Oil prices steadied on Tuesday following a cumulative drop of nearly 8% over four consecutive sessions, as easing concerns over Middle East supply disruptions were met with growing signs of diplomatic efforts to end the US-Iran conflict. Brent crude held near $100 per barrel, while West Texas Intermediate (WTI) stabilized just below $96.
Satellite data revealed a significant increase in Saudi Arabia's crude loadings from within the Persian Gulf, indicating that the kingdom has rerouted its exports through the Strait of Hormuz following the closure of a key cross-border pipeline. On the diplomatic front, US President Donald Trump is scheduled to address the United Nations General Assembly on Tuesday evening in New York, with a possible meeting with Iranian President Masoud Pezeshkian on the agenda. Additionally, a summit between Chinese and American leaders later this week is drawing close attention from global markets.
Hamad Hussain, senior climate and commodities economist at Capital Economics, noted that "oil market investors will be watching for any progress on the diplomatic front." However, he cautioned that given the substantial gaps between US and Iranian demands, the prospects for meaningful breakthroughs in talks remain uncertain.
Crude prices have surged more than 60% this year, driven by Middle East hostilities that have disrupted shipments through the Strait of Hormuz, alongside damage to energy infrastructure caused by the Russia-Ukraine conflict. Refined fuel products have risen even faster than crude, with US retail diesel prices jumping to record highs above $6.50 per gallon.
The Middle East conflict, which began in February with US and Israeli strikes on Iran, continues to draw in additional nations. The UK has agreed to support Saudi forces against Iran-backed Houthi militants, who have also threatened shipping near the Red Sea and the Bab el-Mandeb strait.
Meanwhile, the Trump administration has proposed a $5 billion fund to help rebuild regional infrastructure damaged during the war. According to a document outlining the plan, the so-called "Allied Building and Trust Partnership" initiative would be led by the US International Development Finance Corporation, with the goal of encouraging investment, reconstruction, and economic expansion.
In Libya, production at the country's largest oil field, the Sharara field, has fallen by more than half following the closure of a pipeline to the Zawiya export terminal by armed groups. Sources familiar with the matter indicated that Sharara's current output stands at approximately 127,000 barrels per day.
The broad surge in energy prices this year has intensified inflationary pressures, prompting the Federal Reserve to raise interest rates last week in an effort to slow price gains. St. Louis Fed President Alberto Musalem stated that further rate increases may still be necessary to achieve the central bank's objectives.
As of the time of writing, Brent crude futures for November delivery rose 0.62% to $100.71 per barrel, while WTI futures for October delivery were largely flat at $95.95 per barrel, with the November contract gaining 0.31% to $92.66 per barrel.