Oil prices fall as Saudi pipeline restarts and U.S.-Iran contacts continue

One crew member killed as tanker attacked off Oman’s Musandam coast

Oil prices fell Thursday as traders weighed Saudi Arabia’s restart of its East-West pipeline and continued diplomatic contacts between the United States and Iran. Brent crude futures declined 0.7% to $102.39 a barrel and West Texas Intermediate dropped 0.7% to $91.54 a barrel in early European trading.

U.S. Secretary of State Marco Rubio said Wednesday that Saudi Arabia had restarted its East-West pipeline, which had been attacked earlier this month, restoring an alternative route for crude exports that bypasses the Strait of Hormuz. Rubio also said the southern shipping lane through the strait was open and that more barrels of oil were flowing through it each day. He said the United States would continue defending shipping and enforcing its blockade on Iran.

Iranian President Masoud Pezeshkian said Wednesday that Tehran was ready for negotiations to end the conflict with the United States but would not surrender to what he called Washington’s bullying or give up its nuclear program. Rubio offered a more cautious assessment of the diplomatic contacts, saying Tuesday’s conversation had been with mediators and that he did not want to characterize it as moving in either direction.

Shipping risks remained elevated after the Antigua and Barbuda-flagged Cape Dao was attacked 2.5 nautical miles off Oman’s Musandam governorate on Wednesday, according to a post on X from Oman’s Maritime Security Centre. One crew member was killed and 27 others evacuated after the attack caused a fire in the engine room. The post did not identify who carried out the attack.

U.S. Central Command said in a post on X that its forces had redirected 115 commercial vessels as of Sept. 23 as part of enforcement of the U.S. naval blockade on Iran. The Red Sea route, an important alternative for Saudi oil exports that bypasses the Strait of Hormuz, has also faced disruption from Yemen’s Iran-backed Houthi militia. Chinese companies have become the biggest source of seized goods bound for the Houthis, according to United Nations reports and data gathered by arms experts cited by The Wall Street Journal, with most of the Houthis’ U.S.-sanctioned drone-parts suppliers based in China.

In the United States, commercial crude inventories rose by nearly 3 million barrels to 426.4 million barrels in the week ended Sept. 18, from 423.4 million barrels a week earlier, according to the Energy Information Administration. Stocks at the Cushing, Oklahoma delivery hub climbed to 23.7 million barrels from 21.5 million barrels.

Refined-product markets remained tight, particularly for U.S. diesel. The national average hit a record $6.53 a gallon Tuesday before easing to $6.52 on Wednesday, according to the American Automobile Association. The Trump administration has been considering restrictions on diesel exports, though Energy Secretary Chris Wright said Wednesday the administration would not impose an outright ban and pointed instead to potential voluntary restrictions.

Restricting exports could temporarily lower domestic diesel prices but would push prices for other refined products higher as U.S. refiners cut run rates, said Susan Bell, senior vice president for commodity markets at Rystad Energy. The United States currently exports more than 1.5 million barrels a day of diesel and gasoil, including around 400,000 barrels a day to Europe and 800,000 barrels a day to South America. Rystad estimated that eliminating those exports would require refinery runs to fall by around 4.2 million barrels a day on the Gulf Coast and 500,000 barrels a day in California, also sharply reducing gasoline production.