Oil prices reversed initial gains Tuesday on hopes for diplomatic progress in the Middle East and encouraging news about oil exports from the region.
In evening trade in Europe, Brent crude futures fell 0.06% to $100.28 a barrel, after dropping below $100 a barrel earlier in the session. West Texas Intermediate declined 0.7% to $91.72 a barrel. Both benchmarks had climbed in early European trading before reversing gains, with Brent earlier rising above $102 a barrel.
Oil prices moved after Japan's Kyodo News Agency reported that Iran proposed to reopen the Strait of Hormuz if the U.S. lifts its blockade. Iran's Fars News Agency later reported sources denied the reported offer.
Saudi Arabia, meanwhile, began running tests on its East-West pipeline on Tuesday, a step toward restoring flows as soon as this week after the pipeline was knocked out by attacks earlier this month, The Wall Street Journal reported, citing people familiar with the matter. Crude exports from the Red Sea port of Yanbu could restart within a couple of days, according to the people. Saudi Aramco, which runs the pipeline, didn't immediately respond to a request for comment.
World leaders are gathering in New York for this week's United Nations General Assembly, with investors watching for signs of diplomatic progress between the U.S. and Iran. Qatari officials plan to use the gathering to discuss the possibility of resuming talks, The Wall Street Journal reported.
President Trump said Tuesday that he expects Iran to reach a deal with the U.S. after the November midterm elections, adding that such an agreement would send oil prices below prewar levels. Speaking at the General Assembly, Trump also said the U.S. Navy has recently escorted "more than 1 billion barrels of oil" out of the Strait of Hormuz.
Talks aimed at reopening the strait have so far failed to produce a sustained return to prewar shipping levels and shipping risks through Hormuz remain elevated.
Still, energy traffic through the strait has increased. The volume of oil, natural gas and cargo passing through the strait over the past two weeks reached its highest level in six months, U.S. Central Command, a combatant command of the U.S. defense department, said.
Saudi Arabia is increasingly relying on Hormuz following the shutdown of its East-West pipeline. Around 2.4 million barrels a day of Saudi crude and condensate flowed through the strait over the past two weeks, returning to levels last seen in early July, according to Kpler.
The four-week average of Saudi crude loadings from inside the Persian Gulf rose above 2 million barrels a day last week, from virtually zero for most of June and less than 1 million barrels a day in July, according to energy information company Vortexa.
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