Oil Slides Toward $100 as Hormuz Flows Hit Six-Month High

Summary

• Brent fell 2.4% to $101.35 a barrel, its longest losing run since June.
• Hormuz crude and LNG flows are at a six-month high, US Central Command says.
• Traders are pricing in diplomacy at the UN General Assembly rather than fresh supply disruption.

The latest

Oil retreated toward $100 a barrel, with the global benchmark dropping as much as 3.5% and heading for its longest run of declines since June, according to Bloomberg. Steady tanker traffic through the Strait of Hormuz and diplomatic movement around the US-Iran war cooled a rally that has lifted Brent more than 65% this year.

Details

• The prices: Brent for November settlement fell 2.4% to $101.35 a barrel as of 8:59 a.m. in New York, Bloomberg reported, while WTI for October was 2.5% lower at $97.84. The benchmark dropped as much as 3.5% intraday, putting crude on course for its longest losing streak in three months.
• The Hormuz numbers: Crude and LNG flows through the Strait of Hormuz over the past two weeks are running at a six-month high, according to Admiral Brad Cooper, head of US Central Command. About 32 ships a day crossed the strait with US assistance between Sept. 17 and Sept. 19, according to UK Maritime Trade Operations.
• The diplomacy: President Donald Trump told Fox News he would probably be open to meeting Iranian President Masoud Pezeshkian on the sidelines of the UN General Assembly in New York this week, Bloomberg reported. Trump is also set to hold a summit with Chinese President Xi Jinping and may meet Gulf leaders.
• The Saudi pivot: Satellite data showed Saudi Arabia's observed oil loadings from inside the Persian Gulf jumped over the weekend, with the most ships at the kingdom's main Gulf port since June. Bloomberg reported the shift signals a return toward Hormuz after a cross-country pipeline to the Red Sea was shut earlier this month.
• The analyst read: Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management, said focus has moved to improving oil and LNG flows through Hormuz and the chance of diplomatic progress in New York, adding that "the worst pressure on crude may be easing."
• The risks left: Saudi Arabia issued air-raid alerts for Riyadh over the weekend, the first in the capital since the height of the US-Iran war in March and April, along with warnings for Red Sea hubs including Yanbu, over threats from Iran-backed Houthis in Yemen.
• The Libya outage: Libya's largest oil field cut output by more than half after a pipeline was shut down, Bloomberg reported. The reason for the stoppage was not immediately clear, and no restart timeline was announced.
• The wider squeeze: Brent has climbed more than 65% this year as the war disrupted Hormuz traffic and Ukraine kept striking Russian energy infrastructure. Refined products including diesel have rallied harder than crude, adding to inflationary pressure across consuming economies.

Background

The US-Iran war peaked in March and April, disrupting shipping through the Strait of Hormuz, the chokepoint for a large share of seaborne crude and LNG. A Saudi pipeline to the Red Sea, used to bypass the strait, was shut earlier this month.

Between the lines

The selloff is driven by flow data rather than a settlement: 32 ships a day through Hormuz and the heaviest Saudi Gulf loadings since June tell traders the physical barrels are moving. But Riyadh's first air-raid alerts since April and a halved Libyan field show supply risk has not been priced out, only pushed down the list.

What's next

Whether Trump and Pezeshkian meet on the UN General Assembly sidelines this week, alongside the Trump-Xi summit and possible Gulf meetings. Also watch the restart of Libya's largest field and daily Hormuz transit counts.

Source: Bloomberg