Oil prices retreat as US-Iran diplomacy offers hope for de-escalation

Oil prices slid to their lowest level in more than a week on September 21 as hopes grew that diplomacy could get a chance this week amid a UN meeting, while investors watched for a partial recovery in Saudi Arabia's shipments despite continued attacks by Yemen's Houthis.

Brent crude futures and US West Texas Intermediate crude touched their lowest levels since September 10 earlier on September 21, with Brent falling $2.16, or 2.08%, to $101.71 a barrel after settling 0.91% lower on September 18, according to Reuters.

US West Texas Intermediate crude declined $2.15, or 2.14%, to $98.15 a barrel following a 1.58% 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.

Expectations for a diplomatic opening came as tensions between Iran and the US remained elevated, with the two sides exchanging fresh threats on September 20 amid the ongoing stalemate. President Donald Trump said, however, that 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.

Trump’s openness to a meeting also coincided with Tehran outlining what it would require to return to negotiations. Iran has conveyed its conditions to mediators for resuming negotiations aimed at ending the war with the US, Al Jazeera cited Iran's security chief, Mohsen Rezaei, as saying in an interview on September 19.

By Jeyhun Aghazada