Oil prices declined in early trading on Thursday, October 1, 2026, as supplies from the Gulf region recovered and US inventories increased. According to Reuters, Brent crude fell 1.1% to $96.92 per barrel, while West Texas Intermediate (WTI) crude dropped 1.4% to $89.18 per barrel. This decline follows significant gains in September, with Brent rising 14% and WTI increasing by nearly 5%.
The recovery in oil supplies, particularly from the Gulf region, has contributed to the decline in prices. Saudi Arabia has resumed loading oil tankers from the Yanbu port on the Red Sea, following the restart of the East-West pipeline. This has alleviated concerns about supply shortages that had driven prices up in recent periods. Additionally, US inventory data showed a surprise increase of 922,000 barrels in the week ending September 25, bringing total commercial crude inventories to 427.32 million barrels.
Market analysts had expected a decline of 264,000 barrels, according to a Reuters survey. Refinery utilization rates also decreased, with refineries processing 554,000 fewer barrels per day, resulting in a capacity utilization rate of 92.5%. These numbers suggest that the increase in crude inventories may be partly due to reduced refinery demand, rather than a decline in overall demand.
The diplomatic efforts between the US and Iran have also influenced oil prices. Iran has received a US response to its proposal for reviving a ceasefire in the Gulf, while US President Donald Trump denied reports that he was willing to ease sanctions in exchange for Iranian concessions on its nuclear program. A breakthrough in diplomatic talks could lead to a reduction in the "risk premium" that buyers pay to account for potential supply disruptions.
However, any setbacks in diplomatic efforts or new disruptions could cause prices to rise again. Goldman Sachs has maintained its forecast for Brent crude to decline to $85 per barrel by the end of 2026 and $80 per barrel in 2027, based on expected increases in Middle Eastern supplies and Chinese demand. However, the bank also warned that renewed escalation and damage to energy infrastructure could lead to significant price increases.
The recovery in oil supplies has not been uniform across all products, with diesel, gasoline, and jet fuel exports from the Gulf region still running at about half their 2025 average. This could have implications for the global energy market, particularly if refinery capacity utilization rates remain low.
For Egypt, a sustained decline in oil prices could help reduce the cost of importing crude and petroleum products, but the impact would depend on factors such as the exchange rate, product prices, and transportation costs. The Egyptian government and consumers will be closely monitoring the situation to assess the potential benefits and risks.
Key points
- Oil prices declined on Thursday, October 1, 2026, due to recovering supplies and progressing diplomatic efforts between the US and Iran.
- The recovery in oil supplies from the Gulf region and increased US inventories have contributed to the decline in prices.
- The diplomatic efforts between the US and Iran have influenced oil prices, with a potential breakthrough leading to a reduction in the "risk premium".
