Four major favorable factors emerge, international oil prices respond by falling

On Tuesday, September 29, WTI crude oil futures fell more than 3% in a single day, once again dropping below the $90 mark; Brent futures also declined simultaneously.

Driving this downward trend were four almost simultaneous positive signals: Qatar announced that US-Iran negotiations are still ongoing, Saudi Arabia restored a key pipeline, the IEA expressed readiness to release reserves, and the Trump administration was reportedly drafting a new plan to ease relations with Russia.

However, in sharp contrast to the steep fall in the futures market, Brent spot prices remained at $120, indicating that physical supply tightness has not eased. Although the WTI cash-futures spread has narrowed, it still remains at an extreme level. This divergence shows that the fundamental issue of tight physical supply has not been fundamentally changed by the aforementioned positive developments.

Four Major Positive Signals Released

First, Qatar announced that negotiations are still ongoing.

Qatari Foreign Ministry spokesperson Majed al-Ansari said on Tuesday that Qatar and other mediators are still conveying messages between Iran and the United States, with various parties exchanging possible solutions. According to a report from Xinhua News Agency on the same day, Trump confirmed at the White House on the 28th that the US and Iran are holding indirect negotiations, and both sides have exchanged information via mediators.

Second, Saudi Arabia's East-West pipeline has restored about half of its oil transport capacity.

This pipeline serves as a critical alternative route bypassing the Strait of Hormuz. It was previously damaged by drone attacks, and its partial restoration now provides direct relief to global supply.

Rebecca Babin, Senior Energy Trader at CIBC Private Wealth Group, stated: "Increased flow through the Strait of Hormuz, combined with the restart of the Saudi East-West pipeline, is providing some supply relief to the market."

She also pointed out, "The question is what this means for Iran—reduced leverage over Hormuz could make Iran more willing to come to the negotiation table, or it could prompt Iran to escalate actions to regain initiative."

Third, IEA expressed 'ready to act', and the US plans to release SPR.

The International Energy Agency stated it is prepared to release more strategic reserves to the market. The US Department of Energy also announced that it will release up to 40 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) once again.

Fourth, Trump reportedly supports easing sanctions on Russia.

Russia is a major global oil producer. Reports indicate that the Trump administration is crafting a new proposal to promote a thaw in US-Russia relations. According to media citing US envoy John Coale, Trump supports a plan to exchange political prisoners for relaxed sanctions on Russia.

The Threat from Iran Has Not Disappeared

Although the positive news has dominated market sentiment, geopolitical risks have not gone away.

On Monday this week, Iran reportedly attacked a supertanker in the Strait of Hormuz, seen as a sign that Iran has resumed attacks on transit ships after last week's collapse of diplomatic negotiations at the United Nations.

On Tuesday, Iranian Parliament Speaker Bagher Ghalibaf reiterated: "The United States should know that if we cannot sell oil in the region, no one else can either." He later added: "If our security cannot be guaranteed, then no infrastructure will be safe."

Iran's official Fars News Agency then reported that another drone fired at an 'illegal' vessel the same day, but details were limited.

Diverging Views on the Outlook for Negotiations

Goldman Sachs analyst Rich Privorotsky held a cautiously optimistic view on the progress of the negotiations.

He said: "Reading these signals, it feels like both sides are moving closer bit by bit. Axios and CNN both reported that the US is open to specific nuclear concessions in exchange for sanction relief and the unfreezing of funds... Trump subsequently denied ever making any offer to Iran."

To me, this looks more like a tentative signal rather than just noise. Mediators are still busy, and Trump indicated that further talks are expected this week. The incentives still point towards reaching an agreement now… but the risks of miscalculation remain significant.

Bloomberg analyst Frank Monkam pointed out that as October arrives, Iran may face even greater negotiating pressure—once the US midterm elections are over, the leverage from the supply crisis may fade, and Iran's bargaining position could be weakened.