Oil prices trimmed earlier gains as Saudi Arabia's state supplier reopened a key distribution point.
Saudi Aramco, which is Saudi Arabia's flagship oil company, started loading vessels at the Red Sea port of Yanbu via the pipeline on Sunday, The Wall Street Journal reported citing people familiar with the matter . The East-West pipeline had been closed due to drone strikes hitting it earlier this month.
Aramco is currently operating the pipeline at a throughput rate of around 3.5 million barrels a day, according to the WSJ. It's been closed since Sept. 10.
As a result, oil benchmarks pulled back from earlier highs with front-month November Brent crude futures now up 1% to $105.36 a barrel, while West Texas Intermediate gained 0.3% to $92.62 a barrel. Both benchmarks were up around 3% earlier in the session as investors assessed fresh obstacles to U.S.-Iran diplomacy and persistent security risks around energy supplies.
President Trump rejected an Iranian proposal for a seven-day ceasefire that would have reopened the Strait of Hormuz and resumed nuclear negotiations in exchange for the U.S. lifting its blockade of Iranian ports, The Wall Street Journal reported, citing U.S. officials. Trump has also told aides that he expects another U.S. bombing campaign against Iran after the November midterm elections, the Journal reported.
Iranian Foreign Minister Abbas Araghchi said Sunday that Tehran remained open to diplomacy. In a post on X, Araghchi said he and President Masoud Pezeshkian had gone to New York to pursue peace and that Iran remained ready for what he called "real diplomacy," while warning that Tehran would stand firm against renewed military action.
Continued disagreement over Hormuz and persistent regional attacks should keep the geopolitical risk premium in oil elevated despite recovering Gulf crude flows, MUFG analysts said.
The military backdrop also remains unsettled. Saudi Arabia's air defenses intercepted and destroyed a ballistic missile launched by the Houthis toward the city of Khamis Mushait on Saturday, coalition spokesman Turki Al-Maliki said in a statement carried by the Saudi Press Agency. Separately, official statements published by SPA said Houthi ballistic missiles and drones had been launched toward Riyadh and Khamis Mushait.
Saudi Foreign Minister Prince Faisal bin Farhan is scheduled to meet U.S. Secretary of State Marco Rubio in Washington on Monday to discuss bilateral ties and the latest regional and international developments, according to SPA.
Volatility has been injected into natural gas futures by the extension of a force majeure on liquefied natural gas shipments by QatarEnergy to Edison, one of the supplier's biggest European customers.
About a fifth of the world's oil and gas flowed through Hormuz before Iranian attacks on ships choked off the waterway after war broke out. Qatar is one of the world's largest LNG exporters, accounting for about 20% of the global trade.
State-owned QatarEnergy said that it would be unable to deliver six additional cargoes for Italy's Adriatic LNG import terminal. That makes it 4.6 billion cubic meters of LNG that's been subject to force majeure clauses by Middle-Eastern suppliers in the face of the ongoing war.
Meanwhile, news of a restoration of a natural gas pipeline in West Virginia pushed U.S. natural gas futures lower, reversing gains from last week. "The positioning scramble and interrupted downtrend in NYMEX winter contracts suggest near-term volatility as November becomes the NYMEX front-month," said EBW Analytics Group in a note Monday.
Front-month U.S. natural gas futures fell 4% to $3.067 per million British thermal units.