Oil prices moved lower on Thursday, September 24, after a strong rise in the previous session. The main reason was a new sign from Iran that it remained open to diplomacy with the United States.
The move gave traders some hope that the conflict between Iran and the US could find a diplomatic path. Yet the situation remains uncertain. Tehran and Washington are still far apart on the terms for an end to the war, and the future of the Strait of Hormuz remains a major concern for the global oil market.
Brent crude futures fell 94 cents, or 0.9%, to $102.13 a barrel. This came after Brent rose about 4% on Wednesday. US West Texas Intermediate, or WTI, crude fell 59 cents, or 0.7%, to $91.56 a barrel.
The small fall in oil prices does not mean the market has returned to normal. Traders remain alert to every new statement from Tehran and Washington because any change in the conflict could affect crude supplies, shipping routes and fuel costs across the world.
Iran leaves the door open to talks
A senior Iranian official told Reuters on Wednesday that diplomacy must continue and that Iran remains open to a way out of the war with the United States.
The statement came after Iran’s president told the United Nations General Assembly that Tehran would not surrender to US pressure. This shows the mixed signals from Iran. The country says it wants diplomacy but also rejects terms that it sees as a threat to its position.
Iran is now reviewing the US response to proposals related to the conflict. One of the main issues is the Strait of Hormuz, a vital route for global oil trade.
Iran’s proposals call for the removal of a US naval blockade on Iranian ports and the reopening of the Strait of Hormuz. These points were part of indirect talks held on Tuesday, according to the Iranian official cited by Reuters.
The possibility of talks has given oil traders some relief. If diplomacy leads to a deal, the risk of further supply disruption could fall. That could place less pressure on crude prices.
But that outcome is far from certain.
Why the Strait of Hormuz matters
The Strait of Hormuz is one of the world’s most important energy routes. A large share of global oil trade normally passes through the narrow waterway.
The current conflict has made the route difficult for ships to use. Iran’s actions have restricted access, which has forced Gulf oil producers and traders to seek other ways to move crude.
The importance of the strait explains why even a small diplomatic signal can cause a quick change in oil prices.
Earlier this week, a senior Iranian official said Iran could reopen the route within a week if the United States reduced military pressure and lifted its blockade on Iranian ports.
That statement helped create hope that the supply problem could ease. But Iran’s security chief, Mohsen Rezaei, later said the Strait of Hormuz would not reopen unless Iran’s conditions were met.
These conflicting statements show why traders remain cautious.
Oil had jumped 4% a day earlier
Thursday’s decline came after a strong rally on Wednesday.
Brent crude had gained about 4% in the previous session. The rise reflected renewed concern about the conflict and the possibility of further pressure on oil supplies.
After such a sharp move, any sign of diplomatic progress can lead traders to take some profits. The latest decline therefore reflects both the new comments from Iran and the reversal of part of the previous day’s rise.
Brent remains above the $100-a-barrel level. At $102.13, the benchmark is still far above the levels seen before the latest escalation in the Middle East.
The market has moved sharply during September as traders have reacted to military events, supply problems, Saudi export changes and diplomatic news.
A report from Kotak Securities noted that Brent had moved from near $90 at the end of August to $110 in the second week of September, before it fell below $98 as hopes for diplomacy and some recovery in Saudi supply reduced part of the risk premium.
This wide price range shows how sensitive crude has become to political developments.
The United States and Iran remain far apart
The latest diplomatic signal does not mean that the US and Iran have reached an agreement.
The two countries still disagree over the terms required to end the war. Iran wants the US naval blockade on its ports removed and wants the Strait of Hormuz reopened.
Washington, meanwhile, has not indicated that it will simply accept Tehran’s conditions.
US Secretary of State Marco Rubio said on Wednesday that a deal with Iran would require hard work over time. He also said that President Donald Trump still had military options.
This means the market still faces two very different possible outcomes.
A successful diplomatic process could reduce the supply risk and push oil prices lower. A breakdown in talks could bring fresh fears about crude shipments and send prices higher again.
For oil traders, the next major statement from either side could therefore have a direct effect on the market.
Diesel adds another source of uncertainty
Crude oil is not the only part of the energy market under pressure.
Traders are also watching diesel supplies in the United States. Ultra-low-sulfur diesel futures fell about 5% in midday trade after Politico reported that the Trump administration was preparing plans for a 90-day diesel export ban.
The White House denied the report.
However, Bloomberg later reported that Energy Secretary Chris Wright had told oil industry leaders to prepare for possible US limits on diesel exports during calls late Tuesday.
Wright had earlier said that a diesel export ban would not work, even though President Trump had said he would support such a move.
The issue matters because the US is a major fuel supplier to the global market. A sharp change in US diesel exports could affect supplies in other countries.
Analysts and market experts have warned that an export ban may not solve the problem of high energy prices. It could instead reduce global supply and create fresh pressure in other markets.
For now, the White House denial has reduced some of the immediate concern, but traders continue to watch the issue.
US crude stocks rise more than expected
Another important development came from the US oil inventory report.
US crude inventories rose by 3 million barrels to 426.4 million barrels last week, according to the Energy Information Administration.
That result was far different from the expectation of analysts polled by Reuters. They had expected a 641,000-barrel decline.
Instead of a draw, the market saw a clear rise in crude stocks.
Higher inventories can put pressure on oil prices because they suggest that more crude is available in the US market. However, inventory data can have less influence when geopolitical risks remain high.
Fuel stocks fell during the week, which provided a different signal about demand and supply conditions in the US energy market.
The inventory figures therefore add another layer to an already complex oil market.
Saudi Arabia provides another supply route
The situation in the Gulf has also changed because Saudi Arabia has worked to restore alternative oil routes.
Saudi Arabia restarted its important East-West oil pipeline after a September 11 drone attack. The pipeline can move about 4 million barrels per day of crude to the Red Sea port of Yanbu.
That route can help Saudi Arabia send oil without relying entirely on the Strait of Hormuz.
Reuters reported that the pipeline had resumed at a reduced rate. Full capacity of 7 million barrels per day could take six to eight weeks to restore because three pumping stations suffered damage.
The return of some pipeline capacity has helped reduce pressure on the oil market.
However, the alternative route is not a complete replacement for the Strait of Hormuz. It can only handle part of the country’s crude flow, and damage to key infrastructure remains a risk.
Gulf producers have found costly alternatives
The wider Gulf region has also used other routes and methods to keep crude supplies moving.
Alternative pipelines, spare capacity and routes protected by military forces have helped maintain global oil supply despite the problems around the Strait of Hormuz.
But these options come with a much higher cost.
Business Standard reported that shipping crude to Asia through the Suez Canal instead of the Red Sea can add as much as one month to the voyage. Another method uses ship-to-ship transfers in the Gulf of Oman, where tankers can wait for at least one and a half days.
The cost of tankers has also risen sharply.
Normal spot charter rates for supertankers are around $30,000 to $50,000 per day. But rates for Hormuz transit reached about $1 million per day on September 11, according to maritime data company Windward.
That is roughly equal to $26 per barrel in transport cost.
Under normal conditions, shipping usually accounts for only about 1% to 3% of the cost of crude.
This shows why oil can remain expensive even if the physical supply is enough to meet current demand.
Why oil has not risen even higher
At the start of the conflict, there were fears that the closure of the Strait of Hormuz could cause a huge oil supply shock.
About 15 million barrels of oil a day had passed through the route before the current disruption, according to an Associated Press report carried by Business Standard.
Yet oil prices have not reached the extreme levels some feared.
The reason is that Saudi Arabia and other Gulf producers have used alternative routes and spare pipeline capacity. These steps have helped keep enough crude in the global market for current demand.
That does not mean the supply situation is comfortable.
The alternative routes cost much more, take longer and can face their own security risks. A fresh attack on a pipeline or shipping route could quickly add pressure.
The market therefore has enough crude for now, but the system has less room for another major disruption.
What cheaper oil could mean for the economy
Oil prices matter far beyond petrol stations.
Crude is a major input for transport, manufacturing, chemicals and many other industries. A sustained rise in oil prices can raise costs for companies and consumers.
Higher fuel costs can also add to inflation. Airlines, shipping companies, logistics firms and manufacturers may face larger expenses if energy prices stay high.
Lower oil prices can have the opposite effect.
If diplomacy leads to a stable reopening of the Strait of Hormuz, more crude could move through normal routes. Shipping costs could fall, supply risks could ease and the extra geopolitical premium in oil prices could decline.
That would be positive for countries and companies that rely heavily on imported crude.
But a short-term fall in prices does not guarantee a lasting decline. The market still faces military, political and supply risks.
The next few days could be important
Oil traders are now focused on the next statements from Iran and the United States.
The key question is whether the latest diplomatic signals lead to actual talks and concrete steps.
For Iran, the reopening of the Strait of Hormuz and the removal of the US blockade are central issues.
For the US, the terms of any wider agreement remain unclear.
Until there is clear progress, oil prices are likely to remain highly sensitive to headlines. A positive diplomatic statement could push prices lower, while a military escalation could quickly reverse that move.
The market has already shown this pattern several times this month.
What Thursday’s move tells us
The fall in oil prices on September 24 is best understood as a response to a new diplomatic signal rather than proof that the supply crisis is over.
Brent fell 0.9% to $102.13 a barrel, while WTI dropped 0.7% to $91.56. The move came after Brent had gained about 4% on Wednesday.
Iran says diplomacy must continue, but its demands remain far apart from the position of the United States. The Strait of Hormuz remains restricted, alternative supply routes carry high costs, and the possibility of further disruption remains.
At the same time, Saudi Arabia has restored part of its East-West pipeline route, US crude stocks have risen by 3 million barrels, and the market has seen signs of possible diplomatic contact.
All these factors are now part of the oil price.
For businesses, governments and consumers, the next stage of the Iran-US conflict will matter greatly. If diplomacy produces a stable agreement, the risk premium in crude could fall. If talks fail and the conflict grows, oil could face fresh upward pressure.
For now, the market has taken a small step back after its sharp rise, but the wider oil story remains far from settled.
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