Brent crude oil prices fell by around 7% to nearly $90 a barrel early on Tuesday, November 10, after reports of progress in US-Iran negotiations raised hopes that the conflict could come to an end.
The decline came despite reports of a fresh attack on Saudi Arabia’s key East-West oil pipeline on the same day.
Al Arabiya reported that a mediation proposal involving Qatar and Pakistan had helped revive serious discussions over Iran’s nuclear programme.
Under the reported proposal, Washington may be willing to allow Iran to enrich uranium to 3.67%, a limit Tehran has reportedly accepted. The possible return of International Atomic Energy Agency (IAEA) inspectors to Iran is also being discussed.
However, neither the US nor Iran has confirmed an agreement. A senior Qatari official has also reportedly disputed some details of the proposal.
The 3.67% enrichment limit was included in the 2015 nuclear deal. It would represent a significant reduction from the 60% enrichment level Iran had reached before the latest developments.
Qatar’s Prime Minister, Sheikh Mohammed bin Abdulrahman Al Thani, was scheduled to meet US President Donald Trump on Monday to discuss a possible ceasefire.
On Sunday, US Secretary of State Marco Rubio described Tehran’s demands as “not just unacceptable, but in some cases outrageous and ridiculous”. He added, however, that Washington remained open to diplomatic efforts.
Brent crude also fell by nearly 9% last Wednesday, dropping below $95 a barrel amid expectations that political developments in the US could help accelerate efforts to end the conflict.
Meanwhile, Saudi Arabia’s Energy Ministry said a pipeline in the Medina region had been targeted in an attack, causing a limited fire. No casualties or disruption to operations were reported.
The East-West pipeline is strategically important because it allows Saudi Arabia to transport crude oil to the Red Sea for export, reducing its reliance on the Strait of Hormuz.
A sustained fall in international oil prices could provide some relief to oil-importing countries such as Pakistan by reducing the cost of energy imports.
However, continued attacks on energy infrastructure and uncertainty over the conflict could still threaten supplies and cause prices to fluctuate.
For now, the oil market appears to be responding to hopes of diplomatic progress, although a confirmed agreement between Washington and Tehran remains uncertain.
