Oil Steady Amid Middle East Supply Fears, With Brent Near $104

International oil prices were little changed, snapping a three-day slide as the prospect of diplomatic talks between the US and Iran countered concerns over supply disruptions in the Middle East.

Bloomberg reported on September 20 that Brent crude traded around $104 a barrel, while West Texas Intermediate fell below $100.

Geopolitical tensions in the Middle East intensified again over the weekend. Saudi Arabia issued air raid alerts for Riyadh and Yanbu, a city on the Red Sea coast. It was the first such alert for Riyadh since March and April, when the conflict between the US and Iran escalated. Saudi Arabia faces threats from Yemen's Iran-backed Houthi rebels.

At the same time, the possibility of a diplomatic resolution between Washington and Tehran came into focus. US 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.

Qatar is also trying to mediate between the two sides. Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani said messages were being exchanged between the US and Iran.

On the supply side, shipping conditions through the Strait of Hormuz are improving. Gen. Brad Cooper, head of US Central Command, said weekend transit volumes for crude and liquefied natural gas through the strait reached their highest level in six months.

The market is also watching repairs to Saudi Arabia's East-West pipeline, which was damaged in an attack earlier this month. Saudi Aramco notified European refiners it would not supply next month's long-term contract volumes because of disruptions to pipeline operations.

Supply concerns persist outside the Middle East as well. A Moscow refinery was hit during what was described as the largest Ukrainian drone attack of the year. As Ukraine continues to target Russian energy infrastructure, fuel supplies are tightening, especially for diesel.

Conflicts across the Middle East and Europe are driving up energy prices and adding to global inflation pressures. The Federal Reserve raised its benchmark interest rate last week, and Minneapolis Fed President Neel Kashkari said recent price pressures were spreading beyond the oil shock into the broader economy.