'Hormuz' opens door to de-escalation.. Oil below $100

Gulf energy and stock markets entered a new pricing phase as oil prices fell by more than 2%, with Brent crude approaching $98 per barrel, amid signs of improved Saudi oil flows and growing interest in the possibility of opening a diplomatic channel between the United States and Iran, coinciding with the United Nations General Assembly meetings in New York.

Brent crude futures for November delivery fell by approximately $2.24, or 2.23%, to $98.10 per barrel, while US crude continued its losses as investor focus shifted from supply shortage risks to the prospect of a partial return of oil flows if tensions ease. The most significant shift followed reports that Iran is prepared to reopen the Strait of Hormuz within seven days if the United States reduces its military pressure and lifts sanctions on Iranian ports.

According to Reuters, Tehran stated that its delegation in New York has the authority to enter a negotiation track, although the format of any direct meeting between the two sides remains undecided. Any potential diplomatic progress would have a direct impact on the oil market, given that the Strait of Hormuz is one of the world’s most critical energy chokepoints.

Ship traffic through the strait dropped sharply during the crisis, with some oil shipments continuing via alternative operational routes, while transportation and insurance costs rose significantly. In contrast, Saudi Arabia has strengthened its ability to redirect its oil exports. The East-West Pipeline resumed operations, and vessel tracking data indicated that approximately 14 million barrels of Saudi oil were loaded onto seven supertankers at Ras Tanura on September 20. Saudi flows through the Strait of Hormuz also rose to about 2.9 million barrels per day, compared to roughly 700,000 barrels per day in August.

The market now faces two parallel scenarios: continued tensions mean risk premiums on oil will persist, while any actual de-escalation and the regular return of navigation and supplies could pressure these premiums. This shift was reflected in Gulf stock markets, which moved cautiously before the political trajectory became clear. The Saudi index fell by about 0.1%, the Qatari index by 0.8%, and the Dubai index by 0.1%, while the Abu Dhabi index rose by 0.2%, in a session dominated by anticipation of potential talks between Washington and Tehran.

Gulf markets treat oil as a dual-impact factor; higher prices support revenues for producing nations, but they also raise inflation concerns, increase financing and transportation costs, and heighten investor sensitivity to interest rate paths.

Locally, the Kuwait Stock Exchange closed with a clear decline. The General Market Index fell by 91.10 points, or 1.03%, to close at 8,755.35 points, amid trading volumes of 421.7 million shares across 30,027 transactions valued at 121.1 million dinars. The main market index bore the brunt of the pressure, dropping 332.67 points, or 3.53%, to 9,088.15 points, with 271 million shares traded in 20,651 transactions worth 66.3 million dinars. The First Market Index also declined by 44.43 points, or 0.48%, to 9,138.91 points, through the trading of 150.6 million shares across 9,376 transactions valued at 54.7 million dinars.

In the metals market, gold fell as US interest rate pressures returned to the forefront. Spot gold dropped 0.4% to approximately $4,327.74 per ounce, while US gold futures fell by the same percentage to around $4,364.90.