Oil prices fall after report Saudi Arabia aims to restart critical pipeline this week
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Crude oil prices fell for a fifth session Tuesday after reports that Saudi Arabia aims to restart its crucial East-West pipeline as soon as this week.
Brent crude futures, the international benchmark, were down 1.8% at $98.56 a barrel by 7:15 a.m. ET. U.S. West Texas Intermediate futures traded 2.3% lower to $93.60 per barrel.
Riyadh is running tests on the pipeline and could restart it this week, a person familiar with the matter told Bloomberg News. Sources told Reuters that the pipeline was already pumping at a low rate and could resume exports at the port of Yanbu on the Red Sea later Tuesday.
The Saudis closed the pipeline after it sustained damage in a drone attack launched from Iraq on Sept. 10. The pipeline has played a crucial role in diverting Saudi crude oil exports to the Red Sea as the U.S. and Iran battle for control of the Strait of Hormuz.
Washington, meanwhile, continues to ramp up economic pressure on Iran. U.S. Treasury Secretary Scott Bessent told CNBC that all Iranian airlines will be shut down from Wednesday.
"How do we do that? That if they land, you cannot provide them with fuel. You cannot provide them with landing services, you cannot sell them tickets, or you will be knocked out of the dollar system," Bessent said on CNBC's "Squawk Box."
Investors are still eyeing a possible diplomatic solution to the Mideast conflict, following news that Iranian president Masoud Pezeshkian is set to fly to the United Nations in New York.
Pezeshkian will address the assembly and present Iran's positions on "international developments," with a particular focus on its war with the U.S. and Israel, according to the country's semi-official Tasnim news agency. Talks with the leaders of several countries are also scheduled to take place Sept. 22 to 26, and 28, on the sidelines of the event.
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Attention will likely remain focused on diplomatic developments, said Lukman Otunuga, head of market research at online brokerage FXTM.
"Confirmation of direct talks between Washington and Tehran could place additional selling pressure on prices by improving expectations for regional supply," Otunuga said.
"Conversely, Tehran has warned that renewed escalation would trigger a significant response, which could push crude prices higher," he added.
—CNBC's Anniek Bao contributed to the report.