confirmed Red Sea loadings from the Muajjiz and Yanbu ports have fallen sharply from mid-year highs. Since loading activity from Yanbu port has nearly paused since September 12, aside from the most recent loading of Saudi Arabia's Bahri-owned VLCC Farhah on September 20, the share of loadings from eastern provinces is likely to increase further.
Comments