Oil prices fall for a fifth straight session to a two-week low: Iran reportedly proposes reopening the Strait of Hormuz, Saudi Arabia restarts a key pipeline.

On Tuesday, international oil prices fell sharply for a fifth consecutive trading session, hitting a two-week low. The market is digesting diplomatic rumors that Iran may reopen the Strait of Hormuz, as well as news that Saudi Arabia's key East-West pipeline has restarted. Data showed that Brent crude futures briefly fell below $98 per barrel during intraday trading, while U.S. WTI crude briefly fell below $90 per barrel. As of press time, the Brent November contract was at $98.80 per barrel; the WTI October contract was at $90.68 per barrel. According to reports, Iran proposed that it would reopen the Strait of Hormuz within seven days if the United States took initial steps to ease military pressure. However, Iran's semi-official Fars News Agency subsequently stated that "Iranian sources said these reports are unreliable and untrue." The report said Iran's delegation attending the United Nations General Assembly has been fully authorized to seek the resumption of diplomacy with the United States. This is seen as the latest sign that Washington and Tehran may re-engage over the Strait of Hormuz standoff. U.S. President Donald Trump held a series of meetings with leaders of multiple countries on Tuesday during the United Nations General Assembly in New York and hinted at willingness to meet with Iranian President Masoud Pezeshkian, which has somewhat calmed market concerns. When asked about a possible meeting between the two leaders, U.S. Secretary of State Marco Rubio said: "I don't think there is any arrangement at present." But he added that the United States is "open to such a meeting." However, the two governments still exchanged threats over the weekend. The U.S. side also continued to apply pressure, with Treasury Secretary Scott Bessent saying on Monday that Washington is "pressuring Iran in unprecedented ways," citing new sanctions authorities covering aviation, maritime activities, cryptocurrency, and gold. Bessent also directly linked the Iran conflict to financial markets, saying that long-term U.S. Treasury yields and the crude oil and refining spreads have shown unusually high correlation; he expects that once the conflict ends, oil supply will increase and interest rates will fall. Another factor driving oil prices lower was Saudi Arabia's East-West pipeline. The pipeline effectively serves as a bypass route around the Strait of Hormuz. Since the U.S.-Israeli war against Iran disrupted oil flows through the Strait of Hormuz, Saudi Arabia, the key OPEC exporter, has been using the pipeline to reroute about 4 million barrels per day, or about 4% of global supply, to the Red Sea port of Yanbu. It is understood that a previous drone attack forced Saudi Arabia to shut the East-West pipeline on September 13, halting crude loading at Yanbu port. Speaking about oil prices, Rubio said: "If you look at the increase over the past two weeks, the vast majority of it is because the Houthis attacked the Saudi pipeline and Saudi Arabia had to shut it down." He added: "There is still oil in the system, but the market is reacting to expectations that there will be less Saudi oil in the future. That is also the problem we are dealing with." According to three informed sources, Saudi Arabia has restarted the pipeline and may resume exports from Yanbu later on Tuesday. Two sources said the pipeline was pumping at a low rate after restart. One source said Saudi Aramco is seeking to restore the pumping rate to 4 million barrels per day, while a security source said full restoration could take weeks. One source also noted that the pipeline will resume supplying crude to Aramco refineries along the Red Sea coast, and on Tuesday a cargo was scheduled to be loaded at Yanbu for shipment to China. Two other trade sources said traders are preparing for Saudi oil loadings by diverting tankers to Port Said in Egypt's Mediterranean for ship-to-ship transfers and to Sidi Kerir. Saudi Aramco did not immediately respond to a request for comment. Macro and Market Reaction Since the United States and Israel went to war with Iran on February 28, ship traffic through the Strait of Hormuz has almost stalled. MarineTraffic data showed that daily traffic last week did not exceed 20 vessels. Before the war, the strait handled about 125 large commercial ships per day, carrying about one-fifth of the world's oil and LNG supply. Kpler data showed that 17 commodity ships passed through the strait last weekend, compared with 37 the previous week. Since the start of this year, both major crude benchmarks have risen by more than 60%. U.S. retail gasoline prices briefly reached $4.47 per gallon on Tuesday, up 50% since the start of the Iran war. Diesel prices also surged sharply, with the U.S. national average hitting a record high of $6.52 per gallon on Tuesday, up 82% year to date, partly driven by intensified airstrikes between Russia and Ukraine. As a result, Trump also plans to hold talks with Ukrainian President Volodymyr Zelenskyy on Tuesday to push for an energy truce. As oil prices retreated, U.S. bond yields fell. The 10-year U.S. Treasury yield briefly dropped to 4.92%, after reaching as high as 5.04% a week earlier, the highest since 2007. The 30-year Treasury yield briefly fell to 5.25% on Tuesday, after rising to 5.4% last week, also the highest since 2007. Global stocks rose, with Europe's Stoxx 600 up more than 0.5%, while Germany's DAX and France's CAC 40 also gained. U.S. stock index futures edged higher, with S&P 500 futures up 0.13% and Nasdaq 100 futures slightly down 0.03%. That followed Monday's best single-day performance for the two indexes since August. Chicago Fed President Austan Goolsbee stressed on Monday that oil is part of the inflation problem. He argued that if a supply shock continues to push inflation above the Federal Reserve's 2% target, it cannot be "looked through" indefinitely, although the policy response may be less aggressive than in a demand-driven overheating scenario.