Oil Prices Hover Near $100 a Barrel Amid Iran Peace Talks and Saudi Supply Recovery

Oil prices rose slightly to $100 per barrel on Wednesday afternoon, recovering from morning losses as Iran and the US hold negotiations in New York to end the conflict, while markets closely monitor Saudi supply developments.

Brent crude was up 1.11 per cent to $100.3 a barrel at 3.48pm UAE time, while West Texas International traded 0.33 per cent higher at $90.82 a barrel.

“A credible agreement to reopen Hormuz, combined with a continued recovery in Saudi exports, could plummet Brent towards the low $90s, as markets price a more normal supply environment,” Daniela Hathorn, a senior market analyst at Capital.com, told The National.

“But I would expect the downside to become progressively harder from there unless physical flows improve substantially from the Strait of Hormuz and the East-West pipeline.”

The pipeline connecting the east coast of Saudi Arabia with the west coast on the Red Sea has a capacity to carry 7 million barrels of oil per day. Crude flows through the pipeline accounted for about 4 per cent of global supply during the Iran war.

The key pipeline was shut earlier this month after sustaining damage from drone attacks, but resumed operations on Tuesday at a lower pumping rate, Reuters reported citing sources.

“The restart of Saudi Arabia’s East-West pipeline and signs of better flows through Hormuz both reduce the immediate risk of a severe supply squeeze and renewed diplomacy adds further downside pressure,” said Salih Yilmaz, senior industry analyst of energy at Bloomberg Intelligence. “If those trends continue, Brent could remain below $100 and move lower from here.”

Meanwhile, attention remains fixed on the US and Iran talks in New York, where both sides are seeking to end the conflict and reopen the Strait of Hormuz. US President Donald Trump described the discussions as productive.

“I think there's a lot of momentum for them to make a deal,” he stated at the start of a meeting with Gulf states and other regional countries on Tuesday. “That's what we are hearing from everybody.”

However, analysts warn that if negotiations fail, oil prices could surge rapidly. “If negotiations break down or another round of attacks damage Saudi infrastructure, tankers or Gulf export capacity, the geopolitical premium could return very quickly,” Ms Hathorn cautioned.

Additional risks persist regarding shipping lanes in the Bab Al Mandeb strait amid the ongoing conflict between Houthi rebels and Saudi Arabia, which could further drive up prices due to supply disruption concerns.