Crude oil has fallen for five straight sessions, and the reason is diplomacy rather than any change to the physical supply picture. Brent, which touched $107 a barrel earlier this month, was trading down near $98 by Tuesday. WTI slipped from a peak above $105 to around $91-92. The moves have come entirely on the back of statements out of New York, where President Trump and Iranian President Pezeshkian are both attending the UN General Assembly this week, and where the two sides have reportedly held direct talks for the first time in months.
Seven months of a conflict that reset energy markets
It’s worth remembering how we got here, because the last two days only make sense against that backdrop. The US-Iran conflict, which the Pentagon refers to internally as Operation Epic Fury, is now well past its 200th day, having escalated from the late-February breakdown of earlier negotiations. The Strait of Hormuz, through which roughly a fifth of the world’s oil and a similar share of global LNG passes, has been intermittently closed or heavily restricted since late March, an event that reset the baseline for what “normal” oil and gas prices look like this year.
The most recent flashpoint came on 11 September, when Iraq-based drone strikes hit three pumping stations on Saudi Arabia’s East-West Pipeline, the 1980s-built route that lets Saudi Arabia and the UAE move crude to the Red Sea port of Yanbu without going anywhere near Hormuz. Satellite imagery published in the days afterward showed extensive damage. Riyadh shut the pipeline entirely on 13 September, removing one of the few working bypass routes at a moment when the strait itself was already seeing only a handful of tanker transits a day. Brent broke back above $100 within hours and peaked near $107 the following week, with Gulf supply disruptions estimated at more than 10 million barrels a day at their worst point.
What actually changed this week?
Two things happened in the past 48 hours that moved the price, and it’s worth being precise about what they were and weren’t. First, Saudi Arabia restarted the East-West Pipeline on Tuesday, though at reduced capacity; Aramco is targeting full flows, but analysts think complete restoration will take several more weeks. Second, and more significant for sentiment, a senior Iranian official told Japan’s Kyodo News that Tehran would reopen the Strait of Hormuz within seven days if Washington ends its naval blockade of Iranian ports and halts strikes in the strait. That offer came with seven conditions in total, including the release of frozen Iranian assets, transmitted to Washington via Qatari intermediaries on 19 September.
Trump told reporters that US and Iranian officials had spent three hours in talks, and Treasury Secretary Scott Bessent has simultaneously floated new sanctions on Iranian airlines and financial institutions, a reminder that pressure and diplomacy are running on parallel tracks rather than one replacing the other. Iran’s Revolutionary Guard has said plainly that “the war is not over,” and has kept open the option of further strikes if talks stall. None of the underlying military positions have actually been withdrawn. What’s changed is that both sides are now talking, in public, at the same summit, which markets are reading as the best chance of de-escalation in months.
The case for caution!
Energy traders who have lived through this conflict since February have seen this pattern before: an announcement of progress, a rally in risk assets, oil sheds a few dollars, and then talks stall or a new incident sends prices right back up. One widely read market note this week put the odds of another such reversal over the next two to three weeks at roughly six in ten, with a plausible floor for WTI around $82-85 if the current mood holds and a rapid return above $100 if it doesn’t. Nothing about Tuesday’s news changes the fact that Hormuz traffic remains far below normal, that Saudi Arabia’s bypass pipeline is running at a fraction of capacity, or that Iran’s hardline factions have shown they can act independently of what Tehran’s diplomats say in New York.
Why this matters for UK buyers specifically
Britain has felt this conflict more acutely than most of Europe. Roughly a fifth of the world’s LNG passes through Hormuz, and Qatar’s Ras Laffan terminal, the largest LNG export facility on the planet, has no alternative sea route. Because the UK relies on LNG imports and prices off the same international gas benchmarks as everyone else, the shock transmitted directly into UK wholesale gas, which peaked around 75% above pre-conflict levels earlier this year and was still roughly a third higher by late spring. The domestic price cap for July to September, set using market prices from February through May, captured that spike in full, and household bills rose in step. Business energy buyers, who aren’t shielded by a price cap at all, felt the swings even faster.
That history is the reason this week’s rally in sentiment deserves a measured response rather than relief. A real, durable reopening of Hormuz and a fully repaired Saudi pipeline would be genuinely good news for anyone buying gas or power in the UK. A few days of positive headlines during a UN summit isn’t the same thing, and businesses currently weighing whether to lock in winter energy contracts should treat this week’s dip as a chance to review exposure, not as a signal that the risk has passed. The conflict’s own history over the past seven months is the best evidence available that this kind of optimism has been premature before.