Oil prices fell on Wednesday after US President Donald Trump said American and Iranian representatives had held “very good” talks at the United Nations, raising hopes that the long-running conflict could move towards diplomacy.
Brent crude, the international benchmark, fell below the $100-a-barrel mark, while US West Texas Intermediate also traded below the threshold after repeatedly crossing it since the Middle East war began in February.
Brent fell to $98.41 a barrel, while WTI dropped to $89.23 during afternoon trading in Asia.
Trump said the three-hour meeting between US and Iranian representatives was “very good” and “very productive”, adding that another meeting had been scheduled for the near future.
The comments came only hours after Trump delivered a tough speech at the United Nations, where he said he faced a “big decision” over whether to reach a deal with Iran or “annihilate the Islamic Republic and do it quickly”.
Nearly seven months after US-Israeli strikes triggered the war, Washington and Tehran remain at an impasse, with Iran keeping the Strait of Hormuz closed while the United States maintains a counter-blockade of Iranian ports.
Diaspora Digital Media reports that the conflict has also widened to Yemen, where Saudi-backed government forces are fighting Iran-backed Houthi rebels.
The fighting has affected Saudi Arabia and put further pressure on the kingdom’s energy exports through the Red Sea.
Market analyst Stephen Innes of Quintex Intel said the US-Iran meeting was significant because it moved the market away from pricing based purely on further escalation towards the possibility of a diplomatic process.
However, he noted that a final agreement remained distant.
Trump has repeatedly promised that oil prices would fall once the United States wins the war.
The latest decline in oil prices also came as Saudi Arabia reportedly resumed operations along its East-West Pipeline, a major export route that was shut after drone attacks.
Bloomberg reported that Saudi Arabia was targeting a resumption of exports later this week.
Saudi oil giant Aramco also reportedly told Asian refiners they could soon collect crude from the Red Sea port of Yanbu.
However, European refiners were informed that they would not receive allocations for October, according to the report.
The developments came amid broader movements in global financial markets as investors continued to monitor the Middle East conflict and US-China relations.
Hong Kong’s Hang Seng Index fell one per cent, while Shanghai’s Composite Index declined 0.4 per cent.
South Korea’s Kospi rose 0.9 per cent, while Taiwan’s Taiex gained 0.8 per cent. European markets also opened higher.
Investors are also watching Washington ahead of Thursday’s expected meeting between Trump and Chinese President Xi Jinping, with trade expected to be a major issue.
The United States and China have maintained a tariff truce for nearly a year but have yet to reach a lasting trade agreement.
However, Kyle Rodda, senior financial market analyst at Capital.com, said the bigger concern for markets remained the Middle East war and whether Washington could secure China’s support in using its influence with Tehran.
As of around 0215 GMT, WTI was down 1.4 per cent at $89.23 a barrel, while Brent crude fell 0.9 per cent to $98.41.
The Hang Seng stood at 24,842.87, down one per cent, while the Shanghai Composite closed 0.4 per cent lower at 3,936.52.
London’s FTSE 100 gained 0.3 per cent to 10,744.98.
In currency trading, the dollar rose to 157.76 yen from 157.37 on Tuesday, while the euro fell to $1.1425 from $1.1451.
The pound also declined to $1.3314 from $1.3344, while the euro was flat against the pound at 85.81 pence.
