Oil Prices End Two-Week Rally on Easing Mideast Supply and Diplomatic Hopes

Oil prices posted their first weekly loss in three weeks, as easing concerns over a major Saudi pipeline outage and signs of potential diplomatic progress between the U.S. and Iran weighed on the market. The pullback halts a two-week rally that had seen crude benchmarks surge by nearly 20%.

Prices Retreat From Recent Highs

Crude benchmarks fell on Friday, cementing losses for the week. Key figures from the settlement include:

• Brent crude futures for November delivery fell 1.6% to settle at $103.19 a barrel, for a weekly loss of 1.5%.
• West Texas Intermediate (WTI) crude for October delivery dipped 2.3% to $99.53 a barrel, its first close below the $100 level since September 9 and a 0.7% decline for the week.

The decline was driven by a shift in market sentiment as traders reassessed the immediate risks to global supply that had dominated earlier in the week.

Saudi Supply Disruption Fears Abate

Prices had initially surged following the shutdown of Saudi Arabia's critical East-West Pipeline, a key conduit used as an alternative to shipping through the Strait of Hormuz. The disruption stemmed from an escalating conflict with Iran-backed Houthi forces in Yemen.

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However, fears of a prolonged outage abated following a Bloomberg News report that the kingdom was working to restore about half of the pipeline's capacity within days. To further mitigate the disruption, Riyadh has been offering additional crude cargoes to Asian refiners via ship-to-ship transfers, according to Reuters.

Despite these measures, the pipeline closure is having a tangible impact. State-owned producer Saudi Aramco informed at least two European refining customers that they will receive no crude oil deliveries next month, Bloomberg reported, citing people familiar with the matter.

Focus Shifts to U.S.-Iran Diplomacy

Traders also monitored potential diplomatic openings between Washington and Tehran, which helped reduce the geopolitical risk premium in oil prices. U.S. President Donald Trump stated this week that Iran was "very much wanting to make a deal."

Adding to the diplomatic signals, several media reports indicated the U.S. State Department had granted visas to top Iranian officials to attend the upcoming United Nations General Assembly. While these developments have tempered market anxiety, underlying tensions persist in the region amid a continued U.S. blockade of Iranian ports.