Oil Hits Over 1-Week Low On Hopes Of Boost To Diplomacy In Iran War

📊 Brent crude futures and US West Texas Intermediate crude touched their lowest since September 10 on Monday, with Brent at $101.71 a barrel by 0213 GMT, down $2.16, or 2.08 percent, after settling 0.91 percent lower on Friday. US West Texas Intermediate crude lost $2.15, or 2.14 percent, to $98.15 a barrel following a 1.58 percent drop in the previous session.

🌏 "It seems that a degree of risk premium is being removed from oil prices on hopes that a diplomatic path to de-escalate the US-Iran war may arrive this week," Tim Waterer, chief market analyst at KCM Trade, said. "Whether that hope proves to be warranted or not is another question. Time will tell." The WTI broke a key psychological support at $100 a barrel while some investors may have rolled over their positions in the October contract a day ahead of expiry to November, a Singapore-based broker said.

💰 Price Movement

• 💰 Brent crude: $101.71/barrel (down $2.16, -2.08%)
• 💰 WTI crude: $98.15/barrel (down $2.15, -2.14%)
• 📊 WTI psychological support broken: Below $100
• 📅 Low since: September 10
• 📊 Saudi exports (September so far): >4 million bpd (recovered from 2.4m in August)
• 📊 Saudi via Hormuz (past 6 days): 2.9 million bpd (up from 700,000 in August)
• 📊 Total Middle East oil flows (past 10 days): 17.1 million bpd

📜 US-Iran Diplomatic Hopes At UNGA

Iran and the US exchanged new threats on Sunday amid the stalemate, although President Donald Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to be in New York this week for the United Nations General Assembly. Iran has conveyed its conditions to mediators for re-engaging in negotiations aimed at ending the war with the US, Al Jazeera cited Iran's security chief, Mohsen Rezaei, as saying in an interview on Saturday.

The potential Trump-Pezeshkian meeting at the UNGA — if it materialises — would represent the first direct diplomatic engagement between the US and Iranian leadership since the war began in February. The market's positive reaction to the diplomatic signal — a 2% price decline — demonstrates how sensitive oil pricing is to geopolitical expectations, even when the underlying supply disruptions remain unresolved.

🚢 Saudi Export Recovery Through Hormuz

However, tensions in the Middle East remained elevated as Yemen's Iran-backed Houthis said they attacked "sensitive" sites in the Saudi capital of Riyadh on Saturday with missiles and drones, as well as an Aramco facility in the Red Sea city of Yanbu, a key oil export hub. China has asked Iran to help rein in the Houthis after an appeal to Beijing by Saudi Arabia following the attacks, according to three Iranian sources familiar with the matter.

The attacks by the Houthis on Saudi Aramco's East-West pipeline have prompted the state energy firm to increase exports through the Strait of Hormuz this month and next after halting some shipments via Yanbu. That enabled exports from the OPEC kingpin to recover to over 4 million barrels per day (bpd) so far in September after slumping to 2.4 million bpd in August, the lowest since at least 2013, according to provisional data from analytics firm Kpler.

"Middle East oil flows remain surprisingly strong despite the disruption to Saudi Arabia's East-West pipeline," JPMorgan analysts said in a September 18 note, adding that the total oil flows averaged 17.1 million bpd in the past 10 days, just 6.1 million bpd below the 2025 average. "The most notable pivot has come from Saudi Arabia," the analysts said, as satellite data indicated Saudi oil moving through the Strait of Hormuz averaged 2.9 million bpd over the past six days, up from just 700,000 bpd in August.

🌏 Implications For Bangladesh

For Bangladesh, the oil price retreat toward $100/barrel — while welcome — does not materially change the fuel import cost dynamics that drove the government's Tk 20/litre fuel price hike on September 20. The government's fuel price adjustment was based on sustained international prices above $100/barrel and the cumulative BPC losses of Tk 22,876 crore. A temporary retreat to $101.71 — particularly if driven by diplomatic hope rather than confirmed supply recovery — does not justify a reversal of the domestic price increase.

However, if the diplomatic engagement at UNGA produces meaningful de-escalation — and if Saudi export recovery through Hormuz is sustained — oil prices could retreat further toward the $85-95 range that DBS Bank identified as its base case for Q4 2026. Such a retreat would ease the fiscal pressure on BPC and potentially allow the government to moderate future fuel price adjustments. The coming week's UNGA proceedings will be critical for determining whether the diplomatic hope translates into concrete de-escalation or proves to be another false dawn in the Middle East conflict.