Oil falls to two-week low as Gulf supply outlook improves

LONDON, Sept 22 : Oil prices fell to a two-week low on Tuesday as prospects for increased oil supplies from the Gulf eased market concerns, with Iran signaling it could reopen the Strait of Hormuz within seven days and Saudi Arabia set to resume exports from its Red Sea port of Yanbu.

The Brent crude futures November contract fell $2.01, or 2 per cent, to $98.33 a barrel at 1027 GMT. The WTI October contract, which expires on Tuesday, lost $2.50, or 2.61 per cent, to $93.28 a barrel.

The more actively traded November contract was down $2.45, or 2.65 per cent, at $89.92 a barrel.

Brent November, WTI October and WTI November futures all touched their lowest levels since September 8.

Iran can reopen the Strait of Hormuz within seven days if the United States eases military pressure and lifts its blockade on Iranian ports, a senior Iranian official told Reuters on Tuesday.

The official said the Iranian delegation to the United Nations General Assembly in New York has full authority to revive diplomacy with the United States.

Oil prices appear to be falling on the back of media reports that Iran may be willing to reopen the Strait of Hormuz within seven days. This could be a positive sign that diplomacy efforts may be working, said Hamad Hussain, senior climate and commodities economist at Capital Economics.

Before US-Israeli attacks on Iran began in late February, the strait handled about one-fifth of global oil and liquefied natural gas supplies.

"There may also be other obstacles, such as the issue of tolls and fees, to overcome before a lasting solution can be achieved," Hussain added.

Further weighing on prices, Saudi Arabia has restarted operations at its East-West Pipeline and could resume exports from the Red Sea port of Yanbu later on Tuesday, three sources briefed on the matter said. The pipeline was pumping at a low rate, two of them said.

Market focus is also on US President Donald Trump's meetings with world leaders at the UN General Assembly this week, against the backdrop of an unstable Middle East and a 4-1/2-year-old war in Ukraine that shows no signs of abating.

Meanwhile, Saudi Aramco has increased exports through the Strait of Hormuz after attacks on its East-West Pipeline forced it to halt some shipments through Yanbu. Around 14 million barrels of its crude oil were loaded on seven supertankers inside the Gulf on Sunday, tanker tracking data showed.

Ole Hansen, head of commodity strategy at Saxo Bank, said he does not see much further downside in oil prices until there is increased supply through the Strait of Hormuz, particularly refined products, where the real crunch remains.

Diesel prices have rallied in Europe and the United States to record highs as wars in Iran and Ukraine sharply cut exports from some of the biggest producers such as Russia, Saudi Arabia and the United Arab Emirates.