Oil prices dropped on Wednesday after US President Donald Trump confirmed that American and Iranian officials had met at the United Nations, describing the three-hour session as “very good” and “very productive.” The comments, made alongside Ukrainian President Volodymyr Zelenskyy, signaled a possible shift from confrontation toward diplomacy, even as the two countries remain deeply at odds.
Brent crude, the international benchmark, was trading at $98.41 a barrel in European morning hours, while US West Texas Intermediate stood at $95.21 for next-month delivery. Both benchmarks have repeatedly breached $100 since the Middle East conflict escalated in February, and the latest decline reflects growing hopes that a broader war can be averted.
Diplomatic opening or tactical pause?
Trump’s remarks came just hours after he told the UN General Assembly that he faced a “big decision” between reaching a deal with Iran or “annihilating the Islamic Republic and do it quickly.” The stark contrast between his public threats and the reported back-channel talks underscores the uncertainty facing global markets.
“The three-hour US-Iran meeting matters because it shifts the market from pure escalation pricing toward a genuine diplomatic process, even if a final deal still looks distant,” said Stephen Innes, managing partner at Quintex Intel.
Despite the diplomatic opening, the core disputes remain unresolved. Iran continues to block the Strait of Hormuz, a chokepoint for roughly a fifth of global oil supply, while the US maintains a naval blockade of Iranian ports. Fighting in Yemen, where Saudi-backed forces face Iran-aligned Houthi rebels, has also disrupted energy shipments through the Red Sea.
Saudi pipeline restart adds to supply relief
Prices were further pressured by reports that Saudi Arabia had resumed operations along its East–West Pipeline, a crucial route that allows crude to reach the Red Sea without passing through the Strait of Hormuz. The kingdom had shut the pipeline earlier this month after drone strikes launched from Iraq, according to Saudi officials.
Bloomberg reported, citing a source, that Saudi Arabia hopes to resume exports later this week. Saudi Aramco has reportedly informed Asian refiners that they may soon collect crude from the Red Sea port of Yanbu, though European refiners have been told they will receive no Saudi crude under their October supply agreements.
The news offers some respite for European buyers, who have been grappling with volatile energy prices and supply disruptions. However, the continent’s reliance on imported energy remains a structural vulnerability, as highlighted by the ongoing discussions between French President Emmanuel Macron and Trump on Red Sea security and the Ukraine war.
Markets look ahead to Trump–Xi meeting
European stock markets were set to open higher on Wednesday, with futures for the Euro Stoxx 50 and Germany’s DAX both up 0.3%, and FTSE 100 futures gaining 0.2%. Asian shares mostly rose, with South Korea’s Kospi climbing 1.2% and Taiwan’s Taiex adding 0.9%. The MSCI index of Asia-Pacific shares outside Japan rose 0.5%, its sixth consecutive daily gain, while Japanese markets were closed for a holiday.
On Wall Street, the Nasdaq closed at a record high on Tuesday, up 0.5%, while the S&P 500 was little changed and the Dow slipped 0.4%. In currency markets, the euro traded at $1.1429, near a two-month low, as investors weighed the possibility of another US interest rate hike. The dollar also edged up against the yen to 157.60.
Gold was at $4,379 an ounce, while US Treasury futures rose slightly as oil prices eased, keeping the yield on the 10-year government bond below 5%.
Investors are now turning their attention to Thursday’s meeting between Trump and Chinese President Xi Jinping, with trade tensions and competition over artificial intelligence expected to dominate the agenda. The outcome could have significant implications for global supply chains and technology policy, areas where European companies are deeply integrated.
For Europe, the combination of easing oil prices and diplomatic progress in the Middle East offers a measure of relief, but the underlying geopolitical risks remain. As Trump’s threats and talks illustrate, the path to stability is anything but certain.
