Oil Falls for Third Day, but Iran Conflict Remains a Threat

Global oil prices weakened again during Friday's trading (Sept. 18), marking a third consecutive session of declines as supply disruption fears eased and market attention shifted toward diplomatic developments regarding the Iran conflict. Brent crude traded around US$103.84 per barrel, while West Texas Intermediate (WTI) stood at US$101.07 per barrel. This downturn followed a correction of more than 3% in the previous two sessions, driven by growing hopes for a recovery in energy supplies from the Middle East.

Downward pressure on oil prices emerged after Saudi Arabia began restoring the East-West pipeline, which had previously been damaged in an attack. Saudi Arabia aims to have about half of the pipeline's capacity operational again within days, while tankers continue to transit the Strait of Hormuz despite persistent security risks in the region.

Beyond supply factors, the market is also reacting to diplomatic developments between the United States and Iran. U.S. President Donald Trump stated he is making a major decision regarding the next steps concerning Tehran. Trump has also scheduled meetings with Gulf leaders on the sidelines of next week's UN General Assembly to discuss the conflict.

Regional tensions remain a concern as the Iran-backed Houthi group intensifies its military activities in Yemen, including approaching the strategic Bab el-Mandeb strait and launching attacks on facilities in Saudi Arabia. Meanwhile, China has reportedly asked Iran to help rein in Houthi activities following a request from Riyadh, signaling that diplomacy is becoming a key focus in efforts to de-escalate the conflict.

Oil price movements throughout the week have been highly volatile. Prices initially surged due to disruptions to Saudi oil infrastructure but later corrected as the market perceived the potential for additional supply. Nevertheless, Brent crude prices remain significantly higher than at the start of the year, as the Middle East conflict and the Russia-Ukraine war continue to fuel concerns regarding global energy inflation. Newsmaker Analysis: The current weakening in oil prices indicates that the market is beginning to respond to an improved supply outlook, driven largely by efforts to restore Saudi pipeline operations and ongoing energy trade flows. However, geopolitical risks remain a key factor capable of shifting price trends once again. As long as the conflict involving Iran and tensions surrounding strategic energy routes have not fully subsided, the oil market remains susceptible to high volatility. (asd)